UK Chancellor of the Exchequer George Osbourne has delivered his eighth budget where he set out how he planned to clear the deficit and for the economy to be in a small surplus by 2020. The speech which took place on Wednesday 16th March contained a number of plans. Amongst them was a new sugar tax on the soft drinks industry which would be introduced in two years time. It is hoped that this would raise £520m a year. The profits from this would be spent on doubling the funding for primary school sports in England.
This levy would be calculated using the amount of sugar in sweetened drinks produced and imported based on two bands.
Pure fruit juice and milk based drinks are to be excluded and small supplies will be exempt.
Secondary schools in England to bid for £285m in new funding for extra after-school activities like sport and art
Plan for all schools in England to become academies by 2022
Compulsory maths lessons until 18 to be looked at
£500m to ensure “fair funding” formula for schools in England
Libor funds to be spent on children’s hospital services, specifically in Manchester, Sheffield, Birmingham and Southampton.
Predictions of growth for the UK economy have been downgraded for the next five years.
Growth forecast to be 2% in 2016, down from 2.4% in November’s Autumn Statement
GDP predicted to grow 2.2% and 2.1% in 2017 and 2018, down from 2.4% and 2.5% forecast four months ago
Outlook for global economy is “materially weaker” and UK “not immune” to slowdown elsewhere.
A million jobs forecast to be created by 2020
Inflation forecast to be 0.7% for 2016, rising to 1.6% next year
There will be cuts of £3.5b by 2020 with GDP set to fall to 36.9%.
Debt targets to be missed. Forecast debt as a share of GDP revised up in each of the next five years to 82.6% in 2016-17 and 81.3%, 79.9%, 77.2% and 74.7% in subsequent years
Debt to be £9bn lower in 2015-16 in cash terms
Annual borrowing in 2015-6 forecast to be £72.2bn, £1.3bn lower than forecast in November
Public finances still projected to achieve a £10.4bn surplus in 2019-2020
But borrowing forecasts revised up to £55.5bn (+£5.6bn), £38.8bn (+£14bn) and £21.4bn (+16.8bn) in 2016-7, 2017-8 and 2018-9 respectively
The deficit as a share of GDP is projected to fall to 2.9% in 2016-17, 1.9% in 2017-18 and 1% in 2018-19
The threshold at which people pay 40% income tax will rise from £42,385 now to £45,000 in April 2017 will only apply to Scotland if adopted by Scottish government
Tax-free personal allowance, the point at which people pay income tax, to rise from £11,000 in April 2016 to £11,500 in April 2017
Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers
Insurance premium tax to rise from 9.5% to 10%
Class 2 National Insurance contributions abolished, which the government says gives a tax cut of more than £130 to three million self-employed workers from 2018
There were also plans to cut disability benefits and this has sparked threats of a Tory revolt. There have been complaints from disability groups and campaigners as money would be taken away from disabled people who need it to buy specialised equipment to help them manage in their everyday life. These plans have been called a suggestion by cabinet minister Nicky Morgan. She stated the proposals were “still under consultation”, but aimed to make sure “the right people” got help. 370, 000 disabled people would be hit by these cuts with an average loss of £3, 500 a year. That’s according to the Institute for Fiscal Studies.
Following the Chancellors announcement there have been many complaints and objections from Disability Charities who claim their members are being victimised and that the people who have the most need are having their support taken away from them. There have even been protests from members of the Conservative party who think the planned measures are unfair and will mean a lot of disabled people will not be able to afford the equipment and support they need to manage in every day society. The budget has been scrutinized by an independent board who claim that the Chancellors sums do not add up.
The day after the budget the Chancellor was interviewed on television where he stated that he was trying to make sure that the people who were in the most need got the funding and support they required.
Some of the key changes to disability benefits mentioned in the budget are as follows:
Independent living: getting a life
Social Care
2.19: The government will exempt war pension payments made to injured veterans from the social care means test in England from April 2017.
Benefits
Disability and sickness benefits
2.76: The budget mentions changes to PIP rules in relation to terminal illness and aids and adaptations as already announced. The Government is considering the case for long-term reform of disability benefits and services ‘that is fair for the taxpayer and for those with disabilities or health conditions.’
