Funding for health services and freeze on fuel duty
Chancellor George Osborne unveiled his Autumn Statement today, saying he was presenting a forecast which showed the UK was the fastest growing of any major advanced economy.
He pointed to higher growth, reduced unemployment, falling inflation and a deficit reduced to half of what the Government inherited as evidence that the long-term economic plan was working.
Mr Osborne stressed the need to address “problems that remain unresolved in the British economy”.
Key announcements included a complete reform of Stamp Duty, additional funding of £2billion for health services, the doubling of Small Business Rate Relief for another year, a freeze on fuel duty and a rise in personal tax allowance to £10,600 next April.
The main findings of the Office for Budget Responsibility’s forecast were outlined, including:
- GDP growth forecast at 3%, with 2.4% growth forecast in 2015, 2.2% in 2016, 2.4% in 2017 and 2.3% in 2018 and 2019
- Borrowing forecast to fall to £91.3bn this year, £75.9bn next year, continuing to a predicted surplus of £4bn in 2018-19
- Deficit cut in half and predicted to fall to 4% next year, then 2.1%, then 0.7% before moving to surplus
- Inflation forecast revised down to 1.5% this year, 1.2% next year and 1.7% the following year
- Unemployment revised down in each year of the forecast, falling to 5.4% next year before settling at 5.3%
- “Meaningful real wage growth” predicted to pick up in 2015 and grow above inflation for the next 5 years
Other announcements included:
- Confirmation of additional funding of £2bn for health services, with foreign exchange fines from banks to be invested in GP services
- Publication of a Charter for Budget Responsibility next week, with a vote on it in the new year
- The £2,000 Employment Allowance is to be extended to carers
- A commitment to Lord Hutton’s public service pension reforms
- A freeze on Universal Credit work allowances for a further year, a cut to tax credits when overpayments are certain and an ending of unemployment benefits for migrants with “no prospect of work”
- Extension of inheritance tax exemption to aid workers who lose their lives in dealing with humanitarian emergencies
- Payments to EU to fall by £1bn net this year and next year
- VAT to be refunded for search and rescue and air ambulance organisations and hospice charities
- A 25% tax on diverted profits for multi-nationals is to be introduced
- A 50% limit on bank profits which can be offset against losses in previous years
- Measures to prevent tax avoidance
- Expansion of the British Business Bank and action to encourage peer to peer lending
- Strengthening of Entrepreneurs’ Relief and Social Investment Tax Relief
- Extension of the Funding for Lending scheme with a focus on smaller firms
- R&D tax credits for companies to increase
- The doubling of Small Business Rate Relief for another year
- A full review of the structure of business rates, including an increase to the discount for high street shops, pubs and cafes
- A reduction in the Supplementary Charge from 32% to 30%, expansion of ring fenced expenditure supplement and a new cluster area allowance for the oil industry
- Continuation of the freeze on fuel duty
- APD for children under 12 to be abolished, later extending to under 16s
- Government-backed student loans to be available for postgraduate masters degrees
- Investment in science, transport and culture among plans relating to ambition to “build a northern powerhouse”
- Savings in ISAs to retain tax-free status for spouses after their partner has died
- National Insurance contributions for businesses employing young apprentices to be abolished
- Personal tax allowance to increase next year to £10,600, with the higher rate threshold up from £41,865 this year to £42,385 next year
- Complete reform of Stamp Duty, with zero payment up to £125,000, 2% up to £250,000, 5% up to £925,000, 10% up to £1.5m and 12% above that. Changes to Stamp Duty are effective from midnight and will apply in Scotland until April 2015.