The main points of chancellor George Osborne’s Budget
Departmental expenditure limits will be reduced by “the equivalent to a 1% reduction for most departments” next year and the year after. Local government allocations for 2013-14 will not change from levels previously set out.
Departmental budgets for 2015-16 will be set out on 26 June. The level of savings required for this year rises from £10bn to £11.5bn.
Key quote: “The schools and health budgets will remain protected – because our promise to our NHS is a promise we will keep.”
Restraint on public sector pay will be extended by a year, with increases limited to an average of 1% annually in 2015-16.
Key quote: “Local government and devolved administration budgets will be adjusted accordingly in the spending round.”
Public sector employers have been told they must absorb the cost of extra National Insurance contributions which must be paid as employees’ right to opt out of the second state pension is abolished.
However, the chancellor said the £3bn annual cost to public sector employers fropm 2016-17 would be considered as part future spending reviews.
Growth is forecast to be 0.6% in 2013, down from the 1.2% forecast in December.
Borrowing falls from £108bn next year to £97bn in 2014-15, then £87bn, £61bn and £42bn in subsequent years.
George Osborne promised that extra savings from government departments will be used to boost infrastructure spending by £3bn a year from 2015-16.
Key quote: “I accept Michael Heseltine’s excellent idea of a single competitive pot of funding for local enterprise.”
Corporation tax falls by 1% to 20%, “the lowest business tax of any major economy in the world.”
Shared equity schemes are extended, with interest-free loans up to 20% of value of new-build properties.
Bank guarantees will underpin £130bn of new mortgage lending for three years from 2014.
The planned rise in alcohol duties will be maintained, with the exception of beer. The beer duty escalator is scrapped and the planned 3p rise in beer duty tax this year does not take place.
Corporation tax will be cut by 1% to 20% in 2015
New employment allowance will be introduced to cut National Insurance bills by £2,000 for every firm. Nearly half a million small firms will no longer pay employer National Insurance.
George Osborne confirmed the cap on social care costs will be introduced in 2016.
Key quote: “For decades politicians have talked of doing something for savers and those who have to sell their homes to pay for care; and yet nothing has been done.”