George Osborne delivers his first budget just 6 weeks after the election.

Stating that the budget ‘pays for the past but plans for the future’, George delivers a ‘though but fair’ and ‘unavoidable budget’.

Apparently the deficit should be in balance by 2010/2016 but the new Government are aiming to deliver this a year earlier – by 2014

Whilst the inflation target remains the same at 2%, the Government intend on tacking the deficit by achieving 77% consolidation through spending cuts and 23% through tax increases.

George Obsorne was quick to state at the start of his budget that the UK will NOT be joining the EU during this parliament and intend on selling the student loan book as well as NATS in order to create revenue and reduce the deficit.

Main Points:

Public Sector

• 2 year pay freeze – protection will be put in place for salaries of £21,000 or less -  they will get a flat pay-rise worth £250 in the two years
• Double the operational allowance for the Armed Forces – top salaries will be frozen at 20x the lower salaries
• Planned increase of state pension age to 66 is to be accelerated

Welfare Bill

• Family element of tax credits are being reduced to families earning £40,000+
• Baby element of tax credits are being scrapped from 2011/2012
• Health in Pregnancy grant is being abolished in 2011
• Parents will be encouraged and incentivised to look for work once their child attends school
• Child benefit frozen for next 3 years
• DLA – not  being reduced but all claimants (new and existing) will be required to undergo a medical assessment from 2013
• Introduce housing benefit reductions and introduce maximum limits on housing benefits

Tax

• VAT will rise from 17.5% to 20% from 4^th January 2011. Food, children’s clothing and magazines will remain exempt
• Corporation tax will be cut next year by 1% and annually for the next 3 years
• Government will help local authorities who want to freeze council tax for 1 year
• Capital Gains Tax – this has remained at 18% for middle and low income savers but higher rate taxpayers will now pay 28% from midnight tonight.
• Income Tax - is now £7,475 before income tax is payable. Higher rate income tax threshold is frozen.

Pensioners

• Promising to give lasting help to pensioners, as of April 2011, the Government intend on re-linking the basic state pension with an annual guarantee rise with inflation – meaning no more 75p increases!

Ending his budget stating £4 out of every £5 is to be taken from Government spending – its easy to see that cutting the deficit is going to be no easy task but do you think Mr Osborne has made the right decisions?

How will the proposed changes be affecting you?

Harriet Harman has hit back saying that today’s budget is bad for growth and will inevitably hit jobs in both private and public sector.

Please let us have your views…