CHANCELLOR George Osborne yesterday used a cut in fuel duty to declare his Budget a boost for growth and jobs.
Motorists saw a penny cut from record prices at the pumps last night and were promised a “fair fuel stabiliser” to keep future costs down paid for by a £2bn tax on oil and gas production.
Claiming he had put “fuel into the tank” of the economy, Mr Osborne also confirmed new low-tax enterprise zones on Tyneside and the Tees Valley.
The Chancellor slashed corporation tax by 2% and promised a shake-up of planning and business regulations.
Employees were also rewarded with plans to raise the personal tax allowance by £630, to £8,105, worth £126 in cash terms.
He claimed that together with this year’s rise, it would mean a total of £326 extra each year for “those working hard to pay for their family’s needs”.
Some 10,000 families could benefit from loans being made interest free for the first five years, it was announced, to allow more first time buyers to get on the housing ladder.
Mr Osborne said the move would be paid for by a £250m levy on banks.
The announcements came against the backdrop of a downgrading in growth forecast by The independent Office for Budget Responsibility, from 2.1% to 1.7% this year and from 2.6% to 2.5% in 2012.
Mr Osborne said the economic recovery would be more sluggish than expected with the national deficit taking longer to pay off, but insisted the measures opened the country for business.
The reaction to the Budget from MPs in the region was mixed, while opposition leader Ed Miliband branded the announcements as “the same old Tories”, insisting “it is hurting but it isn’t working”.
Berwick Liberal Democrat MP Sir Alan Beith said: “Help with fuel costs for motorists in rural areas like ours is welcome, and further cuts in tax on low pay implement a key Liberal Democrat policy.”
He welcomed the Tyneside enterprise zone, the Green Investment Bank, measures to back small business and cost-cutting plans to merge the Income Tax and National Insurance systems.
Tory MP Guy Opperman, who represents Hexham, said the Budget would “fire up” the region’s private sector as he hailed help for unemployed young people.
Backing action on fuel costs, he added: “This won’t transform prices at the pump, but at a time when oil prices round the world are spiking, the Government is trying to ease the burden.”
However, Dave Anderson, Labour MP for Blaydon, described the Budget as “all smoke and mirrors”. He said: “Any positives fade into insignificance as the cuts and previous hits that our region has taken start to impact.
“It is a Budget based on ideology that hates the public sector and from people who have no clue what life is like in the real world. All in it together? Don’t make me laugh.”
Shadow Business Minister Chi Onwurah, who represents Newcastle Central, said: “Independent reports put a cost of £25,000 to £40,000 for each job created during the Tories’ last go at enterprise zones in the 80s and that the Tyneside one had little lasting impact.”
Following the announcement Business Secretary Vince Cable told The Journal the Budget would ensure more sustainable growth and tax fairness, adding he was “optimistic” the North East would benefit.
The Liberal Democrat Cabinet minister suggested remote areas of Cumbria could get further help on high fuel prices in future, in a potential expansion of a scheme to take up to 5p off bills for isolated island communities.
The North East Chamber of Commerce said the Government had laid out its store for a rebalanced economy with the private sector at the heart of its strategy, having failed previously to deliver the measures needed.
AA President Edmund King, visiting professor of transport at Newcastle University, said fuel price cut had probably prevented a “summer of discontent.”
The Fair Fuel Stabiliser means the inflation rise in duty planned for next week will be delayed until next year while the April 2012 rise will be put back until the following summer. The fuel duty escalator adding an extra 1p on top of inflation every year will be axed.
Alcohol and tobacco duty rates will go up, but this year’s planned rise in Air Passenger Duty had been postponed for one year. There was also an extra £100m for the repair of winter potholes.
The OBR said it expects a deficit of £122bn next year, compared to £117bn previously forecast. By 2015-16 it is expected to still be £29bn against the £18bn that had been forecast. The coalition has prioritised addressing the debt as the key to financial recovery and achieving sustained growth.
