BUDGET BRIEFING J U LY 2 0 16
BEAM ME UP, OZZY “A Budget for The Next Generation.” That’s how George Osborne described the raft of new measures he outlined today amid fresh warnings that the global economic storm clouds are gathering. It wasn’t the bland Budget many were anticipating, fuelling speculation that today was as much about beaming the Chancellor up to Number 10 as helping the British people to live long and prosper. In a speech lasting over an hour, the Chancellor made some eye-catching announcements aimed at the voters of the future: a new “lifetime” ISA for the under-40s and a tax on sugary drinks to tackle child obesity, as well as the much trailed changes to school funding and status. The morning headlines will focus on these announcements, as well as the unexpected lifeline thrown to the North Sea by abolishing the petroleum tax. Mr Osborne hoped that all this would help to distract from the less promising growth forecasts outlined at the beginning of his statement. As expected, the Chancellor blamed the OBR’s revised growth and debt statistics on treacherous global headwinds – another reason, he argued, to stick to the Government’s long-term economic plan. So who were today’s big winners and losers? Looming elections in Scotland and Wales might have had something to do with the generous offering each received: City Deals for Edinburgh and Cardiff, Severn Bridge tolls slashed in half and a freeze on Scotch whisky duty. Small businesses are set to benefit from the abolition of business rates and a cut to commercial stamp duty, whilst the construction sector will be reassured by the green light given to big infrastructure projects and more house building.
On the losing side, pro-Brexit campaigners will be infuriated by the Chancellor’s use of figures dependent on Britain remaining inside the EU to predict future growth. The onus now will be on them to demonstrate how the British economy would survive Brexit. The Chancellor didn’t test his backbenchers’ patience too much, however, by resisting the temptation to hike fuel duty for the first time in six years. Back to the losers: local authorities are losing control of education as the Government moves to make every school an academy; and budget cuts look likely with the timely cut in business rates... just before they are devolved. For business, the headline measures around corporation tax, business rates and anti-tax avoidance will be of most interest. It was a mixed bag for big and small businesses with some obvious winners and losers, but the Chancellor’s commitment to infrastructure investment with HS3, Crossrail 2 and roads investment for the Northern Powerhouse is likely to be welcomed across the board. What did the Labour Party make of it all? There was the usual noise about public sector cuts and inequality, but they are yet to exploit the fact that the Chancellor has missed the mark on what he set out to achieve in the previous Government and “fix the roof while the sun was shining”. Labour have a limited period of time in which to do so, because if Mr Osborne does manage to balance the books, he will be heading into the next General Election boasting a formidable economic record.
Emily Poole, Account Director Emily is a consultant at Edelman who recently joined the team from the role of Special Adviser to the Secretary of State for Wales.
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK
BUDGET BRIEFING Winners
Losers
Construction
Approval for High Speed 3 in the north, Crossrail 2, a Peak District tunnel and more housebuilding to help reverse the construction sector’s continuing difficulties.
Scotland
Negotiating a City Deal for Edinburgh, zero rating Petroleum Revenue Tax and cutting the Supplementary Charge, millions for local regeneration and cultural projects and a freeze on duty for Scotch. Anyone would think there’s an election on …
Wales
A new City Deal for Cardiff and a halving in the cost of Severn Bridge tolls is a major boost for those in South East Wales and areas like Bristol.
Small business
Thousands of businesses – “corner shops in Leeds, newsagents in Nuneaton” – will pay no business rates, while the Chancellor also moved to cut commercial stamp duty, burnishing his credentials as an advocate for working people.
Drivers
Avoid a rise in fuel duty after the Chancellor backs away from increasing petrol costs. His move has the happy consequence of also keeping Conservative backbenchers onside and cheering him.
Pro-Brexit campaigners
The Chancellor’s numbers on future growth are dependent on Britain remaining a part of the EU – meaning that the onus is on backers of Brexit to show how our economy would weather our departure.
Soft drinks companies
The biggest surprise of the Budget as the Chancellor preempted the Obesity Strategy by levying a sugar tax on soft drinks manufacturers. There will be two rates, coming into effect in two years’ time – at which time George Osborne hopes he will be moving into Number 10.
Local authorities
Losing control of education as the Government plans to make every school an academy... and facing another budget cut as Ministers slash business rates immediately before devolving them to councils.
People who hate maths
Schoolchildren who don’t know their hypotenuse from their their radius received bad news: they will be expected to learn maths until the age of 18.
Generation Y
There was no announcement around further childcare support – so families will continue to have to stretch their budgets in anticipation of the economic growth and wage increases that the Chancellor says is coming.
StakeHolder Reaction Tim Montgomerie Times columnist
Iain Martin Editor, Cap X
Lib Dem Press Office
Harry Cole Westminster Correspondent, The Sun
Raising the income tax threshold is not socially just, Mr Osborne. 85% of the benefit of it goes to top half of earners #Budget2016
Osborne abolishing the Liberal Democrats? Given he’s missing all his other targets we are not that worried. #Budget2016
What is the point of this Budget? I mean it’s happening just because it was in the diary.
So Osborne just froze the (already huge) duty you pay on gin and introduced a levy on your tonic. Not what I call a core vote strategy.
Fraser Nelson Sky News Political Editor
Appallingly, Osborne is trying to enlist the supposedly independent OBR into his campaign for UK to stay in the EU.
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