Will the 2012 Budget hold any surprises?

Normally on the eve of a budget we say, “tension mounts”. That doesn’t really apply this time, given the rather public negotiations between the coalition partners over top rate tax, so-called mansion tax, child benefit, regional pay for public sector workers etc. Scarcely a day has gone by recently without an announcement about something that’s “expected to be in the chancellor’s statement”.

What can we expect to hear in the West Country? Sadly, I think it’s unlikely George Osborne will do as many people in the region hope, and drop the 3p a litre rise in fuel duty due in August. Nor do I expect a reduction in Air Passenger Duty, which is said to be harming tourism. The Chancellor would, it seems to me, prefer to hang on to the money from these to finance some sort of tax cuts to stimulate business. So expect the word “growth” to feature a lot as he attempts to calm Tory fears that the economy is still too sluggish.

There may well be a lengthy section on public sector pay, where the government is flagging up that it wants to introduce regional pay settlements. The south west is almost certainly one of the areas where some public sector workers are paid more than their private sector equivalents – and although not that many people are involved, it will be deeply unpopular with unions.

On top rate of tax, simply abolishing the 50p is politically awkward. He may well announce an intention to do so in a year or two’s time, or drop it to, say, 45p, “compensating” by raising the personal allowance to help more people at the lower end. A previous rise, starting next month, will lift 100,000 people in the south west out of tax altogether – the aim is to raise the threshold from £8,105 to £10,000, but that could take several more budgets.

Current thinking is that the mansion tax – on properties worth more than £2 million – will probably not happen, but there are likely to be extra council tax bands at the top end, plus stronger measures to clamp down on avoiding stamp duty – and possibly more on second homes, an important issues in many parts of the West.

Overall, don’t expect too many surprises. Those will have to wait till nearer the General Election.

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