WELCOME TO MY WEEKLY UPDATE NO.257- A BUDGET SPECIAL!
Having spent the final days before the Budget preparing in Downing Street and working out jokes for the speech as I jogged round Hyde Park with my most trusted aide (my labrador Poppy!), I finally delivered the speech on Wednesday, which I cover in my newsletter this week. In short: the economy is now turning a corner which means we can focus on long term growth and bringing down taxes to make us competitive - alongside modernising public services.
MAKING WORK PAY
NATIONAL INSURANCE CUT If you get your income from having a job, you pay two types of tax– National Insurance and Income Tax. But if you get your earnings from other sources you only pay income tax, meaning you pay less tax than people earning money from a job. I told the House of Commons that is neither morally or economically right. Why? Because one of the most pressing issues we face is the 7 million adults of working age who are not in work– to get them back in the workforce we need to make work pay. So I announced a further 2% cut to National Insurance. When taken together with my measures from the autumn, it means that 27 million employees on an average salary will receive a tax cut of £900 and 2 million self-employed people receive a tax cut averaging £650. According to the OBR this brings the equivalent of 200,000 workers into the workforce, filling one in five vacancies across the economy - including here in Surrey where businesses often struggle to find the workers they need. What about the threshold freeze? For someone on average wage this year the threshold freeze increases tax by £230, much less than the extra £900 they will get from the NI cut. And pensioners? Because I am sticking to the triple lock, the state pension is going up by £900 this year (coincidentally the same as the NI cut is worth to workers) - and because of what we are doing on national insurance (GDP goes up 0.4%) we will be able to pay for it. As I said in this video and in my Today Programme interview (2hrs 12 mins), we can’t bring taxes back down in one go after a pandemic and energy crisis caused by Putin’s war in Ukraine - but cutting NI by one third is a good start (see also interviews with Sky News and GB News).
SUPPORTING PARENTS WITH THE HIGH INCOME CHILD BENEFIT CHARGE Less talked about but just as important were the changes I announced to the High Income Child Benefit Charge - which is a source of great frustration to parents locally who see their child benefit clawed back when their salary goes above £50k (for some, not a high salary in Surrey when the higher cost of living is taken into account). So I raised that to £60k and then increased the phasing out period to £80k. Up to half a million families will gain an average of almost £1,300 and 170,000 families will be taken out of paying the charge altogether. The system is also currently unfair on single earner families, so we will consult on introducing a household-based system, which will take some time to set up so it will be introduced in the next two years.
BETTER PUBLIC SERVICES
NHS As the longest-serving Health Secretary and former Chair of the Health Select Committee, the NHS remains an institution I care deeply about as I know many readers of this newsletter do. We have provided record funding for the NHS already and on Wednesday I announced an additional £6 billion. It includes some money to help with pressures this year but most importantly funding to completely overhaul the NHS IT systems to make it massively more efficient. That is part of funding a productivity plan produced by the NHS itself for things like using AI to cut time spent on filing forms by doctors, digitising operating theatre processes so that the same number of consultants can perform an extra 200,000 operations a year, and improvements to MRI and CT scans to speed up results for patients. NHS England’s Chief Executive Amanda Pritchard strongly welcomed the support. I also carried on marathon training in the run up the budget as part of my personal fundraising for the Royal Surrey Cancer Centre - but despite pulling his leg I suspect Keir Starmer will not be joining me!
PUBLIC SECTOR PRODUCTIVITY I want the agreement we now have with the NHS to be a model across government for all of our public services so that we can get more efficient, better value, and higher quality services. This week, I was able to start by announcing £1.8 billion worth of extra productivity savings with an £800 million investment. This includes saving up to 55,000 hours a year of admin time in the justice system, cutting the time that police officers waste on admin, creating new children’s social care places to reduce costs for local authorities, and investing in 15 new special free schools to create additional high quality places for those with special educational needs.
GROWING THE ECONOMY
INVESTING IN THE UK I want our pension funds to invest in the UK to ensure that our brilliant tech entrepreneurs don’t just start here (as many do) but stay here. We will therefore build on my previous reforms to unlock pension capital. Other markets such as Australia still generate better returns for pension savers, so I will introduce new requirements for DC and local government pension funds to disclose publicly their level of international and UK equity investments. I also announced a brand new British ISA which will allow £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs. This follows calls from over 200 representatives of the city and our growth sectors.
