Today’s Budget was a monumental one being the first of this decade, the first since the UK’s departure from the European Union and the first of this Government.
It set out a comprehensive plan for our country, ensuring proper investments in our roads, railways and digital networks which will underpin growth over the coming decade, as well as the world-class hospitals, schools, colleges and police forces that people rely on every day.
It also supports the Government’s ambition for a fair and sustainable tax system which helps people and families with the cost of living, funds the first-class public services we expect and creates an environment for businesses to succeed.
It takes steps to decarbonise the economy and protect the UK’s natural habitats, ensuring that every part of the UK economy is ready for the challenges of decarbonisation and ready to capitalise on the opportunities to become leaders in the green markets of the future.
Crucially, the Budget delivers on the Conservative Party’s Manifesto promises to the British people.
I hope that the following summary of the Chancellor's announcements is helpful to local residents.
Office for Budget Responsibility (OBR) Analysis
As ever, the independent OBR has published its outlook for the economy and public finances.
Key points on the economy:
- Growth will be 0.5ppts higher over this year and next thanks to the steps the Government is taking today.
- Our economy will grow in every one of the next five years: 1.1% in 2020, 1.8% in 2021, 1.5% in 2022, 1.3% in 2023 and 1.4% in 2024.
- Long-term productivity will increase by 2.5% thanks to the Government’s “planned increase in public investment”.
- Unemployment will remain historically low and 500,000 more people will be in work by 2025.
- Wages will grow in real terms in every year of the forecast period.
- Inflation is forecast at 1.4% this year and remains on or around target for the rest of the forecast period.
Key points on public finances:
- The Government was elected on a Manifesto that promised to meet a specific set of fiscal rules and today’s Budget delivers on that promise – with fiscal space of nearly £12 billion in the target year of 2022-23. The Government will also set the amount it will spend for the rest of this Parliament within these rules.
- The Government will review its fiscal framework to ensure it stays at the leading edge of macroeconomic thinking.
- A current budget surplus in every one of the next five years.
- Borrowing falling by the end of the Parliament. Borrowing will increase slightly from 2.1% of GDP in 2019 to 2.4% in 2020 and 2.8% in 2021. It falls to 2.5% in 2022, 2.4% in 2023, and 2.2% in 2024.
- Debt will be lower at the end of the Parliament than it is today, falling from 79.4% this year to 75.2% in 2024-25.
I know that many local residents are concerned about Coronavirus and so I am pleased that the Budget sets out a plan to support public services, individuals and businesses that may be affected. This is one of the most comprehensive economic responses of any government anywhere in the world to date. For more information about the measures announced, please see the dedicated page on my website here.
The Government is:
- Putting more money in peoples’ pockets with an over £200 tax cut for the typical family. The Government will increase the National Insurance threshold to £9,500 this April, benefiting 31 million people with a typical employee saving over £100 in 2020 – the first step to reaching its ambition to increase the threshold to £12,500.
- Increasing the National Living Wage to boost the wages of the lowest paid. The National Living Wage will increase by 6.2% to £8.72 from April. The Budget commits to a new ambitious target for the National Living Wage to end low pay and extend this to workers aged 21 and over by 2024.
- Axing the tampon tax now we have left the EU. The Government will reduce the cost of essential sanitary products for women in the UK, abolishing the tampon tax from 1 January 2021.
- Freezing fuel duty for a tenth year in a row to help with the cost of living. The Government will freeze fuel duty for the tenth year in a row saving the average car driver a cumulative £1,200 compared to Labour’s plan.
- Freezing duty rates on beer, spirits, wine and cider helping with the cost of living. This will be only the second time in almost 20 years a government has frozen all these duties.
- Creating an entitlement to Neonatal Leave and Pay to support parents with the stress and anxiety of having a baby in neonatal care. For employees whose babies spend an extended period of time in neonatal care, the Government will provide up to 12 weeks paid leave.
