18 March 2015
Last updated at 13:45
George Osborne has told MPs “Britain is walking tall again” after five years of coalition government.
He said a squeeze on public spending would end earlier than planned because of stronger growth and low inflation in his final Budget before the election.
He cut 1p from duty on a pint of beer, froze wine duty, cut 2% from cider and scotch whisky – and froze fuel duty.
The Office for Budget Responsibility says the UK economy is growing slightly faster than thought.
It revised its growth forecast for 2015 upwards from 2.4% to 2.5% and for 2016 from 2.2% to 2.3%, said Mr Osborne.
Setting out his plans in the Commons, Mr Osborne said: “We took difficult decisions in the teeth of opposition and it worked. Britain is walking tall again.
“Five years ago, our economy had suffered a collapse greater than almost any country.
“Today, I can confirm: in the last year we have grown faster than any other major advanced economy in the world.”
A traditional pose outside 11 Downing Street on Budget morning
Will we ever see a Conservative-Lib Dem coalition Budget again?
George Osborne began delivering his sixth Budget in the Commons at 12:30 GMT
Labour’s frontbench team as the Budget is delivered
The government frontbench team watch Ed Miliband as he responds to the Budget
Mr Osborne’s sixth Budget statement comes against a backdrop of a strengthening economic recovery, a fresh fall
Mr Osborne told the Commons that the government had met its 2010 target to end this Parliament with Britain’s national debt falling as a share of GDP.
He said he would use a boost in the public finances caused by lower inflation and welfare payments to pay off some of the national debt and end the squeeze on public spending a year earlier than planned.
This means that in 2019/20 spending will grow in line with the growth of the economy – bringing state spending as a share of national income to the same level as in 2000.
“The hard work and sacrifice of the British people has paid off,” said Mr Osborne.
“The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling.
“The sun is starting to shine – and we are fixing the roof.”
The Budget on the BBC
- Online: Full live coverage in text, video, key points at-a-glance and what it means to you
- On TV: A BBC Two special from 11:30 to 15:30 GMT. Rolling coverage on the BBC News Channel
- On radio: A Radio 4 special from 12:15 to 14:00 GMT. 5 Live special from 11:55 to 16:00 GMT
- On Twitter: BBC correspondents tweeting #Budget2015
The Budget is Mr Osborne’s last set-piece chance to woo floating voters ahead of 7 May’s general election – opinion polls have the Conservatives neck-and-neck with the official opposition, Labour.
He insisted that deficit reduction remained his top priority but also unveiled measures aimed to increase the amount people can earn before paying tax to £10,800 next year and an above inflation rise to £43,300 by 2017 for the amount people can earn before having to pay the 40p tax rate.
He also announced plans to scrap annual tax returns and replace them with “digital tax accounts”, allowing people to manage their affairs using smartphones or computers.
Other measures include:
- Relaxing pension rules from April 2016 to allow up to five million existing pensioners to swap their fixed annual payments for cash
- Tax changes aimed at helping savers, including annual savings limits for ISA increased to £15,240 and the creation of fully flexible ISAs
- A fresh crackdown on tax avoidance and evasion, which he said will raise £3.1bn
- Raising the rate of the bank levy to 0.21% raise an additional £900m a year
- A further boost for regional growth, including extending enterprise and housing zones – and plans for a tidal lagoon to generate green electricity in Swansea Bay. Severn Crossing toll rates will be reduced from 2018
- £1.3bn in tax cuts for North Sea oil exploration and continued production in older fields
Some of the plans in Mr Osborne’s statement are likely to depend on a Conservative victory on 7 May – whoever wins the election is likely to set out another Budget later this year.
Labour’s Shadow Chancellor Ed Balls has accused the Conservatives of planning “extreme” spending cuts and promised to “balance the books in a fair way by reversing the Tories’ tax cut for millionaires”.
Mr Balls has pledged to raise the minimum wage, reintroduce a 10p tax rate for low earners and cut business rates for small firms, if Labour wins office in May.
Lib Dem Business Secretary Vince Cable said the Budget was a “joint effort” between his party and the Conservatives, which would include no “spectacular giveaways”.
But the Lib Dems will unveil their own tax and spending plans for the next five years on Thursday, which are likely to feature greater tax rises than planned by the chancellor.
Mr Osborne’s sixth Budget statement comes against a backdrop of a strengthening economic recovery, a fresh fall in unemployment and a rosier fiscal picture expected as a result of falling oil prices dragging down inflation.
He said: “The critical choice facing the country now is this: do we return to the chaos of the past? Or do we say to the British people, let’s work through the plan that is delivering for you?
“Today we make that critical choice: we choose the future. We have a plan that is working – and this is a Budget that works for you.”
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