What does the budget mean for you?

By Jeremy Hutton, Policy Analyst

Yesterday the iconic red Budget Box again returned to the House of Commons as Chancellor Philip Hammond set out government spending plans for the coming year. The chancellor was right that ‘ending austerity’ doesn’t have to mean tax hikes and taxpayers rightly won’t be further squeezed for more of their hard earned wages.


Far from a definitive budget for the near-future, the Chancellor has simply put off a multitude of decisions until the 2019 spending review. The tax burden continues to rise, and public sector net debt stands at over £1.8 trillion. Should recession again rear its ugly head as some sceptics predict, this high level of debt (around 80% of GDP) could give government little room for manoeuvre in handling any future down-turn.


But the budget gives us some reasons to be joyful. The planned rises in the tax-free personal allowances has been brought forward a year, raising the allowance from £11,850 to £12,500; this will save basic rate taxpayers £130 a year. The higher rate tax threshold will rise from £46,350 to £50,000, saving high earners hundreds of pounds per year.


The budget will further compel investment with the allowance to rise from £200,000 to £1,000,000. This is a good move and will invite investment from private individuals into the British economy, rebuffing any speculative economic uncertainty that may arise from the approaching Brexit deadline.


Business rates for English retailers valued at £51,000 or less will see their business rates lowered by a third, delivering possible savings of up to £8,000. This form of relief is just what is needed for the struggling high street, though retailers should be aware that if this incentivises high street rejuvenation of independent businesses, increased demand could result in higher rents.


Yet the Chancellor also recognises that the decline of the high street is not entirely reversible. The creation of the Future High Streets Fund to facilitate the conversion of under-used retail and commercial areas into residential areas is an excellent way to address the housing crisis, though ultimately this is just a small piece of a much greater effort needed nationally.


However, what the Chancellor gives in one hand he may take with the other. So whilst drinkers and landlords in the UK will be relieved that beer, cider and spirit duties will be frozen, if you like wine then each bottle will soon cost you just a little bit more. Though even for beer, cider and spirit drinkers, it is hard to view this as the ‘saving’ that the Chancellor calls it. As Ben Ramanauskas pointed out last year, beer duty harms investment, hurts an industry worth £23bn to the UK economy and further compels drinkers to indulge themselves in their homes rather than the social atmosphere of a pub. Freezing duty rises is good, but cutting it would be much better.


At least taxpayers can take a short-haul flight to somewhere like Germany, where beer duty is 14 times lower. And Air Passenger Duty on that flight will be frozen for the next year, but don’t go too much further because APD on long-haul flights will again continue to rise. It is encouraging that the Chancellor noted our recent submission on APD, but this freeze still falls short of scrapping this harmful tax completely. If Global Britain is to become a reality, government should stop punishing Britons who put that into practice.


Pledging £420m to fix roads across Britain meanwhile is also very welcome, though if the Chancellor is struggling to find funds to fill in potholes he should look at the great white elephant of UK infrastructure. HS2 is set to cost at least £50bn and the costs may rise much further still. Following the Great British Transport Competition we’ll present the public's proposals on how better to spend that money. If £420m is sufficient to repair the roads, just imagine what could be done with over 100 times that amount.

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