- Helping Universal Credit (UC) claimants to repay debts in a more manageable way. The Government will reduce the maximum rate at which deductions can be made from a UC award from 30% to 25% and give claimants 24 months to repay advances. This will benefit 46% of claimants who will see an average increase to their annual income of £324.
- Reducing reassessments for Personal Independence Payment (PIP) to avoid unnecessary anxiety. PIP claimants whose conditions are unlikely to change will have an award period of at least 18 months, reducing assessments for over 100,000 people with disabilities per year.
- Protecting access to cash and supporting alternatives to high-cost credit. The Government will bring forward legislation to protect access to cash and to allow credit unions to offer a wider range of services and products.
The Government is:
- Increasing the Employment Allowance so businesses can grow and create more well-paid jobs. The Government will help businesses to take on extra staff by increasing the Employment Allowance to £4,000 (increasing it by a third) benefitting over 500,000 businesses and taking 65,000 businesses which will be taken out of National Insurance Contributions altogether.
- Backing entrepreneurs with start-up funding. The Government will extend the British Business Bank’s Start-Up Loans programme, supporting up to 10,000 additional loans up and down the country.
- Cutting taxes for businesses to allow them to invest and focus on growing their business. The Government will increase the annual rate of Structures and Buildings Allowance to 3% providing over £1 billion in additional relief for businesses by the end of the Parliament.
- Increasing R&D tax credits to significantly increase private R&D investment helping to reach its 2.4% of GDP by 2027 target. The Government will increase the rate of Research and Development Expenditure credit from 12% to 13% and consult on whether to allow additional costs to qualify for both R&D tax reliefs.
- Backing its exporters by increasing the lending capacity of UK Export Finance. The Government will make permanent the additional £2 billion to UKEF at Budget 2018 as well as a new £2 billion lending facility for projects supporting clean growth and a new £1 billion to support UK defence and security goods.
- Reforming Entrepreneurs’ Relief so that it genuinely works in the interests of small business owners. In response to evidence that Entrepreneurs’ Relief has primarily benefited a small number of very affluent taxpayers and done little to generate additional entrepreneurial activity, the Government will reduce the limit on eligible gains to £1 million as recommended by the Federation of Small Businesses. Over 80% of those using the relief are unaffected. The Resolution Foundation called Entrepreneurs Relief the “worst tax relief in the UK”.
- Encouraging more businesses to employ veterans. The Government will introduce a National Insurance Holiday for employers of veterans in the first year of civilian employment.
Science and Research
The Government is:
- Increasing public R&D investment to £22 billion per year by 2024-25. This investment is the largest and fastest ever expansion in support of research and innovation, taking direct support for R&D to 0.8% of GDP and placing the UK ahead of the USA, Japan, France and China.
- Boosting funding for its world leading universities and research institutions to attract the brightest and best. The Government will provide an immediate £400 million from 2020-21 for world-leading research, infrastructure and equipment – a large share going outside the ‘Golden Triangle’. The Government will also provide £300 million for maths research, doubling the funding for new PhDs.
- Investing £800 million in a new blue-skies funding agency to fund high-risk high-reward science. This will be modelled on the extraordinary ‘ARPA’ in the US.
The Government is:
- Delivering on its promises with £5.4 billion more for the NHS and health service– writing the cheque for 50,000 more nurses and 50 million more GP surgery appointments per year. The Government will enshrine into law a cash boost of £33.9 billion by 2024. But this Budget goes further by investing £5.4 billon in this Parliament to support the recruitment, retraining and retaining of 50,000 more nurses including a new nursing maintenance grant for all nursing students.
- Providing nearly £700 million of new funding in 2020-21 to improve hospitals across England. Alongside its plan to build at least 40 new hospitals – the largest hospital building program in a generation – the Government will increase the Department for Health and Social Care’s capital budget to allow more vital improvements to hospitals. As part of the Government’s £2.7 billion for six major hospital schemes, it is committing funding for University Hospitals of Leicester NHS Trust.
