The Chancellor of the Exchequer, George Osborne, today made his statement on the UK Budget 2013, saying it was a “Budget for people aspiring to work hard and get on”.
The Office for Budget Responsibility has forecast growth for 2013 of 0.6%, a downgrade from 1.2% in December, but predicts the UK will avoid recession this year.
For 2014 predicted growth is 1.8%, increasing to 2.8% by 2017. Borrowing for this year has increased from the previous forecast of £108bn to £114bn but is expected to fall in subsequent years, with borrowing as a share of GDP excepted to fall from 7.4% in 2013-14 to 5% in 2015-16.
The Chancellor announced help for small firms, saying: “We’ll increase by fivefold the value of government procurement budgets spent through the Small Business Research Initiative.”
Other key announcements included:
- An increase in capital spending of £3bn a year from 2015-16, funded by reductions in current spending.
- A reduction in spending by government departments of £1.1bn in 2013-14 and £1.2bn in 2014, with budgets for schools and health ring-fenced.
- A limit on public sector pay awards of 1% in 2015-16, with exemptions for services personnel.
- Funding for military causes, including Combat Stress, from Libor banking fines.
- A reduction in the main rate of corporation tax to 20%.
- A £2,000 a year employment allowance for National Insurance contributions for businesses and charities from April 2014.
- £5.4bn funding for housing through the launch of Help to Buy, seeing the extension for shared equity schemes and bank guarantees for £130bn of new mortgage lending for three years from 2014.
- £1.6bn for an industrial strategy which will include work with industry to create an Aerospace Technology Institute.
- The creation of a Single Local Growth Fund, as recommended in the Heseltine review.
- Tax incentives for ultra-low emission cars.
- Tax allowances for investment in shale gas.
- Increasing the personal allowance on income tax to £10,000 in 2014-15.
- Cancellation of the planned September fuel duty increase.
- Cancellation of the beer duty escalator and a reduction of beer duty by a penny a pint from 25th March 2013.
- Introduction of a Tax-free Childcare scheme up to £6,000 per child from 2015.
- Introduction of a single-tier State Pension and confirmation of the £72,000 cap on social care costs from April 2016.
- A crackdown on tax avoidance and evasion, to raise over £4.6bn over the next five years.
- An updated remit for the Monetary Policy Committee and a review of the monetary policy framework.