Chancellor of the Exchequer George Osborne will lay out a budget today focused on securing Britain’s economic recovery and rebutting opposition Labour Party claims that he’s ignoring the rising cost of living.
Measures are set to include 170 million pounds ($282 million) of extra funding for apprenticeships to extend the government’s existing program to 2016, according to Treasury officials who declined to be named in line with U.K. policy. The chancellor, who presents his budget to Parliament at 12.30 p.m. in London, is also expected to pledge a further 222 million pounds to develop new science and innovation centers, they said.
Osborne warned earlier this week that while Britain is recovering, the “job is not yet done” and the economy needs to be rebalanced toward exports and investment. He also defended his policies against the attacks of his Labour opposite number, Ed Balls, who says he has ignored the effects of rising prices, making families worse off.
“We need to build a resilient economy and that means addressing the long-term weaknesses in Britain,” Osborne told BBC television three days ago. “We don’t export enough, we don’t invest enough, we don’t build enough, we don’t make enough.”
Writing in the Sunday Mirror newspaper, Balls set out Labour’s pledges should the party win elections in 2015. They include a jobs guarantee plan for the young unemployed, funded by a one-off tax on bank bonuses and by restricting pension tax relief for those earning more than 150,000 pounds.
Osborne’s pledge to extend the apprenticeship plan would help support 100,000 extra work placements, while a further 20 million pounds is expected to be invested in supporting closer ties between apprenticeships and higher education. An average apprenticeship post receives 12 applications, though there are not enough available positions from employers, according to Treasury research.
The government also announced yesterday that the budget will include an increase in the tax-free provision for child care to help working families.
Other measures are set to include a boost to exports and investment, which the chancellor identified as weak spots in the economy, according to the officials. Osborne’s fiscal watchdog, the Office for Budget Responsibility, will raise its 2014 economic growth forecast to 2.7 percent from the 2.4 percent it predicted in December, according to the median projection in a Bloomberg survey.
Osborne said earlier this week the government will extend its Help-to-Buy program for new homes by four years to the end of 2020, helping the creation of 120,000 homes, and pledged to build a new garden city at Ebbsfleet, near London, to address a housing shortage in the capital and the southeast. That contrasts with a Labour pledge to build 200,000 houses a year by 2020. Labour has also reiterated its promise to freeze energy bills until 2017.
The chancellor has faced criticism from his own Conservative Party ranks for ignoring middle-class voters. He told the BBC he may not yield to demands from some Tory lawmakers and lobby groups to use the budget to increase the level at which people start paying a 40 percent tax rate instead of the basic 20 percent. Restrictions to the 40 percent threshold -- currently about 41,500 pounds a year -- mean more people are being dragged into a tax band originally aimed at the well off.
Osborne said that he had always prioritized an increase in the personal allowance, below which no income tax is paid. The chancellor has used every one of his budgets to raise the allowance -- from 6,475 pounds a year when the coalition took office in 2010 to 10,000 pounds as of next month. Deputy Prime Minister Nick Clegg, whose Liberal Democrat party first proposed the policy, has urged him to add at least 500 pounds again today.
The Treasury also announced today it will introduce a new 1-pound coin in 2017 as part of a crackdown on counterfeiters, after the current model spawned millions of fakes.