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Osborne's Budget pitch to workers

Chancellor George Osborne holding red budget box19/3/14

By James Tapsfield

George Osborne will make a pitch to ordinary working people on Wednesday afternoon when he delivers his penultimate Budget before the general election.

The Chancellor is expected to unveil a further rise in the personal allowance above the £10,000 level promised by the coalition, and confirm heavily-trailed childcare subsidies among other measures to help those on lower and middle-incomes.

Aides stressed that despite the economic revival the package would be "steady as she goes", and make little overall impact on the Government's books.

But there were also hints that Mr Osborne could be preparing to produce a rabbit from his red box.

Potential surprise items include pushing up the level at which National Insurance contributions start being paid, or bowing to Tory demands for the 40% tax rate threshold to be raised.

Austerity programme won't be eased

The Treasury has been given more room to manoeuvre by the stronger performance of UK plc over recent months, and some believe the Chancellor will be able to announce further upgrades to growth forecasts.

But Mr Osborne has insisted that he will not ease the government's long-running austerity programme in order to fund major giveaways.

And he will also want to leave scope for a generous pre-election offering next year.

Some have been calling for him to encourage employment by extending the £2,000 NI allowance for firms who take on staff.

Another dramatic suggestion is to increase the NI threshold to match the personal tax allowance - which would chime with Mr Osborne' s longer-term aspiration of merging the two systems.

There have been growing calls from the political right for the higher rate threshold to be hiked, after decades of below-inflation rises dragged millions more into paying 40 per cent.

However, any significant action would be seized on by Labour as evidence that the Conservatives are the party of the better-off.

Fuel duty freeze

Mr Osborne is widely expected to maintain the freeze on fuel duty, and has also been under pressure to avoid increasing tax on wine and spirits - after scrapping the duty escalator on beer last year.

Labour is unveiling a Budget poster in London and Birmingham today that will claim "hard-working people are £1,600 worse off with the Tories".

Paul Johnson, director of the Institute for Fiscal Studies, told BBC Radio 4's Today programme: "The economy is getting a lot better now.

"But it has been pretty bad for the last several years with the result that the Chancellor wanted the deficit essentially sorted by next year but actually it is not going to be until 2018.

"He's set himself the task of getting down to zero borrowing by 2018 but we are still at over one hundred billion pounds so that's a long way still to go."

He added: "If the Chancellor does have any tax cuts, and he may well do, he's going to be taking that back with his other hand, tax increases elsewhere or even deeper spending cuts."



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