Last Wednesday, the Chancellor of the Exchequer George Osborne began his Budget speech with a commitment to redouble his efforts in “making Britain fit for the future”.
Yet, the independent Office for Budget Responsibility revised down targets for productivity growth – an essential component of rising living standards. UK growth, despite expectations that it will exceed that of any other major advanced economy in the world, is revised down as a result of a turbulent and fragile global economy. One million more new jobs are forecast for the remainder of the Parliament, and real wage growth is set to outstrip inflation (which is for all intents and purposes absent due to historically low oil prices in recent quarters).
Osborne still maintains that the government will achieve a surplus on the current account – of over £10 billion – by 2019/20. Only by “living within our means” can the long-term stability of the economy be guaranteed.
The Budget Speech, delivered on 16th March 2016, outlined the following:
A tax system that says to the world: ‘We are open for business’
- Reduce headline cooperation tax rate from 20% to 17%.
- Permanent increase in the Business Rate relief threshold means 600,000 small businesses will pay no business rates at all.
- £1000 tax-break for online sellers; “no forms to fill in, no tax to pay”.
- Tax loopholes exploited by multinational cooperations to be tackled.
- Commercial stamp duty reduced for over 90% of British businesses.
- Additional support for the oil and gas industries.
We are the builders
- £115m package to help the homeless and reduce rough sleeping.
- Support for community housing trusts, including £20m to help young families in the South-West get a foot on the housing ladder
We’re building the roads. We’re laying the track. We’re making the Northern Powerhouse a reality and rebalancing our country
- ‘Green light’ to HS3 (connecting Manchester and Leeds), a new 4-lane M62, London’s Crossrail 2 (for all those, like the Leader of the Opposition, “in the north of London and heading south”)
- £700m boost to flood defences nationwide.
Our nation’s productivity is no more no less than the combined talents and efforts of the people of these islands
- Every primary and secondary school to become an academy.
- Maths education to be made compulsory until 18.
- £500m to speed the implementation of the Fair Funding Formula for schools.
Helping childrens’ health and wellbeing
- Sugar levy on soft drinks industry, raising £520m.
- Doubling of funding for sport in primary schools.
- Option of longer school days for secondary schools to encourage sports and activities.
- Specific support for children’s hospital services in Manchester, Sheffield, Birmingham and Southampton.
“A low tax, enterprise Britain”
- VAT from sanitary products (£12m) directed towards charitable and grassroots causes.
- Fuel duty frozen for sixth year in a row to “keep Britain on the move”.
- Tobacco duty to rise 2% above inflation as well as a minimum price for cigarettes.
- Beer, cider and spirits duties frozen.
- “Lighting the fires of enterprise” through abolishing Class 2 National Insurance contributions; a tax cut for the 3m self-employed.
- Capital Gains Tax headline rate to fall from 28% to 20%.
- Personal Allowance to increase to £11,500 from April 2017; another 1.3m taken out of tax altogether.
- High rate tax (40%) threshold to increase to £45,000; 500,000 removed from the high rate band.
Completely new flexible way for the next generation to save
- ISA limit increased 25% to £20,000.
- Introduction of the lifetime ISA, with a ‘government match’ of £1 for every £4 saved.
Unsurprisingly, Leader of the Opposition, Jeremy Corbyn, described Osborne’s budget as a failure with “unfairness at its very core”. Yet the Conservatives maintained it’s a budget that “gets investors investing, savers saving, businesses doing business; so that we build for working people a low tax, enterprise Britain. Secure at home, strong in the world.”