18 March 2015
Last updated at 01:06
Chancellor George Osborne, pictured ahead of the 2014 Budget
George Osborne is to set out his tax and spending plans in the Budget later – his last before the election.
The chancellor has pledged “no giveaways” or “gimmicks” in his speech, which will be delivered at 12:30 GMT.
Reports suggest the UK’s finances may be boosted by a £6bn windfall as a result of low inflation and stronger economic forecasts.
Labour said the Conservatives were planning “more extreme spending cuts” after the general election.
Alongside expected pension reforms, Mr Osborne is likely to scrap the annual paper tax return, in favour of a drive towards digital records, and further increase the personal income tax allowance.
BBC deputy political editor James Landale says Mr Osborne’s task is clear.
“He will try to use the Budget to end the deadlock in the opinion polls and give the Conservatives the political momentum they need to win another term.
“The chancellor will do that by trying to show voters the recovery is being felt by everyone across the country.”
Mr Osborne will get to his feet in the House of Commons immediately after Prime Minister’s Questions.
It is his last chance to tempt voters before they head to the polls on 7 May, although he has promised there will be no “unaffordable giveaways”, insisting that deficit reduction remains his top priority.
His Budget statement comes against a backdrop of a strengthening economic recovery, with a rosier fiscal picture expected as a result of falling oil prices dragging down inflation.
Mr Osborne will announce the independent Office for Budgetary Responsibility’s latest UK economic growth and borrowing forecasts for the coming years.
It is expected the OBR will report an improved growth forecast and revise down its borrowing figures, meaning the chancellor could have up to £6bn extra to play with.
Experts say this would provide Mr Osborne with some leeway for pre-election sweeteners.
Or he could decide to ease up on planned spending cuts to counter Labour claims that the Conservatives want to cut public spending to levels not seen since the 1930s.
The Budget on the BBC
- Online: Full live coverage in text, video, at-a-glance and what it means to you
- On TV: A BBC Two special from 11:30 to 15:30 GMT. Rolling coverage on the BBC News Channel
- On radio: A Radio 4 special from 12:15 to 14:00 GMT. 5 Live special from 11:55 to 16:00 GMT
- On Twitter: BBC correspondents tweeting #Budget 2015
Mr Osborne has already promised to further relax pension rules from April 2016 to allow up to five million existing pensioners to swap their fixed annual payments for cash.
It follows a series of pension reforms introduced by the government to change the way people fund their retirement.
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Shadow chancellor Ed Balls said the reality was that working families were worse off after five years of the coalition government.
And he added: “The Tories are planning more extreme spending cuts after the election, which go way beyond balancing the books and will put our NHS at risk.”
Mr Balls cited analysis by the Institute for Fiscal Studies which he said showed that tax and benefits changes introduced since 2010 have cost families on average £1,127 a year.
He pledged that a Labour budget would put working families first and “save” the NHS.
Ed Balls said the Conservatives’ spending plans would put the NHS at risk
Labour has pledged to raise the minimum wage, reintroduce a 10p tax rate for low earners and cut business rates for small firms, if it wins office in May.
“And we’ll balance the books in a fair way by reversing the Tories’ tax cut for millionaires,” Mr Balls added.
Vince Cable, the Lib Dem business secretary, said it was important for the chancellor to “get the balance right”, saying that the scope for tax cuts is “very, very limited”.
“In fact, after the next election, taxes are almost certainly going to have to rise.
“Obviously for people on low pay it is important we help them both through the minimum wage and lifting the tax threshold, but the scope for this is very limited.”
Lib Dem Deputy Prime Minister Nick Clegg has said he has been pressing the chancellor for a further increase in the amount of money people can earn before paying tax.
The Lib Dems say they have been pushing for a tax threshold rise
It has risen from £6,475 to £10,600 since 2010, with both of the coalition partners promising to raise it further, to £12,500, in the next parliament.
The Institute for Fiscal Studies, however, has said low-paid workers would benefit more from a lift in the National Insurance threshold, which currently starts at £7,956.
The Lib Dems will set out their own alternative Budget on Thursday to show how it would tax, spend and borrow over the next five years.
Business groups have been lobbying the chancellor over their own priorities – including a freeze or cut in passenger air duty, reductions in charges on North Sea energy firms and moves to use the tax system to encourage research and development.
John Cridland, director general of the CBI, urged the chancellor “not to put politics ahead of economic growth and investment”, emphasising the need for a “responsible” budget.
He said Mr Osborne should build on the economic recovery by creating a “stable investment environment for ambitious firms looking to expand”.
If there was room, he added, the chancellor should expand free childcare to help working families.
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