- Addressing the ‘taper problem’ in doctors’ pensions, which causes many to turn down extra shifts for fear of high tax bills. Delivering on its Manifesto commitment, the Government is taking the vast majority of doctors out of the tapered annual allowance, including up to 98% of senior medical consultants– a £2 billion commitment which supports hard-working doctors.
- Investing in further education, and the arts and sports in schools to ensure everyone gets the best start in life. The Government will invest £1.5 billion over five years to refurbish further education colleges. The Budget also provides £29 million a year by 2023-24 to support primary school PE teaching, ensuring children are getting an active start to life and £90 million a year to introduce an Arts Premium to secondary schools in England – averaging out as £25,000 per secondary school for three years.
- Confirming every region in the country will have funding for specialist 16-19 math schools. This will get more young people learning form the best mathematicians.
- Investing £8 million in local football facilities to provide quality football facilities in areas with the greatest need. This funding will be matched by the Premier League and Football Association.
- Committing to a new £3 billion National Skills Fund to ensure people gain the skills they need for rewarding well-paid jobs. The Government will consult with people and employers on how to target the fund in the best way.
- Increasing funding for counter-terrorism and its intelligence community to keep people safe. This includes £83 million for counter-terrorism policing and £31 million for the UK intelligence community. The Government will also provide an additional £67 million so its intelligence agencies can build on their world-leading technological capabilities and protect the UK’s security.
- Supporting veterans with £10 million for Armed Forces mental health charities. The Government will commit £10 million to Armed Forces Covenant Fund Trust to support veterans with mental health needs.
The Government is:
- Investing record amounts – triple the average over the last 40 years – to build the railways and roads of the future. This includes investing £20 million in the Midlands Rail Hub.
- Providing £50 million to improve accessibility for disabled people at train stations so that its transport network is open to everyone. As part of its £300 million Access for All Fund, the Government will improve accessibility at 12 more train stations across the country.
- Delivering £500 million for major road schemes between 2020 and 2025. This will help fix the A46 Newark Bypass and develop proposals for upgrades to the M1 to better link Leicester and Nottingham. The Government is also investing over £27 billion to 2025 on the Second Road Investment Strategy. To decarbonise the transport sector, the Government expect 97% of cars and vans to be zero emission by 2050.
- Delivering £2.5 billion to fill millions of potholes over the next five years – speeding up journeys, reducing vehicle damage and making its roads safer. The Government has set up a new Potholes Fund, which will provide £500 million a year (a 50% increase) fund to fix 10 million potholes a year. The East Midlands will receive an additional £56 million through this fund.
- Delivering next generation broadband to the most difficult to reach areas of the UK with a record £5 billion of funding. This funding will support gigabit-capable broadband which is 40 times faster than standard superfast broadband benefitting 5 million premises and the hardest to reach parts of the country.
- Improving phone reception in rural places with a £1 billion investment in the Shared Rural Network. The Government will ensure rural areas are not left behind and will provide £510 million of funding which will be more than matched by industry so 95% of the UK will have high quality 4G mobile coverage.
- Setting up a new economic campus in the North and reviewing the Green Book on government investment. The Government will establish a new economic campus in the north of England, representatives in every nation and review the Green Book, the manual for investment to ensure the Government invest across the UK.
- Launching a £30 million Changing Places Fund, to build more accessible toilets and ensure that no one is disadvantaged because of a disability. The Government will ensure that Changing Places toilets are installed in new public buildings and launch a £30 million fund to identify sectors where the Government most needs to accelerate the provision of such facilities.
Green Growth and the Environment
The Government is:
- Doubling the amount it invests in flood and coastal defence to £5.2 billion over six years. Flooding has had a devastating impact so the Government will double the current investment better protecting 336,000 homes. The Government will also provide £120 million to the Environment Agency to repair assets damaged by recent floods.
