The first wholly Conservative budget in 18 years has been announced today by Chancellor of the Exchequer George Osborne.
A second budget in the year is highly unusual, but has been deemed necessary by the Conservative Government following a surprise majority outcome in the recent General Election to turn ‘promises made’ into ‘promise kept’ for voters.
The One Nation budget ‘for working people’, which ‘puts security first’ outlines changes including tax, defence and benefits, including clarifying the proposed £12 billion in Welfare cuts. It has pledged a £10 billion budget for the NHS by 2020, as well as substantial investment in Britain’s roads and infrastructure.
The sweeping Welfare cuts will hit young people the hardest, with plans to remove both housing benefits for young jobseekers as well as tax credit wage subsidies completely for under 25s. Osborne outlined an ‘earn or learn’ obligation for 18-21 year olds; whilst tuition fees will rise in line with inflation, and maintenance grants for poorer students in England to be further converted into loans.
Families on low incomes are also likely to suffer, with benefits outside London being capped to £20,000 as well as child tax credit cuts. Support for ‘working Britain’ has been demonstrated in raising the tax free personal allowance to £11,000, meaning those working 30 hours per week on minimum wage will pay no income tax.
Tough new penalties were promised on tax evasion with a ‘name and shame’ policy to be introduced to repeated users of failed tax avoidance schemes. Permanent Non-Dom status will also be abolished. Contrastingly, the inheritance tax (more commonly referred to as ‘Mansion Tax’) threshold will be raised to properties with a value of £1 million +, while corporation tax has been cut to just 18% in a bid to boost the economy. The levy on banks will also be reduced, with the introduction of an 8% surcharge on profits.
For Scotland, Wales and NI, there is likely to be further devolution of power, though this remains to be seen. Devolution of powers is already in effect in Greater Manchester, with Leeds, Sheffield and the Midlands potentially set to follow Whilst Osborne has claimed this is to fit with the idea of creating a ‘Northern Powerhouse’ in Northern England and lessening reliance on London, is has been suggested this is more to do with transferring spending commitments from the Treasury.
Ella Simpson, Director EVOC, has commented on the Budget, stating:
“The policies outlined in the Summer 2015 budget will see an incredible number of people who are already struggling move into poverty. In a country with one of the lowest corporation taxes, it is extremely disappointing that Chancellors have not seen fit to ensure that people in lowest wages would benefit from general business relief.
Yet again we are not investing enough in Britain’s future, and are putting our young people at serious disadvantage. Lessons from Welfare Reform in the 1980s which resulted in massive youth homelessness have been completely ignored.”
With the Welfare Reform and Work Bill to be published in full tomorrow; the full effect of the Summer Budget on our most vulnerable remains to be seen. We can be certain however that the Third Sector will be at the forefront, helping those hardest hit pick up the pieces.