Budget 2013 - Key Points

George Osborne In Thought

Deficit

• The deficit has been cut by a third, George Osborne says. The deficit has fallen from 11.2% of GDP in 2009-10 to a forecast 7.4% this year, the chancellor says.

• It is expected to fall to 6.8% next year, 5.9% in 2014/15, then 5% (2015-16), 3.4% (2016-17) and 2.2% (2017-18).

The deficit, or budget deficit, is the difference between the money the government takes in each year and the money it spends that year. It can be measured in cash terms or as a percentage of national output (GDP).

The structural deficit is the part of the deficit that would remain even if the economy were operating at its "full potential" (stripping out changes to tax revenue and welfare benefits during an economic cycle).

Debt

• Borrowing is down £45bn since the government came to office, he says. Borrowing is £114bn this year and is predicted to fall from £108bn next year to £97bn in 2014-15, then £87bn, £61bn and £42bn in the following years. These figures were predicted in December's autumn statement to be £108bn this year, £99bn next year, dropping to £31bn in 2017-18. But the OBR confirms the government is on course to meet its fiscal mandate one year early, Osborne says.

• Public sector net debt will be 75.9% of GDP this year – then 79.2%, 82.6%, 85.1%, and 85.6% in the following years, before falling to 84.8% in 2017-18. These figures are all higher than those given in December's autumn statement. (The figures then were: 74.7% this year, then 76.8% next year, then 79%, 79.9%, falling to 79.2% in 2016-17 and 77.3% in 2017-18.)

Government borrowing, or the public sector net borrowing requirement, is the money the government has to raise in the financial markets to cover the deficit for that year and balance the books for that year.

Growth

• GDP growth is expected to be 0.6% this year, the Office for Budget Responsibility now predicts. Its previous prediction – made in Osborne's autumn statement in December – was 1.2%. But the OBR does still predict the UK will avoid a second quarter of negative growth and a triple-dip recession.

• The OBR predicts GDP growth in 2014 of 1.8% (down from 2%), then 2.3% in 2015 (same as previous prediction), 2.7% in 2016 (same) and 2.8% in 2017 (same).

Tax

• The personal allowance will be raised to £10,000 from next year, not from 2015 as previously planned.

• Corporation tax will be reduced by a 1% to 20% in April 2015 to show "Britain is open for business". But the bank levy rate will increase to 0.142% to offset this reduction.

• The capital gains tax holiday is to be extended.

• New measures on tax avoidance and evasion will bring in £3bn in unpaid taxes.

National insurance

• A new employment allowance will take the first £2,000 off the employer national insurance bill of every company in the country. Around 450,000 small businesses – one third of all employers – will pay no employer NI at all.

Childcare

• Tax-free childcare vouchers worth £1,200 per child will be introduced, and there will be increased support for families with children on universal credit.

Pensions

• The flat-rate pension worth £144 a week will be brought forward to 2016.

Bank of England

• The Bank of England monetary policy committee is given an updated remit, but it keeps its 2% inflation target. Its remit will be updated to allow it to use "unconventional monetary instruments" to support the economy while keeping inflation stable.

Whitehall

• Government departments' budgets are to be cut by 1% after an £11bn underspend this year, although health and schools are exempt. Money saved will be put into infrastructure projects.

• Osborne wants £11.5bn of savings in spending review for 2015-16, up from a previously announced £10bn.

Infrastructure

• Infrastructure plans will be boosted by £3bn a year from 2015-16, a total of £15bn over the next decade.

Public sector

• The public sector pay cap of 1% will be extended by one year to 2015-16.

• The military will receive their full recommended increase in the "X-Factor" payment in May and will be exempted from changes to progression pay.

Environment

• The government will take forward two major carbon capture and storage projects and offer new tax incentives for manufacture of ultra low emission
vehicles.

• There will be a "generous" new tax regime to promote early investment in shale gas. "Shale gas is part of the future," the chancellor said of the controversial fuel.

• The planned fuel duty rise expected this September will be scrapped.

Europe

• The OBR says the European budget deal negotiated by David Cameron saved the UK £3.5bn.

Equitable Life

• Help for Equitable Life policyholders will be extended to those who bought with-profits annuities between 1992, with payments of £5,000 and an extra £5,000 for those on the lowest incomes.

Social care

• The cap on social care costs will come in in 2017 and will protect savings above £72,000. The threshold for means-tested help will be raised from £23,000 to £118,000.

Mortgages

• There will be a new help-to-buy scheme for those struggling to find mortgage deposits. This will include £3.5bn for shared equity loans and a government interest-free loan worth 20% of the value of a newly-built home.

• There will be a new mortgage guarantee, sufficient for £130bn of loans, to help people who cannot afford a big deposit.

Alcohol

• The planned 3p rise in beer duty has been scrapped and replaced by a 1p cut in duty on a pint of beer.

• The beer duty escalator has been scrapped, but planned rises for all other alcohol duties will be maintained.

Unemployment

• Quarterly unemployment figures were also announced today: the jobless total increased for the first time in a year, jumping 7,000 to 2.52 million. All the increase was caused by more 18- to 24-year-olds becoming unemployed. The total is still 152,000 lower than a year ago. The unemployment rate remained at 7.8%, compared with 8.3% a year ago.

• There were 993,000 unemployed 16- to 24-year-olds in the latest quarter to January (21.2%), up by 48,000 from the three months to October. The rise among 18- to 24-year-olds was 53,000. The number of unemployed women increased by 5,000.

• But the number of people claiming jobseeker’s allowance dropped in February by 1,500 to 1.54 million – probably due to a tougher stance by jobcentres. And the number of people in employment increased by 131,000 to 29.73 million from November to January, and is now 590,000 higher than a year ago. Economists have struggled to explain this apparent anomaly.

Powered by Guardian.co.ukThis article was written by Paul Owen, for guardian.co.uk on Wednesday 20th March 2013 13.37 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

images: © DFID - UK Department for International Development, © Foreign and Commonwealth Office

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