The fog is lifting – and the shape of tomorrow’s Budget is becoming more clear.
My expectation is that this will not be a time for huge giveaways or takeaways given the extraordinary spending review we had last October. (Here is a reminder of the upcoming tax and benefit changes, with 16 alone in April – as illustrated by our Austerity Calendar).
Leaving aside the inevitable surprises, here is what we already know – or expect – in the showpiece event.
UPDATE on Wednesday morning:
i] £250m for housebuilding. The government will replace its old Homebuy Direct (£275m) – which effectively ended last autumn – with a new Firstbuy Direct (£250m) which will help 10,000 first-time-buyers. (The old scheme also helped 10,000 first-time buyers.). The housebuilders are delighted but others may simply see this as filling a vacuum in the shared-equity market.
ii] Rumours on corporation tax. The government is due to cut the rate from 28 per cent to 27 per cent next month (as part of a plan to lower the rate to 24 per cent by the end of Parliament) but could go further – or signal its intention to go faster.
iii] George Osborne will announce a further £600 rise in the tax threshold from April 2012 to £8.045 – on top of the £1,ooo rise taking effect next month. Bear in mind, however, that this threshold should have risen by inflation (4.4 per cent) anyway.
1] George Osborne will signal his medium-term intent to merge National Insurance and income tax. The idea is to convince the British public that they pay too much tax – preparing the way for a more low-tax future.
2] Fuel duty escalator. The chancellor is set to reduce or cancel the 5p a litre rise. But a “fuel duty stabiliser” – being considered by the Treasury – seems unlikely after being criticised by the OBR.
3] Aviation tax:
a] The government has cancelled plans to shift aviation duty from a per passenger to a per plane duty which would have stopped half-empty planes paying less tax. Officials claimed that the change would have been thwarted by the Chicago Convention from 1944.
b] Air passenger duty will be frozen, according to reports – instead of being raised in line with inflation.
c] Lear Jet levy – passengers in private jets will pay duty for the first time in a small but symbolic hit on the rich.
4] Employment tribunals. Could change rules so that staff at SMEs must work at a company for two years – up from one – to be eligible.There are also plans to charge for visits.
5] More support for apprenticeships, including 100,000 work placements.
good for a politician to gloat in the middle of the turmoil, and George Osborne isn’t doing that. But he is pointing out, unsurprisingly, that the swift cuts to eliminate the deficit have made bond traders less likely to turn their sights onto the UK.
Standards.
Older entries
Jim Pickard
Kiran Stacey