2.78: The government will increase the number of presenting officers in attendance at Employment and Support Allowance and Personal Independence Payments tribunal hearings from 2017.
1.69: Spending in 2015-16 on PIP and Disability Living Allowance is expected to be over £3 billion higher in real terms than in 2009-10. Spending on these benefits is forecast to be higher in real terms in 2019-20 than in 2009-10.
Household benefit cap exemptions
2.73: From Autumn 2016, the government will introduce exemptions for recipients of Guardians Allowance, Carer’s Allowance and the carer’s element of Universal Credit from the household benefit cap, which caps the amount of benefits out-of-work working-age families can receive at £20,000, and at £23,000 in Greater London.
Housing benefit
2.74: The date from which new or renewed tenancies in the social sector will be subject to the cap on Housing Benefit at the relevant Local Housing Allowance rate will be deferred for supported accommodation – from April 2016 to April 2017 – to enable the government to complete a review of supported accommodation.
2.75: The government will delay the ending of the payments of Housing Benefit and Pension Credit to claimants who travel outside of Great Britain for longer than 4 weeks consecutively. This will now come into force in May 2016.
Contributory benefits for self employed
1.166 and 1.167: From April 2018, Class 2 National Insurance Contributions (NICs) will be abolished. The Government will reform Class 4 NICs as a route to self-employed individuals building entitlement to the State Pension and other contributory benefits.
Welfare Cap
1.70: The government’s intention is for the cap to be met by the end of the Parliament when the Office for Budget Responsibility conducts its next assessment at Autumn Statement 2016.
Sport
2.18: The government will invest £1.5 million in sports prosthetics for children and create a fund to develop innovative prosthetics for the NHS.
Help to Save
1.113: The Government will introduce a new Help to Save scheme for those on low incomes who wish to regularly set aside some of their income. The scheme will be open to 3.5 million adults in receipt of Universal Credit with minimum weekly household earnings equivalent to 16 hours at the National Living Wage, or those in receipt of Working Tax Credit. It will work by providing a 50% Government bonus on up to £50 of monthly savings into a Help to Save account. The bonus will be paid after two years with an option to save for a further two years, meaning that people can save up to £2,400 and benefit from government bonuses worth up to £1,200. People will be able to use the funds in any way they wish.
Career opportunities – getting work, education and skills
Disability employment reform
1.134: Later this year, the government will publish a White Paper focusing on the roles that the health, care and welfare sectors can play in supporting disabled people and those with health conditions to get into and stay in work.
2.72: The government has accepted the recommendations of an expert-led taskforce on how to provide £330 million of additional funding for disabled claimants allocated at Summer Budget. This will include:
tailored peer support offer to offered shared experiences and support to disabled people
bespoke employment support directed at key priority groups, such as young people and those suffering from mental health conditions.
Tax credits
1.169: The Budget provides self-employed Working Tax Credit claimants with access to business support and will extend the mentoring support offered on the New Enterprise Allowance scheme to self-employed Universal Credit claimants. The government will also trial face-to-face support from Jobcentre advisors for self-employed Working Tax Credit claimants, with a view to national roll out if successful.
1.186: HMRC will provide 7-day a week helpline service by 2017, with extended hours and Sunday opening on online services and the tax and tax credits phone lines, so that people and businesses have more opportunity to contact HMRC outside of working hours
Following the budget, Iain Duncan Smith resigned from his job as Work and Pensions Secretary denouncing £4b of planned cuts to disability benefits as indefensible. He claimed pressure to “salami slice” welfare, saying the latest cuts were a “compromise too far” in a Budget that benefits higher earning taxpayers.
BBC political editor Laura Kuenssberg said: “There had been bad blood off and on between Chancellor George Osborne and Iain Duncan Smith over some of the more controversial welfare reforms, but nobody expected this move only 48 hours since the Budget.”
http://www.bbc.co.uk/programmes/p03nd95b
Following Iain Duncan Smith’s resignation, Stephen Crabb was promoted to fill the gap on 19th March.
Due to all the negative reaction and feedback from the general public, it has now been decided that the changes to disability benefits will not go ahead. There will also be no more welfare changes for the rest of this parliament.
The Chancellor will today defend his handling of the budget and tell ministers how he expects to cover the £4.4b gap when he attends the House of Commons.
