No surprises, no rabbits, no interest… Budget 2015
50 days to go until the Election and we have the final Budget of the Coalition. For all the speculation of whether the Chancellor would stand by his ‘no gimmicks, no giveaways’ stance, a complete absence of rabbits means that those hoping to make money from copyrights of rabbit photographs will not benefit from this Budget. However, many on the lowest incomes, we’re told, will. So close to the election this had to be a Budget for everyone, which ultimately meant it was a little boring, aside from George Osborne’s superb joke about Ed Miliband’s fridges.
As ever, we knew much of what was coming in advance: reform to pensions annuities, which it has been noted by Robert Peston will raise revenue for the Government in taxation; cutting the life-time allowance for pensioners from £1.25m to £1m, which has the added bonus for the Conservatives of cutting the revenue that Labour would use to fund its tuition fees cut by around £600m; criminal sanctions for tax avoiders, and additional funding for child mental health services.
Tomorrow we’ll hear from the Chief Secretary, Danny Alexander, on what the Liberal Democrats’ alternative budget would entail – an unexpected treat for those who love economic policy announcements. It will be interesting to see what the Lib Dems claim credit for aside from the increase in personal allowance and mental health funding.
Of course, there was much to appease the Tory core vote – including funds to repair church and cathedral roofs, more money for veterans’ services, another increase in the personal allowance, and help for those wanting to save through the new tax-free Personal Savings Allowance. Helping young people to get closer to owning their own home will be helped by the Help to Buy ISA, although the insistence on keeping interest rates so low still means that young people will struggle to save. Not to mention that little in this Budget will help to lower house prices to make even the Help to Buy ISA worthwhile: the new ISA appears to essentially be an account where you put in a maximum of £200 per month and receive no interest, only receiving a bonus based on the first £12,000 when you buy a home that is worth up to £450,000. As you would expect, the Government’s fact sheet answers few questions worth answering – what happens if you buy a more expensive home? What happens when you don’t buy a home – has your money just sat there doing nothing while the rest of your savings don’t increase with interest anyway?
Most significantly for the Chancellor, and for Labour, though is that the percentage of GDP spent on public services will not drop to 1930s levels, as the Opposition has so loudly claimed in recent months. In fact by 2019/20 it will be 0.1% above the 1999/2000 level. This means that implied public service spending will be around £28.5 billion higher. For highlighting this, the Chancellor will be buying the OCR a lot of drinks this year. With departmental spending also predicted to rise in nominal terms by 2019/20, are we really looking at the light at the end of the austerity tunnel?