What the 2018 budget means for you

This is the last budget before Brexit - how are things looking?

What the 2018 budget means for you

The “era of austerity is finally coming to an end", so says Chancellor Philip Hammond this week as he announced new government spending in the public sector, as well as a decrease in income tax. 

On the surface, the headline figures sure make for impressive reading: An extra £160m for counter-terrorism police, an extra £1bn for armed forces, for cyber-capabilities and the UK's new nuclear submarine programme, £30bn to spend on England’s roads, an extra £20.5bn for the NHS over the next five years, including £2bn minimum a year for mental health services, to name just a few announcements. 

However, in reality the spending will still necessitate very careful budget balances for government departments, and outside of the NHS could still require further cuts. 

The Chancellor is already receiving backlash for the one-off £400m “bonus” to schools for them to buy “the little extras they need”, which some have argued as out of touch given that schools have had to resort to asking for donations, or even considering shortening the school hours due to lack of staffing. Incidentally, he allocated £20m more to fixing the potholes in the road than helping students. 

Paul Johnson, of the Institute for Fiscal Studies, told the BBC: "Arguably he's just about got to the absolute minimal definition of ending austerity but it's certainly nothing like a bonanza for the rest of the public services". He added that "most of the planned welfare cuts are still on the books".

On the plus, we are getting a commemorative 50p to mark the UK’s departure from Brexit.

Some key announcements for young people

  • National Living Wage will increase to £8.21

From April 2019 the National Living Wage will increase from £7.83 an hour to £8.21. This will only affect those aged over 25, however. The minimum wage for each age bracket will also be changing, and is detailed by Money Saving Expert.5a4ab92ad86ef88964eefa4224b70c0d815763ff.pngMoney Saving Expert

  • The tax-free Personal Allowance will rise to £12,500

The Personal Allowance – the amount you earn before you have to start paying income tax– will increase by a further £650 in April 2019 to £12,500. This will good for all workers, but especially helpful to those who are freelance, which statistics show is an increasing number of young people. 

The announced rise was previously expected in 2020-21, so comes a year early, and will be maintained in 2020. This means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.

  • The millennial railcard will be available nationally by the end of the year

The previously announced millennial railcard has had a bit of a bumpy start, but Philip Hammond has announced that the digital only railcard will be available for everyone aged 26 to 30 to buy by the end of the year. It will offer up to a third off of most rail travel. 

  • NHS to receive more funding, including specific spending for mental health

The NHS is going to get its budget increased by £20.5 billion after inflation by 2023-24. Within this, the NHS will increase mental health spending by more than £2 billion a year by 2023-24. There will be specific mental health crisis support units in all A&E departments.

  • £650 million for social care next year

Local authorities in England will receive a further £650 million in social care funding next year.

  • More money available to build houses, and help out first time buyers

The government is lifting the cap on the amount of money local authorities in England are able to borrow to build housing. Local authorities fund housing through a separate Housing Revenue Account (HRA). The Welsh Government is also taking immediate steps to lift the cap in Wales.

Additionally, all first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers' relief, hopefully making it easier for young people to get on the property ladder.

  • £400 million extra for schools this year

The controversial “little extras” bonus will give £10,000 for the average primary school and £50,000 for the average secondary school.

  • A consultation on a 2% digital services tax on large digital firms

The government are consulting around a new digital services tax for large digital firms, presumably to try and stop the tax avoidance strategies of companies like Google, Facebook and Amazon. From April 2020, large social media platforms, search engines and online marketplaces will pay a 2% tax on the revenues they earn which are linked to UK users.

  • Further changes to the apprenticeship levy to support employers

From April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chains. Smaller businesses will pay half of what they currently pay for apprenticeship training - from 10% to 5%. The government will pay the remaining 95%.

  • Youth Endowment Fund (YEF) 

Following on the Serious Violence Strategy published in April 2018, £200 million has been allocated for YEF to help young people avoid a life of violence. The YEF will fund activities for 10 to 14 year olds in England and Wales over at least 10 years, specifically working with those most at risk of youth violence to steer them away from becoming serious offenders.

Header Image Credit: DFID - UK Department for International Development

Author

Tom Inniss

Tom Inniss Voice Team

Tom is a Politics graduate, and holds a Masters in Journalism. He serves as Editor for Voice, and has an almost unhealthy obsession with Batman. His hobbies include gaming and reading graphic novels - his current go to series is Bill Willingham's Fables.

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