Budget 2018 has been announced and it is today under intense scrutiny after government has offered tax cuts and extra cash for public services.
Philip Hammond opened his speech by announcing the Budget that paves a way for bright future for Britain and for hard working people who are the ‘backbone of the economy’
Chancellor backed his Budged on optimistic, economic indicators of the lower borrowing and stronger that expected economic growth for the second year running.
But first interviews with ordinary, working people as well as with economy experts (some supporting labour) reveal that the public is sceptical about ‘the austerity coming to an end’.
On the face of it, the Budget is good news for higher earners as it is increasing the tax allowances (now -£11,850, from April 2019 – first £12500 will not be taxed) and announcing more money for those receiving Universal Credit being particularly to the benefit of single mothers working over 25 hours a week.
The increase in tax allowance means saving of about £130 for basic tax payer and £860 for higher tax rate payer and £600 for additional rate tax payer. National Insurance Contributions are however going up bringing those gains down to around £500 to higher tax rate payers.
Also, we can expect 4.9% increase in the National Living Wage (from £7.83 an hour to £8.21 in April 2019) however with the prices constantly going up some argue that it is not going to make any difference at all.
Hammond has also promised more money to fix roads and 20.5 billion pounds for the NHS with more money, in particular, for Mental Health Services.
However, some scholars from the independent Institute for Fiscal Studies say that Budget did not offer too many giveaways. Forecasts in spending that were announced are on presumption that tax collection will continue to raise but situation may still change and there is still Brexit deal or no deal that has not been considered at all. With the Welfare cuts coming in, freeze in benefits from next April, and other cuts working their way through the system, it is hard to talk about increased household spending and by very narrow definition one can argue that the austerity is coming to an end.
Also, the Universal Credit as an idea widely supported, was being criticised for being underfunded which impedes its smooth implementation. Some critics are still saying that Universal Credit is being starved of cash giving plenty of examples that people instead of being looked after by the system, must rely on churches and charities just to stay alive. In the light of the above, it does feel like the lower income families will continue to feel the squeeze to some extent.
On contrary the move to make the global tech giants pay more tax has been received well.
Some points were not addressed in the Budget which left many disappointed. Among those, environmental issues and betting terminals, raising concern for the money being spend and debt incurred by people in gambling and in using those terminals.
Other Budget points:
Fuel duty was frozen as well as duty on beer, cider and spirits nevertheless smoking and drinking wine will be getting more expensive.
£400m to allow schools buy the ‘little extras they need’
Help for first-time buyers of shared ownership properties
£900m in business rates relief for small businesses and £650m to rejuvenate High Streets
Further £650m of grand funding for English local authorities to spend on social care which still seems like a drop in the ocean when considering the needs.
The Budget 2018 – The last Budget before we leave EU – Your Tax Assistant