- Boosting recycling and reducing plastic pollution by introducing a new plastic packaging tax. From April 2022, the plastic packaging tax will incentivise the use of recycled plastic and help reduce the scourge of plastic waste. The Government will set the rate at £200 per tonne of plastic packaging that contains less than 30% recycled plastic.
- At least doubling the size of the energy innovation programme. Research and innovation will reduce the costs of net zero and put the UK at the forefront of new technologies.
- Establishing a £800 million Carbon Capture and Storage Fund to capture emissions enabling its manufacturing heartlands to become leaders in green industry. The fund will establish CCS in at least two UK sites, one by mid-2020s and a second by 2030.
- Helping people to make the transition to cleaner, greener cars. The Government is consulting on bringing forward the phase-out date for the sale of new petrol and diesel cars and vans from 2040. This will, however, require a combination of measures so to support its transition to zero emission vehicles (ZEVs) the Government will: exempt zero-emission cars from the Vehicle Excise Duty expensive car supplement and publish a call for evidence on VED, which will include how it can be used to reduce vehicle emissions; extend the 100% First Year Allowance for ZEVs; and provide £533 million to extend to 2023 Plug-in Car Grants for zero emission cars and ultra-low emission vans, taxis and motorbikes.
- Providing £500 million over the next five years to support the rollout of a fast-charging network for electric vehicles – ensuring drivers will never be more than further than 30 miles from a rapid charging station. To ensure this money is spent effectively, the Government will complete a comprehensive review into elective vehicle charging infrastructure.
- Making polluters pay by removing the entitlement to red diesel outside protected categories. The Government will use the tax system to incentivise users of polluting diesel fuel to improve their energy efficiency by removing the entitlement on red diesel from April 2022 except in agriculture, fish farming, rail and non-commercial heating sectors.
- Investing £304 million to enable councils to improve air quality. The Government will help local authorities to reduce nitrogen dioxide emissions with this investment bringing the total amount that government has provided to affected local authorities to £880 million.
- Announcing a Nature for Climate Fund which will invest £640 million in tree planting and peatland restoration. Its plans will see the rate of tree planting increase by over 600%. The Budget has also announced the Nature Recovery Network Fund to partner with businesses and local communities to restore wildlife.
- Trebling funding for the Darwin Plus programme helping to protect and conserve the globally significant biodiversity found in the UK’s Overseas Territories. This builds on £220 million for bio-diversity conservation in developing nations and the doubling of UK climate finance announced last year.
The Government is:
- Setting out an ambitious package to build quality homes this country needs. The Budget announces £9.5 billion for the Affordable Homes Programme helping to prevent homelessness and help people to get on the housing ladder and taking the total funding to £12.2 billion from 2021-22. This will be the largest cash investment in affordable housing in a decade. The Government will also publish a White Paper on planning in line with its aim to support at least a million more homes
- Creating a new £1 billion fund to remove unsafe cladding. Having taken expert advice, the Government will provide this additional funding to remove non-Aluminium Composite Material cladding from residential buildings above 18 meters to ensure people feel safe in their homes.
- Ending rough sleeping in this Parliament with £643 million of targeted support. Most recent rough sleeping statistics show a 9% fall on the previous year. This Budget will build on this to provide up to 6,000 beds and a substance misuse treatment services with the full capacity to help 11,000 people a year. This will help the most vulnerable people across England, a key step towards ending rough sleeping. The Government will fund its rough sleeping policies through the non-UK resident Stamp Duty Land Tax.
- Bringing more brownfield land into use with a new £400 million Brownfield Housing Fund. Pro-development councils and ambitious Mayoral Combined Authorities will be able to bid into this fund enabling them to create more homes.
- Speeding up and improving the planning system to unlock land for the homes people need. The Government will publish a Planning White Paper setting out how it will bring the planning system into the 21st Century and rethink planning from first principles.
The Budget documents can be found here.
You can watch the Chancellor’s speech here.
If you would like any further information about anything I have mentioned above, please do send me an email at: email@example.com