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Can We Remain ‘Relentlessly Positive’ About the Autumn 2018 Budget?

Can We Remain ‘Relentlessly Positive’ About the Autumn 2018 Budget?

Grow Talk by Sofy Robertson

The Budget, rapidly becoming the most popular ‘b’ word in the media after Brexit, was set on October 29th by Phillip Hammond.

News platforms and businesses alike have been quick to give their views and reactions to the Autumn projections. At Grow, we aim to project a ‘relentlessly positive’ attitude in our media coverage. As with every article we publish, we aim to celebrate the good news out there and not simply hone in on the faults. That being said, it would be naive of us as a media company to report only the highlights of the Autumn 2018 Budget. This Grow Talk article, therefore, aims to bring you the facts of the budget, as well as their potential impacts, both positive and negative, on the UK.

How is the budget set?

Before setting the budget each year, Britain’s Chancellor of the Exchequer is given a revised set of fiscal forecasts by the Office for Budget Responsibility (OBR), the official fiscal watchdog. Since the financial crisis of 2008, Britain’s tax revenues have failed to live up to the promise of OBR’s forecasts. This has made it difficult for the government to reduce the country’s budget deficit.

Why is this year’s budget different?

This financial year, Britain will borrow £26bn, around 1% of GDP, which is £10bn less than what had been expected in March of this year. The OBR’s forecast period, which runs to 2023, shows that Britain’s public finances are some £60bn healthier than previously thought.

Key Budget Allocations: Business, Finance and Personal Taxation

Autumn Budget 2018

  • The 2018 Budget contains good news for some of Britain’s 5.6m small businesses. £900m will be spent in business rates relief for small businesses and £650m will go towards rejuvenation of high streets. Christoph Rieche, CEO and Co-Founder of iwoca, one of Europe’s fastest growing small business lenders, said:

“Cutting business rates will come as welcoming news to thousands of independent retailers […] At a time when jobs and economic growth are more dependent on the success of this sector than ever before, the Government should be clearing the way for British businesses to thrive. It’s taken a step in that direction today.” (Tancredi)

  • The personal allowance threshold, the rate at which people start paying income tax at 20%, will rise from £11 850 to £12 500 in April. This is a year earlier than the government had originally planned.
  • The National Living Wage will increase by 4.9%; from £7.83 per hour to £8.21 per hour from April 2019.

Key Budget Allocations: Alcohol, Tobacco and Fuel

  • Beer, cider and spirits duties are to be frozen.
  • Fuel duty is to be frozen for the ninth year in a row.

Key Budget Allocations: Housing

  • All first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief.
  • £500m is to be given to the Housing Infrastructure Fund which will enable a further 650 000 homes to be built.

Key Budget Allocations: Welfare

  • Work allowances for universal credit are to be increased by £1.7bn.
  • 4 million working families with children will benefit by £630 per year.

Key Budget Allocations: Public Sector

Autumn Budget 2018

  • An extra £160m will go towards counter-terrorism police.
  • £10m will go towards mental health care for veterans, to mark the centenary of the Armistice which brought World War One to an end.
  • Confirmation has been given of an extra £20.5bn for the NHS over the next five years.
  • A minimum extra of £2bn a year will be allocated to mental health services.
  • New mental health crisis centres will be established in every accident and emergency unit in the country.
  • More mental health ambulances have been promised as well as a 24-hour mental health crisis hotline.
  • An extra £700m will be allocated to councils for care of the elderly and those with disabilities.
  • £10m will be given to air ambulances.
  • A one-off £400m ‘bonus’ will be given to schools to help them “buy the little extras they need” (BBC )

Key Budget Allocations: Transport

  • A £30bn package will be delivered to aid England’s roads, including repairs to motorways and potholes.

Key Budget Allocations: Environment and Energy

  • A new tax on plastic that does not contain at least 30% recycled material will be introduced.
  • £60m will go towards planting trees in England.

The not so good news: Climate Change

Green MP Caroline Lucas raised an important point during the budget debate:

“Not one single word from this chancellor about climate change. Nothing about clean energy. Nothing about green energy.”  (The Canary)

Lucas later tweeted the words she had spoken in parliament, drawing attention to how “barely 2 weeks [had passed] since the world’s scientists issued [its] starkest warning yet – just 12 years to prevent climate catastrophe” yet “not one word” about climate change or an emergency climate change budget had been raised in the Autumn budget. Moreover, Lucas was cut off mid-speech when she raised this concern in parliament.