FILM AND TV Some of the world’s biggest blockbusters are filmed in the UK – from Harry Potter to Barbie– and are Europe’s largest film and TV production centre. At the current rate of expansion of studio space, we will be second only to Hollywood by the end of 2025 – and I want to guarantee we keep those trends. I therefore announced significant tax reliefs for the industry, and created a new tax credit for UK independent films.
CULTURE I am also a former Culture Secretary and think we need to be proud of the contribution to tourism made by orchestras, museums, and theatres. I therefore announced £26 million in funding to the National Theatre to upgrade its stages. I also made permanent the tax relief for performing arts which we introduced during the pandemic which Andrew Lloyd Webber said would mean the UK remained the ‘global capital of creativity.’ I hope this means more job opportunities for the brilliant performers from the Guildford School of Acting who put on such a brilliant performance the weekend before last in the Borough Hall to raise money for the Royal Surrey Cancer Centre!
LIFE SCIENCES We have a truly world-leading life sciences sector that develops so many life-saving treatments and vaccines– from Covid to malaria. I therefore announced an additional £45 million to support research by medical charities, including £3 for Cancer Research UK. But we also need to be manufacturing medicines, so I was happy to announce a £650 million investment by Astrazeneca into a new vaccine manufacturing hub in Liverpool, which I visited the day after the Budget. It is also where I filmed this video.
SMALL BUSINESSES I started my own business so I know that every big business starts as a small one, and it is crucial that we provide the support they need for that journey. The VAT registration threshold will be increased from £85,000 to £90,000 which means that it will be the highest threshold across the EU and joint-highest in the OECD, and means that small businesses will be able to focus on priorities like taking on new staff to help grow the economy. The Recovery Loan Scheme will also be extended, which will help 11,000 SMEs to access the funding they need. This comes on top of my announcement in the Autumn Statement to freeze business rates and extend Retail, Hospitality and Leisure relief. Those measures meant that a typical independent cafe with a rateable value of £15,000 will get around £5,700 off their final business rates bill.
LEVELLING UP As well as funding the Long Term Plan for Towns and for local culture projects, together with Levelling Up Secretary Michael Gove I announced further devolution to local leaders who know how best to boost their local economies. That includes devolving powers to the best county in the UK– Surrey of course!
COST OF LIVING
FUEL DUTY I announced that I was freezing fuel duty for the fourteenth consecutive year, which helps keep motoring costs down and saves the average car driver around £50. I know that many people across Surrey rely heavily on their cars so I hope it was a welcome announcement.
ALCOHOL DUTY To help pressure faced by the hospitality sector, I extended the alcohol duty freeze until February 2025. That means that duty is 2p lower on a pint of beer and 10p lower on the average bottle of wine, on top of the £13,000 saving a typical pub will get from the 75% business rates discount. It benefits all of our excellent Surrey pubs – including The Admiral in Ash which I know Councillor John Tonks is a strong supporter of!
HOUSEHOLD SUPPORT FUND I decided to extend the Household Support Fund until September to support the most vulnerable households with the cost of living.
PROTECTING THE TRIPLE LOCK That comes on top of the Triple Lock being protected in the Autumn Statement last year, meaning that from next month pensions will be boosted by 8.5%-- one of the largest ever increases.
A BUDGET THAT STICKS TO THE PLAN TO GROW THE ECONOMY
Together these measures reward people who work hard - and grow the economy. The OBR said that as a result of the measures, the economy will be bigger at the end of the forecast than they had previously predicted in the autumn. The IMF also forecasts that the UK will grow faster than Japan, Germany, France, and Italy cumulatively over the next five years. The net impact of recent fiscal events is that there will be 300,000 more people in work, taxes are cut by more than £900 for the average number, and our economy will grow by an extra 0.7%.
This is only a summary of the top announcements– there was also £26 million for the Invictus Games, changes to the UK non-dom tax regime, an innovation fund for life sciences and advanced manufacturing at the start of the week and much more. You can also watch a video of the top ten measures you might have missed here.
I hope you agree! You can let me know what you thought of it by emailing [email protected].
Delivering my speech in the House of Commons (video here)
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JOIN ME Want to get more involved locally? Email me at [email protected] to join my growing team supporting our work in our community. I am looking forward to hearing what people thought of the Budget when I go door-knocking in Surrey!
AND FINALLY… Every Chancellor starts the day of the Spring Budget by holding up a Red Box in front of the Number 11 door– which is actually a tradition started after a past Chancellor forgot his speech! As you can see here I held up my own box with my speech inside it…
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