George Osborne delivered what he termed a Budget for an “aspiration nation”, against a backdrop of economic gloom as growth forecasts were slashed and official forecasters warned that deficit reduction had “stalled”.
Eye-catching giveaways included a penny off the price of a pint of beer and the scrapping of September’s planned 3p rise in fuel duty, but the Chancellor put his strongest emphasis on measures to encourage jobs, home-ownership and small businesses.
Labour leader Ed Miliband attacked Mr Osborne as a “downgraded Chancellor” offering “more of the same higher borrowing, lower growth”.
But the Chancellor insisted the coalition Government’s “tough decisions” had cut the deficit by one-third and helped create 1.25 million new jobs in the private sector since the general election, while keeping interest rates at record lows.
He brought a planned increase in income tax thresholds to £10,000 forward to 2014, which Tory aides said meant that everyone who paid the 10p tax rate under Labour will next year be taken out of the tax altogether.
Mr Osborne acknowledged that recovery was “taking longer than anyone hoped”, but rejected Labour calls for a change in the course of economic policy, telling MPs: “We must hold to the right track.”
Outlining a “fiscally neutral” package aimed squarely at the aspirational, he told people who want to buy their own home, start businesses or pay for childcare so they can go out and work: “We are on your side.”
Among the key policies designed to support aspiration was a new Employment Allowance worth £2,000 to every company in the country to encourage them to take on staff, which means 450,000 small businesses will no longer have to pay employers’ National Insurance.
Mr Osborne also unveiled a Help to Buy programme for would-be home-owners which will offer shared equity loans for new-build homes as well as Government-backed mortgage guarantees to help people struggling to raise a deposit on property.
To the delight of many Conservative backbenchers, Mr Osborne abolished the beer tax escalator which would have added 3p to the price of a pint and instead trimmed a penny off beer duty from Sunday. However, duties on other alcohols will rise as expected.
He also ditched the planned 3p rise in fuel duty, telling MPs that petrol will now be 13p a litre cheaper than if he had not acted to freeze taxes over the past two years the equivalent of £7 off the cost of filling the tank of a Vauxhall Astra.
For extensive coverage of the Budget, with local analysis and reaction, see Thursday’s Courier or try our digital edition.