George Osborne has unveiled his latest budget: here are the key points

This article is more than 5 years old

This article is more than 5 years old

Growth

Revised down for 2015 to 2.4% from 2.5%. Forecast to grow 2.3% next year – the same as the last budget – and then grow the year after that.

Rowena Mason, political correspondent: Osborne gets this little bit of negative economic news out of the way early in his speech, moving on swiftly to boasts about higher tax receipts and creation of more jobs.

Debt

Osborne hopes minimum wage increase will soften blow of welfare cuts Read more

As a proportion of GDP, 80.3% this year, 79.1% the following year to reach 68.5% in 2020/21. Maintain the surplus in normal times.

RM: The chancellor is repeatedly trying to emphasise that his cuts will not be deeper or more severe than in the last parliament, attempting to cast them as moderate in the face of some Tory jitters about the scale of the public spending reductions. Osborne does in fact appear to have watered down his planned cuts, with higher public spending than he forecast in March and an extra year to achieve his aim of a budget surplus. In fact, the Office for Budget Responsibility says he is using the budget to ‘loosen significantly the impending squeeze on public services spending’.

Public sector



Pay to rise 1% a year for four years.

RM: Osborne is risking strikes here with continued public sector pay restraint for another four years – on top of the last five years. That will be almost a decade of low pay rises for public sector workers.

NHS

£8bn of spending – as outlined in the Conservative manifesto.

Tax avoidance

£5bn of revenues from offshore trusts, investment managers, more money for HMRC, consult on rules on disguised employment, and new penalties to name and shame abusers.

Non-domiciles: abolishing permanent non-dom status for anyone resident in the UK for 15 of the last 20 years.

RM: Labour’s idea of a crackdown on non-doms has been nakedly stolen by Osborne, who rejected Ed Miliband’s popular idea before the election. He is not quite going as far as Labour, which recommended abolishing it, but anyone resident in the UK for 15 of the last 20 years will no longer get to enjoy the status. Osborne repeatedly unveils crackdowns on tax avoidance but Labour has questioned how much it actually raises.

Banks

Levy to be reduced over six years and after that no longer apply to worldwide balance sheets. New 8% surcharge on profits.

RM: It sounds like this could raise more money from the banks than the current levy. It’s another idea very similar to one of Labour’s pre-election pledges that Osborne has borrowed.

Insurance

Insurance premium tax to be raised to 9.5%. Review to be conducted of regulation of claims management companies.

Productivity plan

New car tax based on emissions from 2017 to create a new roads fund.

Fuel duty

No change.

RM: Tory backbenchers will be breathing a sigh of relief that fuel duty is again frozen but it’s not clear what the reformed vehicle excise duty to pay for new roads will mean for either motorists or the environment.

Employment

Apprenticeship levy.

RM: This looks rather like a tax, despite Osborne’s pre-election claims that tax rises would not be necessary.

Education

Maintenance grants to end from 2016/17 replaced with loans repaid once salary reaches more than £20,000.

RM: This is going to prompt claims that Osborne is disproportionately targeting the young when seeking savings. The Sutton Trust has already said it could tip the balance against low and middle income youngsters going to university.

Northern powerhouse

More devolution for Manchester.

RM: Osborne’s plan to create a northern powerhouse really gets up the nose of Labour MPs who feel this should be their territory. However, Labour has begun to point out where the plans are more style than substance.

Shopping

Local councils to decide on Sunday trading hours.

RM: This was heavily trailed and is opposed by all the Labour leadership candidates as well as trade unions.

Buy to let

Buy-to-let mortgages only able to offset interest against costs at the basic rate of tax, not higher rate, in a plan phased in from April 2017.

RM: This is an interesting move that suggests Osborne is at last acknowledging the ‘risks to stability’ of an overheating housing market.

Inheritance tax

From April 2017 £1m free of inheritance tax.

RM: A key plank of the Tory manifesto, the chancellor is signalling this is a priority by implementing it so early in the parliament – seven years after he first promised it while in opposition.

Saving

Green paper on reform of pensions.

Dividends

New tax-free allowance of £5,000.

RM: This looks like a major shake-up to stop tax avoidance through use of personal service companies.

Investment allowance

Set at £200,000 rather than falling to £25,000 at the end of the year.

Corporation tax

Cut to 19% in 2017 and 18% in 2020.



RM: This may be a concession to business as the government tries to put pressure on companies to raise wages for the lowest earners. But it is a bold move at a time when he is about to slash welfare and the rate is already at the lowest in the G7.

BBC

To pick up the cost of free TV licences for over-75s.

RM: Osborne seemed to promise no more cuts to BBC budget in return for it taking on the extra cost of free TV licences which could explain why the corporation has accepted it.

Welfare: young, families and disabled people

No automatic housing benefit for 18- to 21-year-olds.



Free 30 hours of childcare for three- and four-year-olds.



Freeze working age benefits for four years.



Rents in social housing cut by 1%.



Child tax credits restricted to two children by 2017.

Benefits capped at £20,000 from £26,000 (£23,000 in London).

Cuts to employment and support allowance payments for new claimants deemed capable of “work-related activity”.

RM: Osborne has wriggled out of David Cameron’s promise not to cut benefits for the “most disabled”. The rest of the announcement is as expected given the heavy hints about reforming the tax credit system but is likely to draw intense criticism that Osborne is punishing children who cannot help being born in into large, low income families. Labour will now have to decide whether it can stomach this in pursuit of appearing tough on welfare, along with the lower benefit cap and removal of housing benefit for under-21s.

Personal tax

Personal allowance raised to £11,000 from next year. Higher rate tax threshold raised from £42,385 to £43,000 next year.

RM: The Conservatives have whole-heartedly adopted this policy from the Lib Dems despite criticism that it no longer helps the lowest paid because they are now already exempt from taxation. It is some of the best paid in the workforce around the higher rate threshold who will get the biggest benefit.

National living wage

Set at £9 by 2020.

RM: This is the rabbit from the hat. After giving businesses a cut in corporation tax and lower national insurance contributions for small firms, they will be forced to pay their workers who are over 25 at least £7.20 an hour, rising to £9, by 2020. Osborne said 2.5m of the lowest paid will get a pay rise.

Employers’ tax

£3,000 off national insurance contributions for employers.

Defence

2% of national income to be spent on defence.