George Osborne hailed the success of the coalition’s austerity plan as he delivered his fifth Budget today - insisting the Government will be back in the black by 2018.
The Chancellor said the Office for Budget Responsibility (OBR) was now predicting a 0.2 per cent surplus in 2018/19, meaning that he could deliver boosts to hardworking families and savers.
But he stressed that he would not loosen the purse strings despite economic growth being revised up, and the Government would keep “”putting Britain right”.
“I can report today that the economy is continuing to recover - and recovering faster than forecast,” Mr Osborne told MPs.
“We set out our plan. And together with the British people, we held our nerve. We’re putting Britain right.
“But the job is farfrom done. Our country still borrows too much. We still don’t invest enough, export enough or save enough.
“So today we do more to put that right. This is a Budget for building a resilient economy.
“If you’re a maker, a doer or a saver, this Budget is for you.”
Mr Osborne added: “It is all part of a long-term economic plan - a plan that is delivering security for the people of this country.
“In 2018/19 we won’t be borrowing at all. We will have a small surplus of almost £5 billion.
“Taken together, these new figures mean Britain will be borrowing £24 billion less than was forecast. That’s more than we spend in an entire year on the police and criminal justice system.
Main points in Budget 2014
Budget 2014 figures at a glance
• The Office for Budget Responsibility (OBR) confirms economy grew by “three times as much” as forecast 0.6 per cent in 2013
• The OBR predicts 2014 GDP growth of 2.7 per cent, then 2.3 per cent in 2015, 2.6 per cent in 2016 and 2017 and 2.5 per cent in 2018
• Revised GDP figures mean UK economy will be £16 billion larger than OBR forecast four months ago
• Deficit revised down to 6.6 per cent this year, 5.5 per cent in 2014/15 then 4.2 per cent, 2.4 per cent and reaching 0.8 per cent in 2017/18 with a surplus of 0.2 per cent in 2018/19
• Borrowing expected to be £108 billion this year - £12 billion less than forecast a year ago
• OBR predicts borrowing will fall to £95 billion in 2014/15, then £75 billion, £44 billion and £17 billion in subsequent years with a surplus of almost £5 billion in 2018/19
• Forecasts mean the UK will borrow £24 billion less than previously predicted over the period
• Debt is revised down to 74.5 per cent of GDP this year; then 77.3 per cent next year, reaching a peak of 78.7 per cent in 2015/16 and falling to 78.3 per cent, 76.5 per cent and 74.2 per cent
• £42 billion saving on interest payments expected in the following years
• Personal tax allowance to be raised to £10,500 next year; £800 average savings.
• Higher rate threshold for 40p income tax to rise from £41,450 to £41,865 next month and then by further 1 per cent to £42,285 next year; increase in personal allowance passed on to higher rate taxpayers.
• Transferable tax allowance for married couples to rise to £1,050.
• Tax on homes owned through companies to be extended from homes worth more than £2 million to those worth more than £500,000.
• 15 per cent stamp duty on homes worth more than £500,000 bought through companies.
• Inheritance tax waived for emergency services personnel who “give their lives protecting us”.
• VAT waived on fuel for air ambulances and inshore rescue boats.
• All tax restrictions on pensioners’ access to pension pots removed
• Reform of taxation of defined contribution pensions to help 13 million people from March 27
• Tax on cash taken out of pension pot on retirement to be reduced from 55 per cent to 20 per cent
• Abolition of 10p starting rate of tax on income from savings.
• Business rate discounts and enhanced capital allowances in enterprise zones extended for three more years; first Northern Ireland enterprise zone to be established near Coleraine
• Research and development tax credit for loss-making small businesses raised from 11 per cent to 14.5 per cent; social investment tax relief at 30 per cent
• Annual investment allowance doubled to £500,000 and extended to the end of 2015
• From September, 20 per cent tax relief for theatre productions, and 25 per cent for regional touring
• 2 per cent increase in company car tax to be extended through to 2018; increased discount for ultra-low emission vehicles
• OBR forecasts 1.5 million more jobs over the next five years and earnings to grow faster than inflation
• Welfare cap set at £119 billion for 2015/16, rising to £127 billion by 2018/19, only state pension and cyclical unemployment benefits excluded
• Compliance checks on migrants claiming benefits they are not entitled to; saving £100 million
• Housing policies announced today to support more than 200,000 new homes.
• £270 million guarantee approved for the Mersey Gateway bridge.
• Legislation to give Welsh Government tax and borrowing powers to fund infrastructure needs
• Additional £140 million made available for repairs and maintenance to flood defences
• Additional £200 million for potholes
• Tobacco duty to rise by 2 per cent above inflation, and the escalator extended for the rest of the next Parliament.
• Alcohol duty escalator scrapped; taxes to rise in line with inflation except for spirits, where it is frozen.
• Duty on ordinary cider frozen. Beer duty cut by 1p a pint.
• Duty on fixed-odds betting terminals increased to 25 per cent, horse racing betting levy extended to offshore bookmakers and bingo duty halved to 10%.
• From September, 20 per cent tax relief for theatre productions, and 25 per cent for regional touring.