The Chancellor of the Exchequer, George Osborne, began his first ever Budget speech at 12.30pm on the 22nd June, and made some radical announcements.
These inlude: VAT is to go up by 2.5%, housing benefit will be radically reformed and benefit reduced, public sector pay is to be frozen, the income tax threshold is to rise, capital spending (on infrastructure and large national projects) to be ring-fenced.
Here are the key points:
- Osborne says the Government aims to balance the books by the end of the parliament.
- A Treasury unit which exists to prepare for joining the euro is to be abolished.
- Current Government spending will rise to £711bn in 2015/16. This is largely due to debt interest payments.
- The civil list - spending on the Royal family and associated costs - will remain static at £7.9m a year.
- Public sector pay freeze for two years, but only for those on incomes over £21,000. The 1.7 million lowest paid will get a flat £250 pay rise.
- Public service pensions to rise in line with consumer prices as opposed to the previous link with retail prices - this saves saving over £6bn a year by 2015.
- Child benefit: tol be frozen for the next three years.
- Housing benefit: limited to a max. £400 per week on a four bed property. Lower maximums for smaller homes.
- Corporation tax: cut by 1% per year for four years from 2011. This reduces it to 24%. Employers' National Insurance threshold will increase.
- Small companies' corporation tax set to be cut to 20% in 2011.
- VAT: to rise from 17.5% to 20%.
- Fuel duty: No increase on fuel duty.
- Council Tax: to be frozen from next April.
- Capital investment ring-fenced.
- Capital gains: Top rate of 28% (up from 18%) for higher rate tax payers. Stays at 18% for ordinary tax payers. For entrepreneurs, 10% CGT on first £5million made.
- Income tax: tax-free threshold to increase by £1,000. 880,000 lowest tax payers taken out of the tax system. 23 million tax payers will benefit.
- State pension: To be linked to earnings. 'Triple lock' will guarantee an increase in earnings, prices or 2.5%, whichever is the greater
