Autumn Statement 2014 predictions

Felicity Hannah
Osborne banker bonus case
Osborne banker bonus case

With less than six months to a general election, George Osborne'sAutumn Statement couldn't be more important to his party and the coalition government.

He will deliver it on Wednesday 3rd December and, although growth is good and unemployment is down, the deficit remains stubbornly high – partly due to poor tax receipts and low wage growth.

That means the chancellor is unlikely to have an easy time, so what can we expect will be in the red box this time?

£1.5bn for the NHS?

Deputy PM Nick Clegg recently told a press conference that he believes the statement will include extra spending on the NHS.

He said it will include a pledge to spend an extra £1.5billion to allow the service to deal with next winter's demands, and to signal a "step-change" in the way healthcare is funded.

New postgrad loans?

It's widely expected that the chancellor will reveal new loans available to university students who want to complete a one-year masters following their graduation.

Businesses have demanded better qualified graduates, and research from the Institute for Public Policy Research suggests that masters' graduates would be more likely to repay their loans than those with undergraduate degrees.

It's understood that the business secretary Vince Cable made a formal request for the policy to receive funding.

Devolution of tax powers?

During the Better Together campaign, promises were made to the Scottish people, and those promises included the devolution of further tax powers. There were then demands for tax powers to be devolved to both the nations and regions of the UK, so some analysts have suggested this may come up in the Autumn Statement.

Pensioner bonds?

The chancellor will reveal the details of plans for the state-owned savings bank National Savings & Investments to launch market-beating bonds for people aged 65 and above. He first announced these in his March Budget Statement.

Pensioners have seen the interest they earn on savings plummet, thanks to the low interest rates that so many rely on. The new bonds will offer market-beating rates and should support pensioners who rely on income from their savings.

However, not everyone is thrilled. In fact, Nationwide has warned that it will take money away from the economy and even affect building societies' ability to lend.

Rise in inheritance tax thresholds?

Inheritance tax brings a large amount of money to the government's coffers, and rising property values mean that growing numbers of estates have to pay it. However, in the last election campaign David Cameron pledged to raise the threshold to £1 million. If that's to happen next year then it would need to be announced in Osborne's Autumn Statement.

Tougher rules for offshore tax evasion?

Several analysts are predicting that the chancellor will announce tougher rules on offshore tax evasion, potentially even including a new 'strict liability' rule.

That rule would mean that anyone who fails to declare taxable income that is generated offshore will be deemed to have committed a crime.

Tax cuts?

Although it's possible that Osborne will tweak tax rates and personal allowances, perhaps to boost voter support, it's widely accepted that they will remain the same following his statement. This close to a general election tax allowance plans are more likely to be saved for party manifestos.

Business rate reform?

Osborne has dropped some strong hints that he will include reforms to business rates in his statement. He won't be short of ideas on how to reform it, as the British Property Federation has published a lengthy report suggesting an end to the system where rates increase in line with inflation, and arguing for an annual revaluation of properties for business rates.

The Daily Telegraph by the consultancy CVS has suggested that handing the revenues from business rates directly to northern cities could inject as much as £4.4 billion into struggling regional economies.

Stamp duty reform?

While Osborne hasn't given anything away, there have been calls for reform to stamp duty. At present, buyers in England and Wales face a massive hike in tax burden if they pay just £1 above the stamp duty threshold. For example, buying a property just below £250,000 means a tax bill of £2,500. However, buying a property just above that threshold means a tax bill of more than £7,500.

The Building Societies Association has urged the chancellor to make the payment more progressive, so that you pay the higher rate only on the amount above the threshold.

The Association of Chartered Certified Accountants has also supported this reform, suggesting it would be "the easiest" tax break the chancellor can offer voters.

A possible giveaway – with strings attached?

It would be mighty strange if this statement wasn't loaded with something designed to encourage voter support in the next election. However, with the PM warning that "red warning lights are once again flashing on the dashboard of the global economy", the chancellor is unlikely to feel able to give much away.

But there is an election looming – so we predict that there will be a giveaway promised that will only come to pass if Osborne is still chancellor in the next Parliament.

What do you think will be in the Autumn Statement? What should the chancellor do? Have your say using the comments below.

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