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Wednesday, March 20, 2013

Budget 2013 Key Points

The Chancellor halved his growth forecast in today's Budget. All very well maybe, but no one really believes these forecasts in the first place; therefore halving a figure that no one believes in to another figure that no one believes in is a futile exercise.

Rather amusingly the Evening Standard had to apologise after it published details of the Budget online before George Osborne delivered his statement. When I was a young lad, breach of Budget purdah was a "hanging" offence; now breach of purdah is de rigueur!

Here are the key points, courtesy of the BBC:

FUEL, ALCOHOL AND CIGARETTES

September's 3p fuel duty rise scrapped
April's 3p rise in beer duty scrapped. Instead, beer duty to be cut by 1p
Annual inflation +2% rise in beer duty to be ended but "duty escalator" to remain in place for wine, cider and spirits
Cigarette duties unchanged - continuing to rise by inflation +5%

INCOME TAX

Limit at which people start paying tax to be raised to £10,000 in 2014 - a year earlier than planned

HOUSING

Shared equity schemes extended, with interest-free loans for homebuyers up to 20% of value of new-build properties

Bank guarantees to underpin £130bn of new mortgage lending for three years from 2014

STATE OF THE ECONOMY

Growth forecast for 2013 halved to 0.6% d from 1.2% in December
Office for Budget Responsibility watchdog predicts UK will escape recession this year
Growth predicted to be 1.8% in 2014; 2.3% in 2015; 2.7% in 2016 and 2.8% in 2017.

BORROWING

Borrowing of £114bn this year, up from previous £108bn forecast
Borrowing set to fall to £108bn, £97bn and £87bn, £61bn and £42bn in subsequent years
Borrowing as share of GDP to fall from 7.4% in 2013-14 to 5% in 2015-16
Debt as a share of GDP to increase from 75.9% in 2012-13 to 85.6% in 2016-17

SPENDING AND PAY

Most government departments to see budgets cut by 1% in each of next two years
Schools and NHS will be protected
£11.5bn in further cuts earmarked in 2015-16 Spending Review, up from £10bn
1% cap on public sector pay extended to 2015-16 and limits on "progression" pay rises in the sector
Military to be exempt from "progression" pay limits.
Proceeds of Libor banking fines to be given to good military causes, including Combat Stress charity

JOBS

600,000 more jobs expected this year than at same time last year
Claimant count to fall by 60,000

TRANSPORT AND INFRASTRUCTURE

An extra £15bn for new road, rail and construction projects by 2020, starting with £3bn in 2015-16

HELP FOR BUSINESS

Corporation tax to be cut by 1% to 20% in 2015
New employment allowance to cut National Insurance bills cut by £2,000 for every firm
450,000 small firms will pay no employer National Insurance
Government procurement from small firms to rise fivefold
Tax relief for investment in social enterprises
Stamp duty axed on shares traded on growth markets like Aim.
Tax avoidance and evasion measures, including agreements with Isle of Man, Guernsey and Jersey, aimed at recouping £3bn in unpaid taxes

ENERGY AND THE ENVIRONMENT

Tax incentives for ultra low-emission cars
Pottery industry in Midlands to be exempt from climate change levy
Tax allowances for investment in shale gas

INFLATION

2% Bank of England inflation target to stay in place
Bank remit to be changed to focus on growth as well as inflation

PENSIONERS

Single flat-rate pension of £144 a week brought forward a year to 2016
Cap on social care costs confirmed

FAMILIES

20% tax relief on childcare up to £6,000 per child from 2015
£5,000 payments for those who lost money on Equitable Life policies bought before 1992. Extra money for those on low incomes

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