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.