George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his Budget, yesterday. Photo: PA Wire

In a deeply political Budget seven weeks ahead of the general election, Chancellor George Osborne yesterday offered financial goodies to taxpayers, savers, home-buyers and the regions of Britain, while doing his best to blunt Labour’s lines of attack in what is expected to be the most tightly-fought campaign of modern times.

The Chancellor delivered an effective tax cut to 27 million voters – and took 3.7 million out of income tax altogether – by announcing rises to £11,000 in the personal allowance and £43,300 in the threshold for the 40p higher rate over the next two years.

He abolished tax on the vast majority of savings accounts with a new £1,000 tax-free allowance, and offered Government help worth up to £3,000 for first-time home-buyers saving for a deposit, through the creation of a new Help to Buy Isa.

Improved economic forecasts allowed Osborne to declare that Britain could “walk tall again” after years of austerity. To Tory cheers, he announced that he had met his 2010 target to have debt falling as a share of national income by the end of this Parliament and that public spending cuts will now end a year earlier than predicted in 2018/19.

He attempted to kill off Labour claims that a Tory government would take spending back to 1930s by declaring that by 2019/20 public spending as a share of GDP would be at the same level as 2000 – when Tony Blair was in 10 Downing Street.

But Labour insisted that this was achieved by intensifying the spending squeeze in the next three years, which shadow chancellor Ed Balls said would now be far deeper than those experienced during the austerity programme of the past five years and would almost certainly require Mr Osborne to impose cuts on the NHS or increase VAT. Under the Chancellor’s plans, day-to-day spending as a share of GDP would be as low in 2018 as in 1938, he said.

In his sixth Budget as Chancellor, Osborne missed no opportunity to take swipes at Labour’s difficulties with second kitchens, white vans and pink buses. And he made a point of poaching Labour’s plan to cut the maximum size of a tax-free pension pot from £1.25 million to £1 million – depriving Labour of £600 million which it had earmarked to pay for cuts in university tuition fees.