Philip Hammond, the UK Chancellor of the Exchequer has just delivered his budget. Each March, the chancellor gives a speech setting out where the country’s economy stands, and what he plans to spend the government's money on.
This is supposed to the last budget before the UK leaves the EU, in fact it’s supposed to be the last Spring Budget ever.* He went on for around an hour – that’s a lot of talk about OBRs and NICs and fiscal disciplines and R&Ds and business and capital (trust us, we were watching).
Brexit and housing are two of the most talked about issues the budget might have covered, but very little was said on either. So what actually was there in there? Here are some of the ‘highlights’.
*There are two budgets a year, one in March and one in October (known as the Autumn Statement). From October the Autumn Statement will be the Budget, and the Spring Budget will just be an update – which is kind of what the Autumn Statement was always supposed to be. This was all helpfully announced in the last Autumn Statement, to make it all a bit simpler, so this is the last Budget, until the Autumn Statement. All caught up? Good, us neither.
How the budget affects you if you're...
… A small business owner
The big news for small business at the moment is Business Rates – a tax on a business based on the value of the property it’s run from. The chancellor was facing a lot of pressure on these, not least because the rates are about to change, and the bills for a lot of small businesses are going to go up (you can read more about that here). People were expecting some kind of help in the budget.
Not going to happen, it seems; “Business rates raise £25 million a year, so we can’t abolish them,” he said. He did say that no business which has grown beyond the eligible size for a discount on business rates will have a rise larger than £50 a month. He also announced measures to help deal with the changes in the short term. He handed £300 million over to local authorities to help support business that were being negatively affected by the rate changes, and offered a £1000 discount on business rate bills to any pub that has ‘rateable value’ – which is how they calculate the tax – of less than £100,000 (90% of all pubs in the UK).
Your tax contributions will increase, basically. This is what Hammond said: “Under the current system an employee earning £32,000 would incur between him and his employer £6,170.
“A self-employed person earning the equivalent amount will pay just £2,300 – significantly less than half as much.” (Note the use of him there, so much for International Women’s Day Phil…)
To coincide with National Apprenticeship Week, the government announced a new qualification program for technical training – T-Levels. Technical qualifications have been streamlined, from 13,000 available qualifications to 15 clear routes. It’s designed to make them more popular, and help the UK catch up with other countries on promoting skills-based training, rather than just promoting traditional academic university routes.
Technical students will be given 50% more hours training, and will receive a three month work experience placement. And all students who take up “higher level technical study” will receive a maintenance loan, just like university students.
… A woman
Parents of three and four year olds will now be entitled to 30 hours free childcare a week, which Hammond said will help “support women in the workplace”. He announced £5 million to help support women back into work after a career break (maternity leave for example) and also announced that the government was giving £20 million to a campaign against violence against women and girls.
The big news today is that he has announced £2bn extra for social services to help support elderly patients leaving hospital. This is in response to warnings from the NHS that elderly patients were staying in hospital (known as bed-blocking) after they were ready to be discharged because there wasn’t the social support for them. The money, he said, will allow local authorities to make new care packages for the elderly.
"This is the spreadsheet bit"
Did you know that Philip Hammond is known as Spreadsheet Phil? Nope. Apparently so. Each budget speech starts with about 10 minutes of just listing off number after number after number – “The spreadsheet stuff,” Phil said. “I’ve got a reputation to uphold”.
Growth: Figures about the UK’s economy are generally doled out by the Office for Budget Responsibility. It does a lot of attempting to predict the future – or forecasting. Today, it said that it had changed its mind and now thinks the economy will do a bit better this year than it previously thought. It expects to grow by 2%, rather than the 1% previously announced.
Borrowing Philip Hammond is a fan of a ‘balanced budget’ – not spending more than you’re saving – which we can only assume is where the Spreadsheet Phil thing comes from. He said that by delivering a balanced budget he was making the UK economy more stable going into Brexit negotiations. Government borrowing is down, which to Phil is cause for celebration. For this year it is now likely to be £51.7bn – £16.4bn less than was predicted at the Autumn Statement in October.
The idea about government borrowing is that in an ideal world, people would be earning and spending enough money to keep jobs and businesses going, and the government can just fund the stuff it needs to do through tax. But that doesn’t always happen, so the government has to borrow from banks to fund its work. The amount it borrows vs the amount it actually has to spend is known as the deficit.
The problem with is that while Philip Hammond thinks keeping borrowing down as much as possible is a good thing, not not all economists actually think borrowing is a problem as long as it’s in check. At the end of the day if the government is doing what it needs to do to make sure people’s businesses and jobs are functioning as they should some say that’s all that matters.
Inflation When prices go up. There’s a lot of debate about what causes it, but it’s one of the occasions when little changes in the country’s economy directly affect people. Things get more expensive. Inflation is a big problem for people when prices are going up faster than their wages are. The OBR says inflation will be 2.4% this year. Then 2.3% next year and 2% in 2019. Despite the fact it's going down, this is “higher than target”, Hammond said. But, he insisted wages are rising at the same time.
Nothing like a whole load of (mostly white, mostly male) politicians in an ornately decorated room reading out policies that affect people’s health, education and businesses for an excuse to crack a few one liners at each other’s expense, right? Here are just two of our faves.
“...In the last Labour government. By the way they don’t call it the last Labour government for nothing!”
“So far down the black hole that even Stephen Hawking will disown him.” Stephen Hawking recently criticized Jeremy Corbyn’s leadership btw, if you didn't get that one (nothing like having to explain a joke).