Originally published on tmrw at: tmrwmagazine.com/what-does-the-2016-budget-actually-mean/
Politicians seem to like dressing up policies in jargon and spin, hoping that we’ll all just accept it and move along. But the 2016 budget is too big of a policy to think (or pray) that it can just be swept under the mat, even if you try and surround the changes with lots of talk of ‘pay now or suffer later’ (yes Osborne, we’re looking at you).
And Osborne’s certainly not received the warmest reaction to his budget. Ian Duncan Smith even resigned from cabinet over Osborne’s plan to cut £4.4bn from disability benefits. Osborne has since called the policy a ‘mistake’ in the commons, yet refused to apologise (typical teenager).
But there are other parts of the budget that look set to get the go ahead. However, listening to Osborne drone on about finances for 62 minutes may seem a bit of a drag, so instead, here’s what you need to know about the 2016 budget:
There’s a new pension for the ‘next generation’
In April 2017, with the Lifetime ISA, people under 40 will be able to save up to £4,000 a year. The government will then give them 25% of what they save as a contribution, meaning for every £4 saved, the government add a further £1. This ‘top up’ will continue till the person is 50. Osborne describes it as a new pension system for the ‘next generation’, with the current pension system still also being kept in place.
The reason for introducing this Lifetime ISA, according to Osborne, is to help young people out with saving. Though that sounds helpful, most young people just don’t have the money to save. We’ve not all got a Carrie Bradshaw-esque shoe addiction, it’s going on high rents and food – that stuff is pricey Mr Osborne.
Changes to the personal allowance
People will be able to keep more of their money before it is taxed. £10,600 is the current income a person has to earn before they start paying income tax (the personal allowance). Instead, it will now be £11,000 this April, and will become £11,500 the following April. The higher rate threshold for paying tax will also increase, going up to £43,000 next month and to £45,000 in April 2017.
Cuts to funding victims of domestic violence
Sadly, it wouldn’t be a budget without cuts. Perhaps the most controversial one is further cuts to services that help victims of domestic violence. The government has already cut these funds by nearly 30%. This led campaigners from ‘Sisters Uncut’ to protest outside of Westminster by barricading the Treasury entrance a few days before the budget was announced.
A sugar tax is coming in
The price of sugary drinks will increase under a new sugar tax. Though it won’t start for two years, the money raised by the tax is hoped to be used in beneficial ways, such as providing more sports funding for schools. Basically, we’re all going to be super fit and healthy. At least, that’s the plan anyway.
The self-employed are getting a boost
The way self-employed people give money towards National Insurance is also set to change. From 2018, a self-employed person will only pay national insurance if they earn over £8,060 a year, rather than the current £5,965. Considering how many people are self-employed, this definitely seems like a bonus.
Changes to duty on alcohol
Good news for fans of beer and cider, as duty on both products is to be frozen again. Whereas duty on other spirits has also been frozen, duties on wine and other alcohol will rise in line with inflation. Aka it will get pricier.
And that’s, more or less, the 2016 budget. Or what Jeremy Corbyn calls “the culmination of six years of his failures” with “unfairness at its core”. But if Osborne was looking for supporters of his budget, I really doubt he was going to find it in the Leader of the Opposition.
One person who is happy is Jamie Oliver, who has long been campaigning for the sugar tax. So he celebrated in the best way possible: doing a dance outside of Westminster.
Though with the criticisms over Osborne’s refusal to apologise about the cuts to disability benefits, despite his later reversal, it seems the attitude of the nation is closer to Corbyn’s view than Jamie Oliver’s. A recent YouGov poll found only 28 per cent of Britons believe last week’s budget to be fair. This makes it the most unpopular budget since 2012. Ouch.