Wednesday saw the first wholly-Conservative budget since 1996. In the lead-up, it had been widely reported it would include significant cuts to in-work benefits and savings, as the government seeks to create a budget surplus by 2020.
The chancellor’s budget speech included many of the measures put forward in May’s Queen’s Speech as policies the Conservatives were unable to put in place in the last parliament due to the influence of their coalition partners, the Liberal Democrats.
Once again deploying the familiar phrase “We’re all in it together”, George Osborne attempted to portray his latest budget as one of ‘aspiration’. He claimed the country was “fundamentally stronger than five years ago”.
Assessed by some as a budget which hit the young and protected the old, targets for cuts included university students, the replacing the existing student grant system with loans will lead to an overall fall in the amount of money given to the poorest students, a reduction in housing benefit for under-21s and a freeze in working age benefits for the next four years, as well as a lowering of the benefit cap to £23,000 in London and £20,000 in the rest of the country.
In a move which had been widely anticipated, Mr Osborne also announced a rise in the threshold at which people start paying inheritance tax to £1m, lifting many people out of this tax altogether.
Also announced was a cut in the rate of corporation tax to 18%, a move which has been seen as an attempt to appease businesses who will have to start paying an increased minimum wage from April next year.
One of the more surprising announcements was the new ‘living wage’ which will be introduced in 2016 at £7.20 per hour and will rise to £9 per hour by 2020. As this will be compulsory, it will, in effect become the new minimum wage for over 25 year-olds.
However, despite the chancellor’s use of the phrase ‘living wage’, the figure does not equate to the level which Living Wage UK believes is necessary (£7.85 per hour outside London and £9.15 inside).
As far as transport and infrastructure are concerned, the chancellor’s speech was something of a let-down. Despite the high-profile of the ‘Northern Powerhouse’ in the weeks following the general election, there was no mention of it - or of any other related policies.
Those working in these sectors should not be entirely disappointed, however, as the full budget report included several policies relating to transport, infrastructure, and the powerhouse agenda.
The full summer budget briefing document is now available to download.
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