Budget 2015: Osborne stays focused with clear election message

In 2010 the Conservative party election campaign was a shambles with no clear consistent message to tell the country.

One minute they were talking about deficit reduction then protecting the NHS before flitting to the nebulous Big Society. It was unfocused and the party did not know which voters it was trying to attract and how.

Not this time. There is only one message: stick with our long-term economic plan. And a clear voter target: pensioners and home owners/ aspiring home owners.

Today the Conservative Chancellor George Osborne ruthlessly rammed home his campaign message in the last Budget of the parliament, backed up with targeted policy and supporting evidence.

On the long-term economic plan the message was crystal clear; debt will fall as a proportion of GDP next year, growth has been revised upwards, the deficit halved, austerity eased, more jobs than ever before. Stick with us.

On its target audience the message was clear too with a set of focused policies designed to give more money to the voters its wants to attract.

George Osborne wants the votes of IFA clients and those with a keen interest in personal finance issues. Already he has revolutionised pensions access, slashed the 55% death charge on pension pots, trebled Isa limits and made them more flexible, ended the stamp duty slab system and offered unparalleled mortgage support through Help to Buy and funding for lending.

He has also introduced market-busting pensioner bonds, retained free TV licenses, eye-tests, bus passes and winter fuel allowance for the elderly and introduce the triple lock on state pensions. He has been a dream Chancellor for the advice industry.

Today he went further still, relentlessly focused on his audience. He set out a four-pronged attack on savings policy.

Firstly, there is a second hand annuity market. This will raise £1bn in tax for the Treasury over two years and allow annuitants to sell their policies to institutional buyers. It will appeal to those on poor deals and earning a few pounds a week.

Secondly, the savings tax is abolished. Any basic rate taxpayer with cash savings will pay no income tax on the first £1,000 earned. Popular with those penalised by low interest rates.

Thirdly, flexible Isas. Any Isa withdrawals would not can be put back into the tax-free wrapper without any reduction in the overall amount. A small measure that will please savers who want flexible access alongside tax-free benefits.

Fourthly, a Help to Buy Isa. This is the ultimate policy for Tory target voters combining generous savings policy alongside a boost to aspiring homeowners (and their parents who would normally fund a housing deposit). Anyone first-time buyer saving for a house will receive up to £3,000 from the Government if they save up to £12,000.

There was more good news on personal tax too with the income tax personal allowance rising to £10,600 next month, £10,800 in 2016/17 and £11,000 in 2017/18. The 40p income tax threshold will also rise more than inflation next year to more than £43,000.

But it wasn’t all positive for IFAs and their clients. Osborne stole Labour’s clothes by reducing the lifetime pension tax relief allowance from £1.25m to £1m. Experts say this would affect anyone buying an annuity worth £30,000 including senior teacher and nurses. Osborne did decide against a cut to the annual tax relief allowance from £40,000 to £30,000 backed by Labour.

More positively he agreed to increase the lifetime allowance in line with inflation from 2018, a small concession.

There was also a concerning crackdown on inheritance tax avoidance and tax planning, particularly focused on deed of variation. Details were vague and it seemed to be a deliberate attack on Labour leader Ed Miliband who used a Deed of Variation when his father died 20 years ago.

There were other populist measures such as raising £900m from taxing banks and a £3.1bn crackdown on aggressive tax avoidance but Osborne let little deviate from his central campaign message.

This was a fiercely political Budget from a Chancellor in the midst of a tough election battle. It was competent, displayed a clear record of economic success and dished out goodies to his target voters.

Love them or hate them the Tories have a clear election message this time and there will be more to come with policy announcements expected on inheritance tax soon. The Budget was the start of the campaign.

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