Osborne set for crucial pre-election Budget

CHANCELLOR George Osborne will say his economic plan is working as he delivers his most important Budget at lunchtime.

With the general election just weeks away and pollsters anticipating a close call,  Mr Osborne will be keen to woo voters with some limited tax cuts to boost the feel-good factor, although he has pledged there will be “no unaffordable giveaways” or “gimmicks”.

Reports suggest the government’s finances may be boosted by a £6bn windfall as a result of low inflation and stronger economic forecasts.

Alongside expected pension reforms, Mr Osborne is likely to scrap the annual paper tax return, in favour of a drive towards digital records, and further increase the personal income tax allowance.

TheBusinessDesk.com, in association with Grant Thornton, will be providing full coverage of Budget 2015 this afternoon.

In a leaked extract from his speech, published by the BBC, he is expected to say: “The critical choice facing the country now is this: do we return to the chaos of the past? Or do we say to the British people, let’s work through the plan that is delivering for you?

“Today we make that critical choice: we choose the future. We have a plan that is working – and this is a Budget that works for you.”

His Budget statement comes against a backdrop of a strengthening economic recovery, with a rosier fiscal picture expected as a result of falling oil prices dragging down inflation.

Mr Osborne will announce the independent Office for Budgetary Responsibility’s latest UK economic growth and borrowing forecasts for the coming years.

It is expected the OBR will report an improved growth forecast for 2015 – 2.7% compared with 2.4% -and revise down its borrowing figures, meaning the chancellor could have up to £6bn extra to play with.

Osborne is expected to raise the personal allowance from £10,600 to £11,000, at a cost of about £2bn and will again  target tax avoidance.

Regionally, there could be further moves to bolster the Northern Powerhouse initiative with cities handed the ability to control transport strategy and spending.

Liverpool Mayor Joe Anderson has called for a fairer funding deal for Liverpool from central government,  for HS2 to be extended 20 miles more – a move he says would boost the city region’s economy by more than £8bn and bring 14,000 jobs.

He is also calling for a Manchester-style devolution deal for Liverpool, or  “Devo Scouse” as he called it.

He said: “If cities like Liverpool are to become part of the “Northern Powerhouse” we need the powers and economic levers to match the aspiration.

“Greater control over transport to improve connectivity. Powers over spatial planning and housing to drive regeneration and sustainable development. The ability to work with business to deliver the skills base we need to compete. But Manchester shows where the bar is now set. We need the same package of measures they have in order to develop our potential to the full.”

Ed Fazakerley, partner at Manchester-based Palatine Private Equity, said: “Despite the strong headline rates of inflation and the growth of many of the UK’s core sectors, there is always more the government can do to support Britain’s growing businesses.

“SMEs are all too often ignored by politicians, but with the CBI strongly recommending that George Osborne support the “UK Mittelstand”, we’re expecting an increased focus on Britain’s smaller enterprises.”
 
Meanwhile, Lawrence Jones, the founder of Manchester-based technology company UKFast, is calling  – for a simplification of the tax system and new rules to crack down on international corporations who don’t pay their fair share.
 
He said: “I’ve always said it would be great if you could just have some sort of headline tax that every company pays instead of what we have now. Currently, there are people fiddling the system, doing things like paying a management charge to their other office in one of these tax free havens. And it’s very difficult then to track to see where that money has gone and why it went there. I think there needs to be a way of stopping that.
 
“But rather than looking under the bonnet of every single business and getting into legal wrangles with these corporate giants, why wouldn’t you just create a flat rate of tax? The amount of money the government would get would far outweigh any other form of collection and yet they’re not doing it.
 
“Taking a couple of per cent off everybody would stop these huge international corporations coming in and washing out all the tax they should be paying. Allowing them to do this means they’re able to compete with much lower prices than the average bookshop or the average technology company, yet they’re not contributing to the economy. It’s not fair and it’s not British.”