The 2014 Budget came amidst some promising economic news. Economic growth is the strongest in the European Union and one of the most impressive in the world. Inflation is down to 1.7% – the lowest level in five years. UK income inequality is at its lowest level since 1986. In Bristol West, unemployment was down 11.4% at the end of 2013 compared to May 2010. Nationally there are now 1.26 million more people in work than when the Coalition Government took office. This is all good news, but there is obviously still a way to go.
A number of the core components of this year’s Budget had a very distinctive Lib Dem feel about them. Listening to the Chancellor’s speech there were some obvious yellow lines that would not have been present without the Lib Dems in government.
At last year’s Budget the Lib Dems were able to deliver on our manifesto pledge to increase the personal Income Tax allowance to £10,000 – this will start on 6 April 2014. That was a great victory, as I acknowledged at the time when I was the party’s Treasury Spokesman. The headline for this year’s Budget is yet another increase in the personal tax allowance secured by the Lib Dems, raising it to £10,500 from April 2015. This is a huge benefit to millions of low paid and part time workers.
So far the Lib Dem rise in personal Income Tax allowance has seen 2.7 million people removed from Income Tax completely, and another 24.5 million people receiving a cut in their tax bill. In Bristol alone this is 17,570 people removed from Income Tax and 173,100 benefitting from a tax cut. These impressive numbers are set to increase again in April 2015, with the typical basic rate taxpayer being £800 better off thanks to the Lib Dems delivering on this key election promise.
Apprenticeships are another key policy that we have been pushing hard on, and the Budget delivered more good news. In both 2014-15 and 2015-16, £85 million will be provided to extend the Apprenticeship Grants for Employers scheme (AGE), funding over 100,000 additional incentive payments for employers who take on young apprentices. There will also be £20 million of funding to support employer investment at the top end of apprenticeships degree and masters level apprenticeships.
While there is a high demand from young people to do an apprenticeship, not enough employers are coming forward and offering them. This extra funding will encourage more employers to offer apprenticeship places to help meet that demand from young people. These places are vitally important to our continued economic recovery, with the National Audit Office estimating that for every £1 spent on apprenticeships the wider economy benefits by £18. I am proud we have been able to create over 1.6 million new apprenticeships and am delighted that we are continuing our drive to offer the best opportunities to young people. I have made many visits to Bristol businesses that are expanding the number of apprentices.
There is good news on pensions, too, with radical changes announced that will offer more options to people over how they use their pension savings. My Lib Dem colleague Steve Webb, the Pensions Minister, has worked tirelessly to ensure that security in retirement remains a central part of this government’s pension reforms.
The new changes being brought in provide greater choice for those retiring this year, allowing people aged 55 or over with defined contribution pension savings to withdraw these savings (subject to their marginal tax rate). To go along with the increased choice people have, the Government is ensuring that everyone approaching retirement receives free and impartial face-to-face guidance. Thanks to the Lib Dems in government, pensioners now have more flexibility than ever over their own finances.
As you may be aware, in the 2013 Budget we announced the Help to Buy Equity Loan scheme in order to provide £3.7 billion of investment in England and to support up to 74,000 home buyers of new build properties by 2015-16. In the first 10 months of the scheme, over 25,000 people reserved a new build home and 89% of these are first-time buyers. Every home built under the scheme is a new-build home, so not only is this helping first-time buyers afford to get on a foot on the property ladder, but it is providing an effective catalyst for house building right across the country. The scheme will undoubtedly help stimulate new house building in Bristol, for instance at Wapping Wharf, which I have visited twice in the last six months to see this large site take shape.
There was also good news for drivers and other road users (on top of the freeze in fuel duty) in the form of extra funds for pothole repairs. Over £180 million will be divided between councils to help repair roads, with Bristol receiving around £340,000.
The Chancellor also announced that all the regulatory hurdles had been cleared for tax relief to be given to the film, television and computer games industries. This follows his confirmation to me last year that relief would be given to the makers of “high end” tv drama, childrens tv and animation. This will be a huge boost to Bristol film makers such as world famous Aardman Animations as well as the thousands of people who work in the creative industries cluster that is developing between Bristol and Cardiff.
I am pleased to see Lib Dems, as part of the Coalition, delivering a whole host of positive policies to further boost the economic recovery we are seeing today. But this Budget is as much about what we have been able to block as it is about what we have been able to announce. The Conservatives would have slashed welfare spending, for instance by removing housing benefit from the under 25s. We did not allow this to happen. We understand that welfare spending has to be brought under control and we are doing this through the welfare cap, which will ensure that money is spent efficiently, but we are also insisting that this is not done at the expense of the most vulnerable in our society.
I am committed to delivering a stronger economy, set on a path of sustainable growth. I also want to balance the nation’s books so that we only spend what we raise in taxes. But I am determined that sound finances will not be at the expense of the poor and that the recovery gives everyone a chance to make their way in life.