George Osborne pledged to share the benefits of economic recovery with pensioners and savers today as he delivered his penultimate Budget before the general election.
The Chancellor unveiled radical reforms to tax rules on retirement pots and new-style flexibile ISAs where people can save up to £15,000 without the Treasury taking a cut, and he pushed up the personal income tax allowance to £10,500 next year.
Hailing the success of the coalition’s austerity programme, Mr Osborne said UK plc would grow by a better than forecast 2.7% in 2014 and the government would be back in surplus by 2018-19.
He also offered some crowd-pleasing items including scrapping the duty escalator on wine and spirits, a penny off a pint of beer, and freezing the “carbon floor” price in a bid to take £15 off consumers’ energy bills.
“The message from this Budget is: you have earned it; you have saved it; and this government is on your side, whether you’re on a low or middle income, whether you’re saving for your home, for your family or for your retirement,” Mr Osborne told MPs.
“The forecasts I’ve presented show: growth up; jobs up; and the deficit down.
“With the help of the British people we’re turning our country around. We’re building a resilient economy.
“This is a Budget for the makers, the doers, and the savers.”
But Labour leader Ed Miliband responded: “The Chancellor spoke for nearly an hour but he did not mention one central fact: the working people of Britain are worse off under the Tories.”
There was disappointment for Tories who have been urging an increase in the higher tax rate threshold, after millions more people were dragged into paying 40p.
The level at which the rate kicks in will rise below inflation next month to £41,865 – and then to £42,285 in 2015-16.
The uplift in the personal allowance was in line with expectations, despite speculation that the Chancellor could opt to go further.
Mr Osborne said duty on bingo halls would be cut by more than anticipated – from 20p to 10p. But fixed odds betting terminals will be hit with 25% rates in recognition of their addictiveness to gamblers.
Duty on Scotch Whisky and cider will be frozen, and inheritance tax will be waived when members of the emergency services die in the line of duty.
Investment allowances for small and medium sized businesses are being doubled to £500,000, one of a host of breaks for exporters and manufacturers.
But Mr Osborne targeted most of his big measures at savers pensioners, with fundamental reforms of rules.