Last week, the Chancellor delivered his annual Budget.
He started by setting out figures from the independent Office of Budget Responsibility, which showed how the economy has improved in the last 12 months. Britain is now growing faster than Germany, Japan or the US - in fact faster than any advanced major economy. Unemployment and the deficit are both falling and are predicted to go on falling. And earnings are now predicted to start growing faster than inflation, which is really important because it means we should begin to feel the benefits of the recovery in our pockets.
But it wasn’t all good news. While the deficit is falling, it’s still too high. We need to keep on taking tough decisions on public spending to get ourselves out of the mess Gordon Brown left us in. We need to help hard-pressed families who are struggling to cope with the effects of austerity. And we need to tackle some of the fundamental problems that have dogged this country for years under governments of both parties - we’re too reliant on the City of London and don’t make enough things, we don’t export enough and we don’t save enough.
The Budget contained measures to tackle all these problems, but in the limited space available I want to mention just two.
First, the measures to help savers. Record low interest rates are great news for businesses who want to borrow money to invest and those of us with a mortgage, but they are bad news for those living off their savings. The Chancellor is therefore offering new Pensioner Bonds to everyone aged 65 or over with interest rates of around 2.8% for a one year bond and 4% for a three year bond. He’s also cutting taxes on saving income and giving those with defined contribution pensions freedom to draw down as much or as little of their pension pot as they want anytime they want with no-one being made to buy an annuity.
Second, to help families he’s cancelling the fuel duty rise planned by the last Government for September and increasing the personal allowance - the amount of money we are allowed to earn before we have to start paying income tax - to £10,500. This helps almost everyone, but those on low to middle incomes the most. When we came to power, the personal allowance was just £6,475. We’ve cut the income tax bill of someone working full time for the minimum wage by more than half. That’s one of the achievements of this Government of which I am most proud.
This column was first printed in The Croydon Advertiser on Friday 28th March 2014