Britain is "walking tall again" the chancellor said as he began his speech
George Osborne has unveiled his final Budget before the general election, telling MPs "Britain is walking tall again" after five years of austerity.
He announced tax relief for savers and first time buyers and said a squeeze on public spending would end earlier than planned if the Tories win in May.
The chancellor cut 1p from beer duty, 2% from cider and scotch whisky - and froze fuel, wine and tobacco duty.
Labour leader Ed Miliband said Mr Osborne had "failed working families".
"This a budget that people won't believe from a government that is not on their side," Mr Miliband told MPs.
'Grown faster' Mr Osborne hailed slightly better than expected growth figures, which suggest the economy will expand by 2.5% this year, rather than 2.4% and described his economic package as a "Budget for Britain - a comeback country".
He said the government had met its 2010 target to end this Parliament with Britain's national debt falling as a share of GDP, meaning the "the hard work and sacrifice of the British people has paid off".
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Setting out his plans in the
Commons, Mr Osborne said: "We took difficult decisions in the teeth of
opposition and it worked. Britain is walking tall again.
"Five years ago, our economy had suffered a collapse greater than almost any country. "Today, I can confirm: in the last year we have grown faster than any other major advanced economy in the world."
He said he would use a boost in the public finances caused by lower inflation and welfare payments to pay off some of the national debt and end the squeeze on public spending a year earlier than planned.
In 2019/20 spending will grow in line with the growth of the economy - bringing state spending as a share of national income to the same level as in 2000, the chancellor told MPs.
A traditional pose outside 11 Downing Street on Budget morning
Will we ever see a Conservative-Lib Dem coalition Budget again?
George Osborne was on his feet for 58 minutes in the Commons
Labour's frontbench team as the Budget is delivered
The government frontbench team watch Ed Miliband as he responds to the Budget
The Budget was Mr Osborne's last set-piece chance to woo
floating voters ahead of 7 May's general election - opinion polls have
the Conservatives neck-and-neck with the official opposition, Labour.He insisted that deficit reduction remained his top priority but also unveiled measures aimed at increasing the amount people can earn before paying tax to £10,800 next year and an above inflation rise to £43,300 by 2017 for the amount people can earn before having to pay the 40p tax rate.
He said 95% of savers would pay no tax on their cash savings if the Conservatives won the election, under changes to ISAs unveiled in the Budget.
He also announced a new help-to-buy ISA which will see the government add £50 to every £200 first-time buyers put away towards a deposit - in a move that will come into effect later this year.
He confirmed plans to scrap annual tax returns and replace them with "digital tax accounts", allowing people to manage their affairs using smartphones or computers.
Other measures include:
- Relaxing pension rules from April 2016 to allow up to five million existing pensioners to swap their fixed annual payments for cash
- A fresh crackdown on tax avoidance and evasion, which he said would raise £3.1bn
- Raising the rate of the bank levy to 0.21% to bring in an additional £900m a year
- A further boost for regional growth, including extending enterprise and housing zones - and plans for a tidal lagoon to generate green electricity in Swansea Bay. Severn Crossing toll rates will be reduced from 2018
- £1.3bn in tax cuts for North Sea oil exploration and continued production in older fields
The Lib Dems will unveil their own tax and spending plans for the next five years on Thursday, which are likely to feature greater tax rises than planned by the chancellor.
Ed Miliband: "This is a Budget people won't believe"
He said Labour would reverse the tax cuts for millionaires and introduce a mansion tax to fund the NHS.
He also pledged to abolish the "vindictive and unfair" housing benefit changes he calls the "bedroom tax".
'Long-grass plan' The SNP said Mr Osborne had "blown his last chance" to deliver for Scotland.
SNP deputy leader and Treasury spokesman Stewart Hosie said: "Today George Osborne could have delivered a Budget focused on delivering economic growth by tackling inequality.
"He has not - he has decided to continue with his utterly failed austerity agenda."
UKIP Leader Nigel Farage said: "This government has evidently failed in it's promise to the British people to eradicate the deficit and whilst it took Labour 13 years to double the debt this government has done it in five.
"Mr Osborne talks about a long-term economic plan, today he pushed all his targets back and created a long grass economic plan."
Mr Osborne's sixth Budget statement came against a backdrop of a strengthening economic recovery, a fresh fall in unemployment and a rosier picture expected as a result of falling oil prices dragging down inflation.
In was, in parts, an openly electioneering Budget, with Mr Osborne saying: "The critical choice facing the country now is this: do we return to the chaos of the past? Or do we say to the British people, let's work through the plan that is delivering for you?"
