Chancellor announces 'Budget for enduring growth'

23 March 2011 15:52:22

George Osborne's latest Budget includes a cut to fuel duty.

The chancellor of the exchequer today (March 23rd) unveiled his Budget for the coming year, promising to help families with the cost of living and "put fuel into the tank of the British economy". George Osborne outlined a number of measures that should be welcomed by households and insisted that, unlike last year's emergency Budget, which was designed to rescue the nation's finances, the latest financial plan is not about raising extra taxes and will be fiscally neutral. Here, CompareandSave.com takes a look at some of the key announcements that may be of interest to the British public.

Economy
Mr Osborne was forced to downgrade his growth forecasts for this year from 2.1% to just 1.7%, a situation that he said the Office for Budget Responsibility attributes to a weaker-than-expected final quarter of last year, the rise in world commodity prices and the UK's higher-than-expected inflation. The chancellor noted that the European Commission expects the UK's growth to be stronger than Spain, Italy, France and the averages for both the eurozone and the EU over the coming year.

Taxes
One of the main Budget announcements was that a consultation will be held on merging income tax and national insurance in a bid to simplify the system. Mr Osborne admitted that such a task would take "a number of years" to complete, but argued that the current system is costly and complex for employers, as well as costing the taxpayer as a result of the extra burden placed on HM Revenue & Customs.

The 50p tax rate on high earners will remain for the time being, but will only be a temporary measure. Meanwhile, the personal tax allowance will increase by a further £630 to £8,105 from April 2012, which Mr Osborne said equated to a real increase of £48 extra per year, or £126 in cash terms.

First-time buyers
People trying to get on to the property ladder for the first time may benefit from a new-build shared equity scheme for first-time buyers, called First Buy, which will be funded by the proceeds of this year's bank levy and should help some 10,000 families. The chancellor also announced that temporary changes to the Support for Mortgage Interest scheme, which were due to end next January, will be extended for another year, reducing mortgage arrears for about 100,000 unemployed homeowners.

Pensions
Mr Osborne confirmed plans for a £140 per week flat-rate state pension, as opposed to the existing system where the full state pension is £97.65 and can be topped up through the means-tested pensions credit. He claimed that the system "would be simple; it would be based on contributions; it would be a flat-rate, so people know what to expect; and it would cost no more than the current system". The measure will take years to come into effect and will not apply to existing pensioners, but should ultimately help people to work out how much they need to save for retirement.

Duties
This year's Budget did not include any further increases in alcohol duty, while the tobacco tax rate will rise by 2% above inflation. The planned increase in air passenger duty has been delayed until next year to make allowance for last year's "hefty" duty rise and the cost pressures currently being experienced by families.

Fuel
Drivers are likely to welcome the chancellor's announcement on fuel, which will be subject to a cut in duty of 1p per litre as of 18:00 GMT tonight. Mr Osborne admitted that the price of petrol has become a "huge burden" on families and said that next week's planned inflation rise on duty will be delayed until next year. The fuel duty escalator put in place by the previous government will be scrapped for the rest of this Parliament and a new Fair Fuel Stabiliser will be introduced to offset rising petrol prices.

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