Sunday, 30 March 2014

Liberal Democrat Budget Update

This recovery wouldn’t be happening without the Liberal Democrats in Government.  Forming the coalition has provided the country with the stable Government it needs to sort out Labour’s financial mess.  Liberal Democrat policies are at the heart of the government’s economic plan that is delivering jobs and growth.

While there is still a lot more to do, we have ensured that growth is back, employment is rising, unemployment is falling and inflation is under control.

The Liberal Democrats are committed to building a stronger economy and a fairer society.   This Budget boosts fairness by:

  • The Liberal Democrats have fought for rises in the amount of money that people can earn before paying income tax right from the start of the coalition.  We have already delivered an increase to £10,000 by April this year.  That gives millions of tax payers a £700 tax cut.  Nick Clegg set our key priority ahead of this Budget on the Andrew Marr show in November  to go further to increase the tax threshold to £10,500. We’ve been successful in our campaign and the personal tax allowance will rise to £10,500 in April 2015 which will give millions of tax payers another £100 tax cut taking the total tax cut in 2015 to £800.
  • Giving people control over the money they have saved in their pension ‘pots’.  We are removing the need for people to be tied into buying annuities.  They will have access to, and control over, their money.  This work has been pioneered by Lib Dem Pensions Minister Steve Webb.  It’s the biggest shake up in pensions in almost 100 years.
  • The Budget announces that from April 2015, the tax rules for how people access their defined contribution pension savings will be radically simplified to allow individuals aged 55 or over with defined contribution pension savings to withdraw their savings however they wish, subject to their marginal rate of income tax.  As a transitional step, from 27 March 2014:

- The minimum income requirement for accessing your pension savings flexibly will reduce from £20,000 to £12,000.
- The capped drawdown limit will increase from 120% of an equivalent annuity to 150%.
- The total pension wealth that can be taken as lump sums will increase from £18,000 to £30,000.
- The size of a pension pot that can be taken as a lump sum regardless of total pension wealth will increase from £2,000 to £10,000.
- The number of small personal pension pots that can be taken as lump sums will increase from two to three.

  • We’ve reduced tax on savings for people on low incomes and increased the levels and flexibility on ISAs.
  • Frozen duty on spirits to help the Scotch Whisky industry. Cut Beer duty by 1p.  Frozen duty on cider.  Abolished the above inflation escalator on wine. 
  • Cut Bingo duty from 20% to 10%.
  • Launched more measures to clamp down on tax avoidance, including new measures to force tax avoiders to pay their taxes up front just like everyone else.
  • Doubled the number of £1m prizes on premium bonds and raised the holding limit from £30,000 to £40,000 with plans to go to £50,000.

To support growth, the Government has already decided to:

  • Cut corporation tax from 20% by April 2015 from 28% in 2010.
  • Introduce an employment allowance of £2,000 for every business from April 2014.

The Budget 2014 builds on this by:

  • Doubling the amount of money that companies can set off against tax for investing in new equipment to £500,000.
  • Increasing the level of financial support for exporters to the most competitive in Europe.
  • Reducing business energy costs by freezing the Carbon Price Support rate and giving special help to companies who are ‘energy intensive’, whilst maintaining  full support for renewable investment.
  • Extending the ‘Help to Buy’ scheme, setting up a fund of £500 Million to help SMEs in the house building sector and building a ‘Garden City’ at Ebbsfleet.

The coalition’s priority remains fixing the economy and clearing up the mess left by Labour. This budget shows that our economic plan is working and is delivering jobs and growth.

The independent OBR has:

  • Revised up its growth forecast up to 2.7% for 2014.
  • Revised up its employment forecast to 31.4m people being in work – a record number.
  • Confirmed its belief that inflation will stay at or near the forecast level of 2% for the rest of the forecast period.