Portrait of the week | 26 June 2010

In the Budget, Mr George Osborne, the Chancellor of the Exchequer, said that the balance of cuts to tax rises would be 77 per cent to 23 per cent. Whitehall departments would have to cut spending by 25 per cent. Borrowing would fall from £149 billion this year to £20 billion in 2015-16. Debt would be 67 per cent of GDP by 2015-16, compared with the 75 per cent planned by Labour in its budget in March. Current expenditure of £637 billion this year would rise to £711 billion in 2015-16, to meet debt interest. Mr Osborne raised VAT from 17.5 per cent to 20 per cent, from 4 January 2011. For basic-rate income tax payers, the personal allowance will rise by £1,000 in April, to £7,475. Capital gains tax for higher-rate taxpayers rose to 28 per cent immediately. Councils would be offered funds to allow them to freeze council tax for a year. Child benefit is to be frozen for three years and tax credits reduced for families earning more than £40,000. Single parents will be expected to work when their youngest child begins school. Housing benefit will be limited to £400 a week. Public-sector workers earning more than £21,000 will have a two-year pay freeze. Growth of 1.2 per cent is predicted for this year, rising to 2.9 per cent for 2013. Unemployment is expected to reach 8.1 per cent this year, then to fall to 6.1 per cent by 2015. White Papers are to be published on the economies of British regions and of Northern Ireland. Labour’s plan to tax cider by an extra 10 per cent is scrapped.