Osborne To Build For Britain In His Budget

By Anushka Asthana and Darren McCaffrey, Sky Political Team

George Osborne has announced that a "garden city" will be built in Britain for the first time in decades, based in Ebbsfleet, Kent, with 15,000 homes to start with.

Speaking ahead of Wednesday's Budget, the Chancellor also pledged to extend the first phase of the help-to-buy scheme for new build homes until 2020.

The Government has chosen Ebbsfleet in Kent as a new garden city

Policies to drive up housing supply will be one plank of the financial statement, which Mr Osborne will use to warn that the tough times are not over.

He is expected to announce measures aimed at small business, families, and investors, including:

:: An increase in the tax-free element of the personal allowance to £10,500

:: A freeze in the carbon tax

:: Action to support British companies that export their goods

:: Tax relief for business investments of up to £250,000

:: An additional crackdown on tax avoidance

:: Investment in road and rail, including speeding up the HS2 project

:: A tax cut on bingo halls

Mr Osborne will also take the opportunity to talk once again about policies coming into place in April. These include a transferable tax allowance for married couples of up to £200 a year, a drop in corporation tax to 21% and the chance for UK employers to cut their national insurance payments by £2,000 a year.

Details of a planned £1,200 childcare tax break will be unveiled

The decision to freeze fuel duty this September, which was made last year, will also be reconfirmed.

And there could be support for families with childcare as the details of an expected £1,200 per-child tax-break scheme are published following a Government consultation.

But the Chancellor is unlikely to give in to pressure from Conservative grandees on the 40p tax rate. Former chancellors Lord Lamont and Lord Lawson have argued that the 4.4 million people now falling into the band, which kicks in at £41,450, is too high.

Although the threshold will rise by 1% this year, it is less than inflation.

Tory backbenchers and some business groups are also pushing for the rate to be used to deliver a middle class tax cut.

But Mr Osborne has argued that the tax allowance changes will benefit the middle classes.

Moreover, it has been reported that he is happy for more people to face the higher tax rate.

According to the Mail On Sunday, he told MPs: "It means they feel they are a success and joining the aspirational classes. That means they are more likely to think like Conservatives and vote Conservatives."

He said the polling backed his arguments, but the newspaper quoted an MP saying the comment was met with a "stunned silence".

Ed Balls says Mr Osborne's housing measures 'fall short'

A Treasury source said the overall tone of the Budget would be cautious with warnings of further austerity ahead. Mr Osborne will argue that his macroeconomic policies are working, but there must be no wavering from the plan.

The next step is building a "resilient economy".

"Britain has to up its ambition, Britain has to up its game, Britain has to earn its way in the world," he told BBC1's Andrew Marr Show.

"Yes, the economy is recovering, but that is not enough. We have got to finish the job."

Shadow chancellor Ed Balls told Sky News the measures on housing fell short.

"We've asked him to invest in affordable housing, there's nothing on the table yet from him there," he said.

"At the moment we're calling on him to reduce the limit on help to buy from 600,000 - we've not had any action on that yet.

"And this is a promise to get a new town moving eventually, but it's not on the scale we need, or as fast as we need to deal with that cost of living crisis.

"I hope that when it comes to the budget on Wednesday, George Osborne's going to be giving a lot more than he's promised so far."

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Osborne Backs HS2 Fast-Track Plan

The chairman of HS2 has called on politicians to accelerate the construction of the high-speed line to reduce the £50bn cost of the project.

In a new report, Sir David Higgins has proposed a fast-tracked building timetable for the northern, phase two, section of the highly controversial project.

His plans have been given the backing of George Osborne, who said Sir David's plans to build a new hub at Crewe would help to create more growth and rebalance the economy.

Currently the scheme's first phase, which will see a new line connect London to Birmingham, is set for completion in 2026.

The second phase, which will take the line in a Y-shape to the North West and North East, is due to be completed around 2032/33.

But now Sir David said building work on both phases should be started at the same time and the second phase completed six years earlier than planned - by 2027.

In addition, he said the line should stretch 43 miles further north than planned, to a new transport hub at Crewe in Cheshire.

He also proposed a brand new station at London Euston, but added that plans to link HS2 with HS1, the London to Kent Channel Tunnel high-speed rail link, should be reconsidered.

Sir David believes speeding up the project would help keep costs under control because it would reduce uncertainty and limit the impact of inflation.

Mr Cable supports Sir David's proposals because of 'economic benefits'

The current whole-line cost, including contingencies, is £42.6bn, with £7.5bn for the trains.

Mr Osborne said: "Sir David's proposals would see huge benefits delivered to the North six years sooner than planned through a new hub at Crewe, creating more growth and rebalancing the economy in line with our long-term economic plan."

He added: " ... HS2 is essential to the future of this country and will help fulfil the Government's long-term plans to create a balanced and more competitive economy across the UK. But we must be conscious of the price, and there will be no increases to the overall spending envelope set for HS2 at the last spending review."

Business Secretary Vince Cable has also expressed support for Sir David's proposals, saying there was clearly a "compelling argument" for speeding up the project.

But shadow chancellor Ed Balls is concerned about the costs warning that under a Labour government there would be "no black cheque" for the project. Other former Labour grandees have also spoken of their reservations about the scheme.

Sir David cautioned that "this project is too big to become a political football".

Anti-HS2 groups have also cast doubt on the possibility of bringing forward the phase 2 work while the revamped Euston plan was seen as merely bringing "more wealth and work into London".

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