The budget 2015 – what to expect

Chancellor George Osborne wasted no time after the Conservatives won an unexpected overall majority to announce there would be an emergency budget in June, and later today he will open his red box to reveal spending priorities free from the restrictions of coalition politics.

It will be the first truly Conservative budget since November 1996.

With that in mind, we can expect some fairly bold announcements, with the continuing theme of deficit reduction.

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With some announcements on funding for women’s refuges and to speed up the adoption process expected, it is likely to be cuts which make tomorrow’s headlines.

Both Osborne and his Prime Minister David Cameron have suggested in the last week or two tax credits could be in the firing line, as part of the £12bn cut to the welfare budget the Chancellor says he has already found. He said he was seeking to make the welfare system “fair for the people who pay for it”.

The benefit cap looks to be reduced to £23,000, and it may be lowered to £20,000 outside London.

The Conservatives pledged not to raise income tax during the whole term, and in fact there have been rumours Osborne is considering lowering the top rate of tax to 40p. This would be a controversial move, although the Chancellor told the BBC it was not “one of his priorities”.

The manifesto pledge of an increase of the inheritance tax threshold to £1m is likely.

This means the Chancellor’s ambition to run a surplus will only be met by more big cuts to government departments, with only health and international development ring-fenced. The Department for Business, Innovation and Skills (BIS) will have to find £450m in cuts, while the Government has already announced that the MOD will be making £500m worth of savings but emphasised the UK would still be meeting its NATO target of spending two per cent of GDP on defence this year.

It will be interesting to see how Osborne attempts to sweeten this bitter pill. 

More in-depth speculation from Dods monitoring