Yesterday the Chancellor delivered the 2014 Budget statement.
We heard great news on growth, with a confirmation that the economy grew by 1.9% last year. Forecasts are now on the up, too – the economy is expected to grow by 2.7% this year and further strong growth is predicted.
The deficit is down by a third, and will be halved by next year. A falling deficit means that we’ve saved £2,000 per year per family on what would have been debt interest payments to creditors. The hard decisions we’re taking have seen mortgage interest rates and interest rates for businesses remain low.
I welcomed the announcement, which was a recommitment to our long-term economic plan, which has brought us back to, and will help to cement, recovery. It is only by sticking to this plan that we can ensure growth, stability and jobs for people here in Amber Valley.
Income tax and wages
The Conservative-led Government will raise the Personal Allowance in Income Tax to £10,000 by 6th April of this year. That will mean that 33,000 of my constituents will be £700 per year better off, and 3,000 will have been taken out of the tax altogether.
That’s great news, but as those who signed my petition to raise the Personal Allowance in Income Tax will know, I believe we should go further, which is why I welcome the announcement that we will raise it to £10,500 by next April. This will mean that the tax cut will be £800, up £100, by next April.
Though not a budget measure, it has been announced that the National Minimum Wage will increase to £6.50 per hour from October, an increase of 19p or 3%, above the 1.9% rate of inflation.
Combined together, income tax cuts and real wage growth that we expect to see will have a positive impact on hard-working people’s take-home pay, so I’m really pleased about the measures we’re seeing.
Fuel duty
Once again, we’ve cancelled Labour’s planned fuel duty rise, which means that by September, the price of petrol per litre will be 20p cheaper than it would have been under a Labour-led administration.
Support for businesses
Here in Amber Valley, we’ve plenty of good manufacturing and exporting businesses so I’m really glad of some of the changes that were announced yesterday. Support for these businesses will mean orders on the books and more jobs for local people.
Manufacturing businesses will see the capping of Carbon Price Support rates, saving mid-sized manufacturers £50,000 per year, and save the average family £15 per year on their energy bills.
The Chancellor announced the doubling of lending to exporting businesses to £3bn, and he doubled the Annual Investment Allowance to £500,000 (which will run until the end of 2015).
We’ve also reformed Air Passenger Duty, with the two highest rates (C&D) set to be abolished. Long-haul flights will be in the same lower band B as flights to the US. This is great news for East Midlands Airport, a good local employer.
Pensions reform
From 2015, we’ll reform defined contribution pensions by ensuring that nobody will have to buy an annuity if they don’t want one, while ensuring that those that do can shop around and buy one. We’ll also scrap the punitive tax rate if you try to take a lump sum, meaning should you opt to take more than the 25% tax-free amount, you’ll be taxed at normal marginal rates as opposed to the current 55% rate. A new legal guarantee will see that anybody retiring on a defined contribution pension will be offered free, impartial advice on how to get the best from the choices they’ll now have.
In the mean time, from 27th March, we will: cut the minimum income requirement for a flexible drawdown from £20,000 to £12,000; raise the capped limit to 150%; increase the size of a single pension pot that can be taken as a lump sum to £10,000; and almost double the size of total pensions savings that can be taken to £30,000.
As a member of the Work and Pensions Committee, I’ve been pressing for changes to end the scandal of poor annuity deals, so I’m particularly pleased about these announcements.
Help for savers
We’re increasing the limit of ISAs to £15,000 a year and merging cash and stock ISAs into a new single ISA. We’re also scrapping the 10p rate on savings income and zero-rating it up to £5,000, meaning 1.5 million low-income savers will benefit.
The amount savers can invest in Premium Bonds will increase, too – first to £40,000 on 1st June 2014, then to £50,000 in 2015/16.
Pensioner bonds will be introduced in January 2015, which will offer better returns than any equivalent on the market today.
Beer duty
For the second year running, we’ve managed to take a penny off the pint of beer. We’ve also frozen wine, cider and spirits duty. This is great news for local pubs and beer drinkers, and has been something I’ve been campaigning on since I was elected.
Help to Buy
The Chancellor announced that the Help to Buy scheme will be extended until 2020, which will continue to help those trying to get on the property ladder through Government-backed mortgages with lower deposits.