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Sunday, 25 February

And As If By Magic - Chancellor Discovers Magic Money Tree

Chancellor Philip Hammond has presented his Budget to Parliament – here's a summary of what was announced.

 

Employment

There are over 32 million people in work – near a record high. The rise in employment over the past year has been driven by full time workers. Unemployment is also at its lowest rate since 1975.

 

Growth

In 2017 growth has remained solid (according Hammond) but slowed slightly at the start of the year. The Chancellor said the UK economy is forecast to grow by 1.5% in 2017; it will then grow at a slightly slower rate in the next three years, before picking up in 2021 and 2022.

 

Inflation

Inflation is forecast to peak at 3% in the final months of this year, as measured by the Consumer Prices Index (CPI). It will then fall towards the target of 2% over the next year.

 

The borrowers

Borrowing has fallen since 2010 but debt is still high. In 2009-10 the UK borrowed £1 in every £4 that was spent. Last year it was £1 in every £16, said Hammond. However the UK still has a debt of over £1.7 trillion – around £65,000 for every household in the country.

And it's going to get worse as the UK needs another extra £3 billion to prepare for Brexit over the next two years. The Chancellor reckons this will be enough to fund the border, the future immigration system and new trade relationships.

 

No not £350 million a week

Hammond said 'straight up Gov'nor' there'll be £3.5 billion invested in upgrading NHS buildings and improving care. A further £2.8 billion will go towards improving A&E performance, reducing waiting times for patients and treating more people this winter.

 

Help for home buyers

Abolishing stamp duty land tax (SDLT) on homes under £300,000 for first-time buyers from 22 November. 95% of first-time buyers who pay stamp duty will benefit. (TWinFM says at an average of 200,000, this will save about £1,500.)

First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000. They will pay the normal rates of stamp duty on the price above that. This will save £1,660‎ on the average first-time buyer property, said Hammond, who also claims, 80% of people buying their first home will pay no stamp duty.

 

Can't get no relief

There will be no relief for those buying properties over £500,000.

 

All's rosy in the garden

The government will also create 5 new ‘garden’ towns, according to the Chancellor. Changes to the planning system will also encourage better use of land in cities and towns. This means more homes can be built...a whopping 300,000 a year supported by £15.3 billion new financial support for house building over the next five years – taking the total to at least £44 billion. This includes £1.2 billion for the government to buy land to build more homes, and £2.7 billion for infrastructure that will support housing.

 

The National Living Wage and the National Minimum Wage will increase from April 2018

The National Living Wage for those aged 25 and over will increase from £7.50 per hour to £7.83 per hour from April 2018. The National Minimum Wage will also increase:

  • 21 to 24 year olds  £7.38 per hour.
  • 18 to 20 year olds  £5.90 per hour.
  • 16 and 17 year olds £4.20 per hour.
  • Apprentices £3.70 per hour.

 

Personal allowance

The tax-free personal allowance will rise with inflation to £11,850 from April 2018. The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850. This means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.

 

At the pump and on the trains

Fuel duty will remain frozen for an eighth year. The government will work with the rail industry on a new railcard for those aged 26 to 30 which will be introduced from spring 2018.

 

Cheers Phil

Duty on beer, wine, cider and spirits will be frozen. The cost of a pint of beer or cider will be 1p lower than if duty had risen by inflation, said Hammond. The cost of a typical bottle of wine will be 6p cheaper. None of this makes any real sense in Scotland, where minimum alcohol prices have been secured. On top of this and across the country, cheap, high-strength cider will be subject to a new band of duty...so your White Lightening is gonna be more expensive no matter how you slurp it.

 

 

Fags and flights

The duty on cigarettes will increase by 2% above inflation. Hand-rolling tobacco duty will increase by 3% above inflation.Air Passenger Duty will be frozen for all economy passengers and all short-haul flights. It will rise for premium fares on long-haul flights and on private jets.

 

Universal Credit

After many calls to head-off problems for poorer households, big Phil came good with a plan. Households in need who qualify for Universal Credit will be able to access a month’s worth of support within five days, via an interest-free advance, from January 2018. This can be repaid over 12 months. Claimants will be eligible for Universal Credit from the day they apply, rather than after seven days. Housing Benefit will continue to be paid for two weeks after a Universal Credit claim.

 

Electric and driverless cars

The UK will set out rules so that self-driving cars can be tested without a safety operator. An extra £100 million will go towards helping people buy battery electric cars. The government will also make sure all new homes are built with the right cables for electric car charge points.

 

AI

The Centre for Data Ethics and Innovation will set standards for the use and ethics of AI and data. This will allow the UK to lead the world in developing practical uses for the technology, the Chancellor chimed.

 

More investment in maths and science in schools

Schools will get £600 for every extra pupil who takes A level or Core maths.

 

£64 million for construction and digital training courses

£34 million will go towards teaching construction skills like bricklaying and plastering. £30 million will go towards digital courses using AI.

This funding is provided in advance of launching a National Retraining Scheme that will help people get new skills. It will be overseen by the government, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI). They will decide on other areas of the economy where new skills and training courses are needed.

 

A £220 million Clean Air Fund for local areas with the highest air pollution

Local authorities will be able to use this money to help people adapt as steps are taken to reduce air pollution. Possible ways the money could be spent include reducing the cost of public transport for those on low incomes or modernising buses with more energy efficient technology.

The money will come from a temporary rise in Company Car Tax and Vehicle Excise Duty on new diesel cars.

 

Reducing single-use plastics waste

Hammond stated that the government will seek views on reducing single-use plastics waste through the tax system and charges. Disposable plastics like coffee cups, toothpaste tubes and polystyrene takeaway boxes damage our environment.

 

Business rates

Business rates will switch to being increased by the Consumer Price Index (CPI) 2 years earlier than planned. Business Rates will rise by CPI from April 2018. Business rates currently rise by the Retail Price Index (RPI), a different way of measuring inflation which tends to be higher than the CPI. Business rates revaluations will take place every 3 years, rather than every 5 years, starting after the next revaluation, currently due in 2022.

 

Stumping up tax in a digital age

Stopping digital multinationals who hold intellectual property in low-tax countries from avoiding tax. The government will also look to change international corporate tax rules to ensure digital companies pay a fair amount of tax.

 

Funding for transport across England

£1.7 billion will go towards improving transport in English cities. Half will be given to Combined Authorities with Mayors, and the rest allocated by a competition. An extra £337 million will go towards a fleet of new trains on the Tyne & Wear Metro. An extra £6 million will go towards the Midlands Connect motorway and rail projects. Transport links along the Cambridge-Milton Keynes-Oxford corridor will be improved...all of which have been previously covered in ThisWeekinFM

Picture: From out of nowhere, Philip Hammond appeared dressed as the Chancellor of the Exchequer

Article written by Brian Shillibeer

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