Budget 2014: everything you need to know

Pension annuities, growth forecasts, cider duty. It's all here...

by Emma Haslett
Last Updated: 04 Jun 2014

The annual round of schoolboy jeering that is the chancellor’s Budget announcement has become rather dull: these days, we find out most of the speech’s contents in the days leading up to it. By the time the chancellor takes to the dispatch box, we’re well versed in what its contents are going to be. This year, though, there were a few surprises: here’s MT’s round-up

THE HEADLINERS

Pensions: Osborne’s measures to help savers and pensioners were, without a doubt, his pièce de résistance. In a radical change to how pensions work, he scrapped compulsory annuities, giving pensioners far more control over what they do with their pension pot, and reduced the 55% tax charged to those who want to take large amounts out of their pension when they retire. For those who want to, for instance, invest their money in property or equities, it’s great news - but there will always be a certain number of people who blow all their retirement cash in one go. It’s unlikely to help with the property bubble, let’s put it that way.
Markets haven't taken it well: Legal & General shares were down 4% after the speech, Aviva's were down 7%, Aviva were down 4% and the Prudential's fell 3%.

Pensioner bonds: The chancellor also announced a special ‘pensioner bond’, a one-year bond at 2.8% or a three-year bond at 4% (MT supposes 10 years is a touch optimistic), issued by National Savings and Investments and open to anyone aged 65 or more.

ISAs: It isn’t just retirees who got help - ISA savers also got something extra. Not only did the chancellor increase the annual ISA limit to £15,000, but he also merged cash with stocks and shares ISAs.

THE BUSINESS PLEASERS

Exports: the chancellor will double the amount of finance available to exporters to £3bn, and cut interest rates it charges to export finance borrowers, which will (he reckons) make our export finance the most competitive in Europe. Air Passenger Duty will also be changed to 'end the crazy system' where you pay less tax travelling to Hawaii than you do to India or China (who knew?). 'From next year, all long haul flights will carry the same, lower, band B tax rates that you now pay to fly to the United States,' said Osborne. Oh - and tax on private jets is being increased.

Planning: some might argue there's a property bubble inflating - but not Osborne. Although housebuilding is 'up 23%' (since when? He didn't say), he wants to extend the much-maligned Help to Buy scheme until 2020 'so we get 120,000 new homes built'.

Big data: A surprise inclusion was the announcement of the 'Alan Turing Institute', which will 'lead the way in the use of big data an algorithm research'.

Osborne courts Glasgow manufacturers in 2013

R&D: After HSBC's warning yesterday on the lack of research and development being done by British businesses, the chancellor said he would raise the rate of R&D tax credit for loss-making small firms from 11% to 14.5%. The annual investment allowance will also double from next month, to £500,000, and will be extended until the end of 2015. '99.8% of businesses will get a 100% investment allowance,' he said, adding pointedly that 'it costs £2bn in the short term'. Take that, Labour

Energy: Osborne repeated that £7bn package to cut energy bills the government announced last year, but added that Carbon Price Support will be capped at £18 per ton of CO2 from 2016-17. Not  one for, say, a smallish retailer - but mid-sized manufacturers could save £500,000, he reckoned.

Fuel: Way back when Gordon Brown was still in situ, he announced a rise in fuel duty. Since then, it's been delayed every year. This year was no different: 'I can confirm that the fuel duty rise planned for September will not take place,' said Osborne. There's a surprise.

THE VOTE-WINNERS

Gambling: 'My Honourable Friend for Harlow has turned his energy and talent into a vigorous campaign to cut bingo duty… to 15%,' said the chancellor. 'I can go further. Bingo duty will be halved to 10%.' If that's not trying to court the popular vote, we don't know what is. Oh wait…

Beer: Duty cut by one whole penny. Now a pint in London will be £999.99. And duty on cider was frozen, too.

THE GROWTH FIGURES

No wonder Osborne looked pleased with himself - he said the latest forecast by the Office of Budget Responsibility showed:

1. That growth this year will be 2.7%, up from a prediction of 1.8% for 2014 this time last year - ‘the biggest upward revision to growth between Budgets for at least 30 years’
2. The claimant count has fallen 24% in the last year, and the economy will create 1.5 million more jobs over the next five years
3. The deficit will fall to 0.8% by 2017-18, dropping to 6.6% next year and 5.5% in 2016. By 2019, ‘they are forecasting no deficit at all - instead, at plus 0.2%, a small deficit’. He then stuck his tongue out and thumbed his nose at Ed Balls
4. This year, Britain will borrow £108bn. Next year it’ll be £95bn, in 2015 it’ll be £75bn, and by 2018-19 there will be a surplus of ‘almost £5bn’
5. As a proportion of GDP, though, it’s going to rise: this year it’s 74.5%, next year it’ll be 77.3% and in 2015-16 it’ll be 78.7%. By 2018-19 it’ll be 74.2%. Still incredibly high.

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