I listened today to George Osborne’s budget 2016 speech and wanted to provide an update for those who did not have the opportunity to catch it.
For those of you with an interest in parliamentary proceedings, the budget will continue to be debated tomorrow, Monday and Tuesday. Whilst the topic of debate tomorrow will be education, Monday will be local government and Tuesday will be business – it will be here that the finer details of the budget announcement will be fleshed out. However, I would like to share my initial thoughts.
I welcome the increase in the amount people can earn before having to pay tax, which helps in particular those on the lowest wages. It means that people will be able keep more of their hard earnt money, with a typical basic rate taxpayer paying over £1,000 less in income tax than compared to five years ago.
From April 2017 the tax free personal allowance will rise to £11,500 compared to £6,475 in 2010. In North East Cambridgeshire, it is estimated that 2,284 low earners will be taken out of paying income tax whilst 58,539 people will pay less.
Taxes will also be reduced for small businesses – 600,000 small businesses nationally will pay no business rates at all saving them up to almost £6,000, while a further 250,000 businesses will see a tax cut on their business rates bill. This helps small businesses to invest in growth, and create more jobs.
The budget also brings in legislation to restrict large international companies reducing their tax burdens to close to zero. It brings in a cap on interest deductions and changes rules on complex structures which are used to avoid tax, and which distort the market between large and small firms. This is an issue I highlighted in the last Parliament as a member of the Public Accounts Committee, and it is good to see action being taken to close tax loopholes.
A new Lifetime ISA will help reward young people who save. It means that for the under 40’s, for every £4 you put into the ISA, the government will give you £1. It means young people receive help whether they are saving for a first home or for their retirement.
Fuel duty has been frozen, for the sixth year in a row, which is particular important in a rural constituency like North East Cambridgeshire. It is one of the main bills many workers face each week, and it will save a small business £270 a year, per van. Other taxes have also been frozen, such as the beer and cider duty, which helps support our local pubs.
The Chancellor also announced £100 million to invest in tackling homelessness. It will deliver low-cost ‘second stage’ accommodation for rough sleepers leaving hostels and domestic abuse victims and their families moving on from refuges. £10 million will also be provided to prevent and reduce rough sleeping, doubling the funding for the Rough Sleeping Social Impact Bond from £5 million to £10 million and taking action to assist rough sleeping EU migrants to return to their home country.
There are many other points in the budget, such as introducing a sugar tax on unhealthy soft drinks and using the money raised to double sports funding in primary schools, and introducing a fair National Funding Formula for schools which has been a key priority of Cambridgeshire MPs including myself.
Perhaps the most important issue to flag was the reference made to a proposed East Anglia Devolution Agreement. This is something councillors and residents will no doubt be discussing in the weeks ahead, not least in terms of what money it might offer to help with key transport schemes for our area like upgrading Ely Junction and re-opening the Wisbech to Cambridge rail link.