First Conservative Budget sets out support for workers – and pushes younger people into work
The first all-Conservative Budget announcement has championed economic security, promising to create 2 million more jobs over the next five years.
Chancellor George Osborne introduced the Budget by speaking of the 3% economy growth in the last Parliament, the 2 million new jobs already created, and the fact that more women are in work than ever – with the gender pay gap at an all-time low.
Osborne has now announced the Conservative intention to turn Britain from a low wage, high tax, high welfare country to a high wage, low tax, low welfare one, where those who can work will be expected to – and must take jobs they are offered.
National Living Wage
The flourish of the Summer Budget was undoubtedly Osborne’s announcement of a new National Living Wage, which will stand at £9 by 2020.
Saying, “Britain deserves a pay rise – and Britain is getting a pay rise”, the Chancellor has pledged that the NLW will be £7.20 by next April, meaning that those on the National Minimum Wage will see their pay increase by over a third.
The pre-election promise of support for working people by “letting them keep more of the money they earn” will also now be legislated through a tax lock prohibiting an increase in income tax and National Insurance for 5 years.
The tax free personal allowance will also be delivered as promised, with the threshold raised to £11,000, and promised to continue rising in line with the minimum wage.
“Earn or learn”
The Budget was less promising for aspiring university students, with student maintenance grants scrapped and replaced with loans – a move likely to push poorer18 year olds to reconsider higher education.
However, Osborne announced that there will no longer be automatic housing allowance for unemployed 18 – 21 year olds, but rather an obligation to “earn or learn”.
In announcing these measures, the government confirmed the desire to push more people into work – supported by the Chancellor’s commitment to create 3 million more apprenticeships, and an apprenticeship levy for larger companies.
Health, wealth and family
As well as businesses feeling the effects of apprenticeship creation, employee benefits are likely to be affected – both directly and indirectly – by some of Osborne’s announcements.
The Chancellor has mooted “further radical change” in pensions, publishing a green paper today examining new ideas for a system overhaul, including the idea of treating pensions like ISAs.
At the opposite end of the age spectrum, it has also been promised as per the previous announcement that from September 2017, all working parents of 3 and 4 year olds will receive free childcare of up to 30 hours a week.
Workplace healthcare may also see the impact of NHS funding, which Osborne promised would be 8bn a year more by 2020, in order to create “a strong, 7-day service”.
In the run-up to the Budget, speculation has been rife that the government would look to abolish salary sacrifice.
With no announcement in the main speech, providers and employers may have let out a sigh of relief – but there are no promises for the long-term future of the benefit.
The full Budget statement reads: “The government will actively monitor the growth of salary sacrifice schemes that reduce employment taxes and their effect on tax receipts.”
“Open for business”
With corporation tax to be cut to 19% in 2017 and 18% in 2020, Osborne wants to send out a signal nationally and internationally that, “Britain is open for business”.
The prevailing message from the Budget has been that the government wants to see more people in work than ever before.
Indeed it seems that the Conservatives are setting out to unseat the Labour party: “This is the party of the working people” argued Osborne emphatically. “One purpose, one policy, one nation.”