Osborne cuts fuel duty and income tax
Chancellor hopes measures will help 'squeezed' families
BRITAIN's Chancellor George Osborne used his budget statement to announce cuts to fuel duty and income tax aimed at helping families hurt by his previous reductions in welfare and an increase in sales tax.
The final announcement in his statement yesterday, to cheers from the government benches, was a cut in fuel duty of 1p a litre, as well as the cancellation of other planned increases. Earlier he raised by £630 (€724) the amount a person can earn without paying tax, a £120 tax cut for most earners.
"I know that by itself it will not end the pressure on family budgets, but we've done what we can to help," Mr Osborne said of the fuel-duty cut. He said his deficit-reduction policy was keeping interest rates low, which would help families by speeding economic recovery.
Decisions last year to raise value-added tax, increase university tuition fees and cut payments to higher earning parents led opposition Labour leader Ed Miliband to identify a group he called "the squeezed middle" who were suffering under the Conservative-led coalition government.
The Treasury published charts yesterday that it said showed the government's measures meant wealthier people would be hurt most.
By abandoning last year's practice of lowering the threshold at which people start paying the middle 40pc rate of tax, Mr Osborne avoided creating more losers from his cut to child benefit. In October, he said he wanted to withdraw this payment, worth £2,400 to people with three children, from all higher-rate taxpayers.
Mr Osborne also signaled his support for replacing the UK's current state pension system, in which some payments are means-tested and others depend on the time period over which someone has paid taxes, with a flat-rate £140-a-week payment.
For people buying their first homes, Mr Osborne offered £250m in interest-free loans.
Labour's Treasury spokesman, Ed Balls, said the measures, including the cut in fuel duty to 57.95p a litre didn't go far enough. "The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne's VAT rise is adding 3p to the price of petrol is laughable," Balls said.
A handful of protesters blocked Mr Osborne's car on the way to Parliament for the budget speech.
The Trades Union Congress expects to attract at least 100,000 people at a public march on Saturday to protest what it calls "the myths used by the government to justify its deep, rapid and unfair cuts," accusing the government of scaremongering by making comparisons with hard-hit Greece.