This was a budget for the makers, the doers and the savers but above all it was a budget for the voters, in a country which does not invest enough, export enough or save enough apparently. With just over twelve months to go to the election, the Chancellor could not have hoped for a better economic backdrop with which to revisit the polling stations in May next year.
Growth is up, inflation down, employment up, borrowing down, investment up, so all is well. Just the trade figures will continue to disappoint, as the structural deficit trade in goods will continue to provide a drain on net trade.
Despite the clear evidence of a strong recovery, the Chancellor will continue with the austerity programme. More departmental cuts planned, along with a cap on welfare spending. The chancellor is determined to “fix the roof” whilst the sun is shining. The deficit will fall over the next four years, the plan to eliminate government borrowing by 2018.
Attacks on tax dodgers, will ensure the complex tax avoidance schemes and “Corporate wraps for property” are placed under pressure. Fines for LIBOR abusers will be redirected to good causes including military charities, scouts, guides, cadets and St John’s Ambulance.
Exporters will receive a modest boost with and increase to £3 billion in the amount available to finance export growth. Alas £ 3 billion - a small drop in the world’s five oceans, if the £1 trillion export target is to be met.
In housing, the help to buy scheme is to be extended to 2020, assisting the purchase of 120,000 new homes, with an additional 15,000 new homes planned for Ebbsfleet. Where is that?
In infrastructure, £270 million is planned for the Mersey Gateway Bridge, with a further £200 million available to fill “potholes” around the country. A modest contribution if HS2 is to proceed.
Investment also receives a boost, with a doubling of the investment allowance to £500,000. Almost every business in Britain, will pay no upfront tax as they invest to expand capacity in the future.
Energy costs will be clipped, with caps on carbon price support and additional measures providing savings to every manufacturer in the country.
Bingo tax is set to halve, fuel duty prices will not be implemented in September, the lost revenue, partly financed by increase duties on betting terminals and offshore bookies.
Personal allowances will increase to £10,500 producing tax savings for millions of voters. Tax cuts for those on low incomes and those on middle incomes too.
But the biggest giveaway was for savers. A new composite ISA for cash and shares, new higher yielding pensioner bond, yielding 4% on a three year investment. An end to the iniquity of the forced purchase annuity. An end to caps and drawdown limits on pensions. People will have the right to access their own savings at a time of their own choosing and best of all, the abolition of the 10 pence tax rate for savers altogether. It is a vote winner for hitherto disillusioned pensioners.
The Chancellor claims this is a budget for the makers, the doers and the savers. Above all the savers appear to have done remarkably well, the makers and the doers, less so. Above all it is a clever budget for the electorate.
The Labour lead in the polls is narrowing to around five points. Tory analysts will have an eye on the 1986 pre election swing. A swing yielding over 15 points to the Conservatives in the twelve month run up to the election of 1987. The Lib Dem vote has collapsed, the UKIP vote will evaporate. This is a budget which will do little harm to the economy but a great deal for Tory spirits and voters in this critical pre election phase.
It is a budget which should be commended to the House but above all to the Tory back benchers, particularly MPs and prospective candidates in marginal seats.
© John Ashcroft 2014
Word Count 650 words
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