Budget 2011

George Osborne springs fuel price surprise

 

George Osborne today announced plans to cut petrol duty by 1p per litre from six pm tonight and introduce a ‘fair fuel stabiliser’ to keep prices down over the longer term as part of a Budget he claimed would “reform Britain’s economy”.

Mr Osborne also announced plans to:

* Increase the amount people can earn without paying tax to £8,105 next year - representing a tax cut of £326 a year.

* Leave alcohol duties unchanged while increasing taxes on tobacco by 2 per cent above inflation.

* Freeze air passenger duty but impose it at a higher level for private jets.

* Spend £250 million on a new shared equity scheme which will help 10,000 first-time buyers purchase a newly built property, but who cannot afford the deposits.

* Allow people to leave 10 per cent of their income to charity when they die instead of paying it in tax.

* Find an extra £100 million for the repair of winter potholes in roads.

* Introduce new tax avoidance measures to save £1 billion a year.

* The total cost of Libyan operations will paid for out of Treasury reserves.

Much of Mr Osborne’s hour long speech was dedicated to outlining a range of tax and business reforms which he said would help business grow and encourage new investment in Britain.

These included cutting corporation tax by 2 per cent and eventually reducing it to 23 per cent – the lowest in the G7 as well as a proposal to merge income tax and national insurance contributions.

At the same time Mr Osborne painted a gloomier picture of the UK's economy than he had done previously and admitted the recovery would move at a slower pace than he had thought.

Based on figures from the Office for Budget Responsibility – the body the Tories created to provide independent economic forecasts - Mr Osborne said GDP growth estimates for 2011 had been cut from 2.1 per cent to 1.7 per cent, while 2012 was revised down to 2.5 per cent from 2.6 per cent.

However, he said in the longer term the outlook was more optimisitc as estimates for 2013 were held and forecasts for 2014 and 2015 were revised upwards to 2.9 per cent from 2.8 per cent and 2.8 per cent from 2.7 per cent respectively.

The Chancellor also revealed the rate of inflation, currently at 4.4 per cent, is not expected to drop back to the Government's two per cent target until 2013 - contrary to the Bank of England's belief it will fall back by 2012.

But the most surprising announcement was on fuel duty.

A new Fair Fuel Stabiliser to be introduced, funded by increasing the supplementary charge on North Sea oil and gas production from 20 per cent to 32 per cent from tomorrow.

The Stabiliser means the inflation rise in duty planned for next week will be delayed until next year while the April 2012 inflation rise will also be put back until the following summer.

The fuel duty escalator which adds an extra 1p on top of inflation every year will also be axed for the rest of the parliament.

However experts said the amount raised by the Treasury from the new tax would be greater than the amount passed on to motorists.

Mr Osborne also announced a raft of measures he said would make the UK the best place in Europe to start, finance and grow a business.

He confirmed a shake-up in planning regulations which will make all bodies involved in planning give priority to growth and jobs.

There will also be 21 new Enterprise Zones created where firm will be liable to tax relief and other benefits.

He confirmed the creation of a Green Investment Bank and pledged another £2 billion of funding, on top of the £1 billion already committed. However it will not be properly functioning as a bank for another few years as it will not be allowed to borrow on the money markets. Instead it will have to rely on central Government for funds.

On education he announced a doubling of the number of planned new University Technical Colleges from 12 to 24.

There will be a new squeeze on non-doms who have been accused of avoiding their fair share of tax using their special tax status.

The last government introduced a £30,000 charge for those who had lived here for seven years.

Mr Osborne said he was increasing the charge to £50,000 for non-doms who have been in the country for 12 years, a move he said would raise over £200 million in the coming years.

Mr Osborne's second budget was greeted by cheers on the coalition benches but was damned by Labour leader Ed Miliband,

He said: “It is the same old Tories. It is hurting but it isn't working”

www.twitter.com/oliver_wright

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Life and Style
love + sex
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Life and Style
A statue of the Flemish geographer Gerard Kremer, Geradus Mercator (1512 - 1594) which was unveiled at the Geographical Congree at Anvers. He was the first person to use the word atlas to describe a book of maps.
techThe 16th century cartographer created the atlas
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
News
i100
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: UI / UX Designer

£25000 - £35000 per annum: Recruitment Genius: This firm are focussed on assis...

Recruitment Genius: General Processor

£7 per hour: Recruitment Genius: A vacancy has arisen for a General Processor ...

Recruitment Genius: Outbound Sales Executive - B2B

£18000 - £22000 per annum: Recruitment Genius: A great opportunity has arisen ...

Recruitment Genius: Online Sales and Customer Services Associate

£14000 - £16000 per annum: Recruitment Genius: Full time and Part time positio...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot