Naked Politics Blogger
Yesterday, the Chancellor of the Exchequer presented a Budget for the “next generation.”
“Act now to make sure we don’t pay later” said George Osborne said when introducing his Budget. The Chancellor of the Exchequer commented early on about the financial woes across the global economy. “Financial markets are turbulent. Productivity growth across the west is too low. And the outlook for the global economy is weak.”
This statement was followed up by Chancellor saying the situation made for a “dangerous cocktail of risks”. This didn’t seem to sway the Chancellor from going on to announce a large amount of policies aimed at the “next generation”.
Here are the main highlights of the Budget:
A longer school day for 25% of secondary schools
The Chancellor pledged an additional £285 million a year for 25% of secondary schools. Schools will be able to opt in to the longer days from September 2017. This means parents – particularly of younger families – will have more flexibility around working later. State schools in UK currently finish at 3:30pm.
Sugar tax on soft drinks
From April 2018, the long suspected ‘sugar tax’ will be introduced as a levy on soft drinks companies. The levy was recently advocated by Chef Jamie Oliver. The tax is expected to raise an additional £160 million for the Treasury. This money will be used to increase funding for PE and Sports at school. This announcement was welcomed by both sides including the Leader of the Opposition – Jeremy Corbyn – during his response.
Every school will be an academy by 2022
By the end of 2020, every school in England will become an academy or free school. Academies give head teachers more control over their budgets. They have to abide by the national curriculum but, are able to take on private and corporate sponsors to provide products and services to the school. This has made them very unpopular with the left wing in the Labour Party during recent years.
Lifetime ISA for any adult under 40
The Chancellor announced the ‘lifetime ISA’. This means anyone under 40 can save up to £4,000 each year and receive a 25% addition by the Government. I.e. Save £1,000 and received £250. The total amount you can save into ISAs has also be increased from £15,240 to £20,000 as of April 2017.
ISA are difficult to understand. Find out more here.
Personal Tax Allowance increase to £11,500
From April this year you can earn £11,000 and pay no tax. From April 2017 you can earn £11,500 and pay no tax.
Tax Allowances for money earned from the sharing economy
Those using the ‘shared economy’ received tax breaks in the Budget. You can earn up to £1,000 from occasional jobs like ‘providing a car service’ or ‘selling goods’ you’ve made before paying any tax. Equally, if you let a property on a service like AirBnB you earn up to £1,000 before paying tax. This is a constructive step towards integrating the digital economy into the tax system.
Corporation Tax cut to 17% by 2020
The main rate of Corporation Tax (the main business tax) will be slashed from 20% to 17% by the end of 2020. This is in the hope that more businesses will look to set-up shop in the UK and pay tax legally rather than using methods to avoid. A similar strategy was taken by the Republic of Ireland. The only risks are that there will still be loopholes for large corporates to dive through.
Tougher rules on large companies avoiding tax
In the Budget, the Chancellor tried to make amends following the alleged sweetheart deal with Google on its tax affairs. He pledged to cap a relief on interest payments to 30%. This means large businesses will be stuck when attempting to move money out of the UK. The Chancellor also introduced tougher new rules on royalty/patent payments (as described in the recent BBC programme regarding the ‘Fair Tax Town’ Crickhowell).
As well as the policies listed above there were an array of other announcements that included; an additional £700 million for flood defences, a new tax break for museums and touring exhibitions, a freeze on fuel duty and a 2% increase in tax on cigarettes (3% for rolling tobacco).
Tax on sugary drinks was definitely the rabbit out the hat for this Budget. Only time will tell if it hurts the poorest in society most or, encourages them to eat healthy. Jamie Oliver has told us it’s a good thing, but then again he’s not living rough. All we do know is that Jeremy Corbyn supported it – which for socialist is quite bold.
The whole Budget was a mundane spectacle. This is Osborne’s eighth budget but it certainly wasn’t lacking in creativity. It was an upbeat tax and spend. At some point though, little George’s luck is going to run out. Growth has been forecast down, he needs to cut another £3.5bn and, our trading partners are suffering hard (China in particular). To top the whole thing off we also have an EU referendum that could knock the UK into oblivion.
There were lots of sweeteners for young people and young families today. But. Despite Osborne’s cries of success; we must fight against the race to turn schools into academies. It’s the biggest step towards privatisation of the education system ever made. Putting large quantities of money into head teacher’s hands and, letting them bring on corporate sponsors is an expenses scandal nobody wants to see. The Chancellor must remember that the ‘next generation’ are people, not numbers.