A further tweet from Lucas shows a highlighted passage of the proposed budget (point 4.105) that Lucas says shows “a possible £3bn tax break for oil and gas companies in the North Sea” which she argues is “yet another blank cheque for the dirty fossil fuel industry while clean, renewable energy is ignored”.

The not so good news: Education

The one-off bonus that will be given to schools this year for “the little extras they need” has many within the education sector riled. Either that, or laughing hysterically at the sheer ridiculousness of the phrase.

Unions said Mr Hammond’s gesture would “infuriate” head teachers as England’s school leaders have been relentlessly campaigning for better funding for schools, saying their budgets have been squeezed (BBC).

This year and last, reports were rife of parents and teachers buying toilet rolls, food, stationary and other essentials for their children’s schools. Having left the teaching profession at the end of this school year, I experienced lack of resourcing and funding first hand. There was a period where there was no blue tac available in my school to put up displays and my class of thirty shared one school-owned glue stick.

Geoff Barton, general secretary of the Association of School and College Leaders said:

“While we welcome any increased investment in schools, the £400m ‘bonus’ announced today hardly scratches the surface of what is needed. The chancellor’s comment that this money will help schools to ‘buy the little extras they need’ shows a complete misunderstanding of the prevailing funding pressures.”

Jules White, Headteacher at Tanbridge House School in Horsham and leader of the Worth Less Campaign said:

“Never mind Mr Hammond’s ‘extras’ – schools can’t afford the essentials. We’ve appealed for help with our budgets and especially for support [for] children with special needs and for the most disadvantaged pupils. It’s all fallen on deaf ears.”

The not so good news: IFS name the budget a gamble

Autumn Budget 2018

The Institute for Fiscal Studies (IFS) have today accused Hammond of gambling with the economy in the Autumn 2018 Budget. Paul Johnson, director of the IFS said:

“When push comes to shove it’s not tax rises and it’s not the NHS that Mr Hammond is willing to gamble on, it’s the public finances. Because yesterday’s budget was a bit of a gamble. Yes the OBR reduced borrowing forecasts so he was able to find more money without committing to more borrowing. But what the OBR gives the OBR can take away. Suppose the public finance forecasts deteriorate significantly next year. They might. There’s perhaps a one in three chance of that. What will he do then?” (The Guardian)

What impact will Brexit have on the proposed budget?

It’s about time we mentioned the second ‘b’ buzz word: Brexit. This is where everything becomes a little muddier.

The evening before Hammond proposed the Autumn Budget, he said a no-deal Brexit would require a “different response” with “fiscal buffers” in place to support the economy. He spoke frankly to Sky News, saying “we’d need to have a new Budget that set out a different strategy for the future.” (BBC)

There are reports that Downing Street later rebuked Hammond’s comments, saying that the budget plans would go ahead regardless of the type of deal delivered from Britain’s exit from the EU.

What does this mean for the future of the United Kingdom?

After reading about the proposed Autumn 2018 Budget and its subsequent media dissection, you may be questioning whether or not you are feeling more informed about the future of our country.

Despite the battle of opinion within our government, the uncertainty of Brexit remains a looming spectre over even the best-laid plans. The budget itself, released earlier than usual this year due to Brexit negotiations, is evidence of this.

Uncertainty has become one of the most significant themes, or perhaps issues, that the people of the United Kingdom are facing. Hammond’s budget claims to end austerity, to champion the “strivers, the grafters and the carers” (The Guardian). This claim was met with immediate criticism from the opposition, with Labour Party leader Jeremy Corbyn accusing Hammond of providing “half measures and quick fixes while austerity grinds on”.

It is uncertain whether the budget will form the building blocks for change in terms of austerity and our struggling education and health services. As Corbyn predicts, Hammond’s proposals may form nothing more than sticking plaster on an arterial wound. This reporter is unable to offer the certainty and assurance that we, as a nation, are missing, but remains relentlessly positive that we can weather what is to come.

Photos by Jon Tyson , rawpixel , Santi Vedrí on Unsplash

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