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Economics

Published on March 26th, 2013 | by Anna Welsh
Image © The Prime Minister's Office

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The Budget 2013: aspiration nation

‘This is a budget for people who aspire to work hard and get on’, said George Osborne introducing his fourth budget to the packed House of Commons and the Great British public. The single sentence outlines the firm, concrete Conservative belief that if you want something, you need to work hard for it; nothing will be given for nothing.

Britain watched with much anxiety as Mr Osborne unveiled a much anticipated (and, for some, predictable) budget. As expected, Britain’s economy is still suffering heavily, with just a 0.6% growth forecast for 2013, half of what was originally forecast in the autumn statement last year. Despite this downgrade, Mr Osborne still remains affirmative that Britain’s economy is healing. If this prediction is correct, it will prevent Britain from entering the dreaded triple-dip recession.

As the Conservatives often state, Britain is in the worst economic situation that it has ever had to face, which is a reason why this budget is extremely crucial. It was known before the budget that increasing cuts need to be made as borrowing for this year is predicted at £121 billion meaning no decrease from last year. However, it is forecast that by 2014, this will decrease by £1 billion.

Below is a summary of the main points that have emerged from Osborne’s announcements.

Good News

  • The Office for Budget Responsibility (OBR) has predicted that this year, Britain will see the end of the long, gloomy recession. Britain’s economic growth is expected to rise slowly, peaking at 2.8% in 2017.
  • Mr Osborne has delivered good information for drivers, with the announcement that the fuel duty rise, which has previously caused much anger and uproar, will not go ahead as planned. Furthermore, people who use low-emission cars will benefit from tax incentives.
  • The chancellor has raised the personal tax allowance from just over £8,000 to £10,000 from 2014, meaning that more people on low income jobs will see less taken by the tax man and more in their banks. This will be in place a year earlier than planned.
  • Lovers of beer were also in for a surprise as instead of the planned rise on beer duty by 3p in April, it will be cut by 1p.
  • 600,000 jobs are expected to be created this year.
  • No cuts to the National Health Service protecting jobs and patients.
  • A planned £15 billion will be spent on the railways and on the roads for service improvements, before the year 2020.
  • For parents who are spending money on childcare, by 2015 there will be a 20% tax relief on every child for up to £6,000.
  • From 2014, £130 billion will be used for mortgages lending.

Bad News

  • Even though the beer duty has decreased, wine, spirits and cider are still subject to duty tax and will rise with inflation.
  • No duty relief for smokers as the duty remains unchanged and will rise with inflation.
  • The pay rise for public sector workers will be capped at 1%, however, this will not affect the military.
  • Each government department will expect to see a 1% cut in two years’ time.
  • Britain’s debt has not fallen as quickly as expected.
  • Looking to the future, if the Conservatives win in 2015, more austerity is foreseen.

As is now a familiar routine, the leader of the opposition, Ed Milliband, expressed his view on Mr Osborne’s economic cuts and, as usual, did not mince his words stating that Mr Osborne is not the right chancellor for this moment in time. Mr Milliband also resurrected the fact that Britain has now lost its triple A rating.

This budget seems significantly different from last year, with less unrealistic visions. Who can remember the caravan, granny and pasty tax announced that time?

What is George Osborne’s ultimate message from this speech? Stick with us; we are fixing the economy, slowly but surely. This budget appears to be headed in the right direction – for once, we have faced a U-turn the government should be proud of.

Please note that all blog posts do not represent the views of Catch21 but only of the individual writers. We also aim to be factually accurate and balanced across all content taken as a whole.

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About the Author

Anna Welsh

Anna Welsh is a 22 year old student in her last year studying Occupational Therapy at the University of Northampton. She is a member of the Conservative Party. In her spare time she enjoys learning the guitar. Anna is interested in politics and in particular the UK economy, health, culture and the media.



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