The Chancellor has delivered his annual Budget to Parliament. The main points of the statement were:
Osborne confirms that English schools will be “freed” from local authority control, and turned into an academy.
As London schools have been turned around, there will be a focus on turning around schools in the north.
- All pupils up to 18 may have to learn maths.
- A fairer schools funding formula will be introduced.
- Extra funding will be released to keep schools open longer.
- Every primary and secondary school is to be in the process of becoming an academy by 2020.
- An education white paper will be published tomorrow with more details.
- £115m to support homelessness.
The Chancellor confirmed plans to go ahead with HS3 from Manchester to Leeds, in addition to the announcement yesterday that Crossrail 2 will go ahead as part of the £27 billion rail upgrade which will create a link through the capital from north to south.
- Upgrades will be made to the A66 and the A69 in the North Pennines, and the M62 will be made into a four lane motorway. There will be a new tunnel road from Manchester to Sheffield.
- There will be a £13m contribution Hull City of Culture next year.
- An extra £700m for resilience and flood defences to be raised through a 0.5% increase in insurance premium tax.
- Go-ahead for flood schemes in York and Leeds amongst others.
- The Cathedral repairs fund extended by £20m and there will be a tax break for museums.
- 100% of local government resources will come from their own area by the end of the Parliament.
- Greater Manchester to get new powers over criminal justice.
- New devolution agreement with a mayor for East Anglia, the West of England and Greater Lincolnshire.
- Negotiations will be opened on city deals with Edinburgh and Swansea and there is a new £1bn deal for Cardiff city region.
- A Thames estuary commission will be established, to be led by Michael Heseltine.
Disability budget will rise by more than £1billion.
Energy and Climate Change
- Climate change levy will rise from 2019
- £730m in auctions to back renewable technologies
Savings and Pensions
- Public sector employer pension contributions to rise.
- New state-backed savings scheme for low-paid workers, worth up to £1,200 over four years.
- The Money Advice Service, which has provided financial advice to consumers since 2010, is to be abolished.
- ISA limit increased from just over £15,000 to £20,000 from April 2017.
- New Lifetime ISA for under-40s from April 2017. Can save up to £4,000 a year; government puts in £1 for every £4 saved and no tax paid when money withdrawn.
- New sugar levy on soft drinks to be introduced in 2018. There will be a consultation on its implementation.
- This sugar levy to raise £520m and the money will help to fund extending school days for wider activities that will be voluntary for schools but compulsory for pupils.
- Will raise £12bn over this Parliament through taking further steps to tackle tax avoidance and evasion, including moves to end the use of “personal services companies” by public sector employees to minimise their tax liabilities.
- Corporation tax –currently 20% – to be lowered to 17% by 2020.
- Tax reforms to close corporate tax loopholes and profit diversion schemes will raise £9bn from large firms.
- Threshold for small business rate relief will rise from £6,000 to £15,000 from April 2017.
- Threshold for higher rate of business rates will rise from £18,000 to £51,000.
- Supplementary Charge for oil and gas producers to be halved from 20% to 10%.
- Petroleum revenue tax to be “effectively abolished”.
- Greater London Authority (GLA) to retain all business rates from April 2017.
- ‘Tax break for the digital age’ – new £1,000 tax free allowance ‘to help micro-entrepreneurs’ selling services or renting their home online.
- Commercial stamp duty reform to come into effect from midnight; 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m.
- Class 2 National Insurance contributions scrapped for self-employed workers from April 2018.
- Capital Gains Tax basic rate cut from 18% to 10%. Higher rate cut from 28% to 20%.
- Entrepreneurs’ relief of 10% to be extended to long term external investment in unlisted companies.
- Tax free allowances employers and employees use for pensions advice increased to £500.
- Tax-free personal allowance to rise to £11,500 from April 2017.
- Higher rate of tax threshold to rise to £45,000 from April 2017.
- Fuel duty continues to be frozen.
- Beer and city duty frozen.
- Duty on whisky frozen.
- All other alcohol duties will rise by inflation at planned.
National debt as a share of GDP
In cash terms the national debt is lower than it was forecast to be, but so is the nominal size of the economy. This means that debt as a percentage of the GDP is higher. “When I became Chancellor we borrowed £1 in every £4 we spent – now it’s £1 in every £14”.
The new debt/GDP forecast means that the Chancellor has missed his target of starting to cut the national debt, as a percentage of output, this financial year. That now won’t happen until 2017-2018.
Public Sector Borrowing
- Public spending is due to hit 36.9% of GDP by end of the decade – the same as the government raises through taxation.
- Further spending cuts of £3.5bn by 2019/2020.
- The Chancellor promises that with his cuts “the country will be spending no more than the country raises in taxes” and he will do this whilst investing in services like the NHS.
- Figures out today from the Office for National Statistics show that employment is at the highest level ever. The proportion of people on out of work benefits is also at its lowest rate since November 1974.
- 2 million jobs were created during the course of the last Parliament with a further 1 million to be created over the course of this Parliament.
- 90% of the new jobs created since 2010 have been in skilled occupations, with three quarters being full time.