When he stands up to deliver his budget today, the Chancellor George Osborne will do so in very bleak circumstances.
The military is engaged in a new conflict which will have to be paid for whilst at home, the latest figures show inflation is rising and borrowing higher than anticipated.
All of which gives Mr Osborne very little room for manouevre, let alone to deliver what David Cameron predicted last week would be ‘the most pro-growth budget in a generation.
Almost certainly it will disappoint Welsh Labour and Plaid Cymru. Both parties have made their wishlists known.
Labour says it wants Mr Osborne to reverse the planned VAT increase on fuel and it may get some joy here. It’s expected the Chancellor will ‘do something’ to ease rising fuel prices which could inlcude postponing the VAT increase.
Welsh Labour and Plaid Cymru have both called on the Chancellor to reform the way Wales is funded. Fat chance of that happening.
Plaid also wants the Treasury to overturn an earlier decision to prevent the Assembly Government spending unused money at the end of the financial year. Again: fat chance.
Most likely Wales can expect to see no specific spending but rather the knock on effect of increased spending in England on apprenticeships, colleges and schools.
There’s been plenty of speculation over the last few days, some of which seems better-informed than others. Let me add to it.
A possible merger of national insurance and income tax. There have been a lot of hints about this and there have been many calls for it to happen over the years. It’s thought to be extremely complicated to do and throws up a number of questions such as what happens to pensioners who pay no National Insurance? And what about employer’s contributions? What’s most likely is that Mr Osborne will signal the beginning of the process.
Income tax threshold. Last year the level at which you start paying tax was raised from £6,475 to £7,475. It’s likely to be raised at least to £8,000 in line with the coalition government’s aim of raising it to £10,000. But it’s also likely that the level at which people pay higher rate (40%) tax will be brought DOWN to pay for it.
Corporation tax. There’s some speculation tonight that Mr Osborne has a surprise tax cut planned and that it could be corporation tax which he cuts.
Pensions. At the moment, those whose state pension is below the minimum income guarantee (about £140) are eligible for benefits which bring it up to that level. Bringing the basic level of pension up to that level would be a way of generating good headlines and stopping those pensioners from feeling like benfits claimants.
Fuel. As I mentioned, there have been very strong hints that the Chancellor will ease the burden on motorists by postponing or reducing the fuel duty increase planned for next month. Watch too for a possible answer to a request from the Wales Office that rural parts of Wales are included in a pilot scheme
Cigarettes and alcohol. You can expect a 17p increase on a packet of 20 cigarettes. Look for 3p per pint on strong lagers but a possible cut in duty on low-strength beer.
Troops. A possible £250 pay rise for 50,000 troops earning less than £21,000.
Online CD selling. A loophold which allows VAT-free CDs, DVDs etc to be imported from the Channel Islands is expected to be closed. That could mean up to £2 extra on such online CDs.
We’ll know soon enough. Remember, if these predictions come true, you read them here.
If they don’t: nothing to do with me guv.