Thursday 19-03-2015 - 12:55
Yesterday’s Budget was more about politics than policy. It was Osborne’s key opportunity to frame the economic debate ahead of the general election in a few weeks’ time - and to throw in any pre-election giveaways that he hopes might win some votes.
Whatever the outcome of the General Election, there will be a new comprehensive spending review early in the new Parliament – once the dust of likely coalition negotiations has settled – along with a whole new range of policies which may render today’s Budget obsolete. That said, any new spending commitments announced today would likely largely be honoured, even if there is a change of government and a new chancellor in May.
We’ve put together a brief summary on some of the key issues from today’s Budget, and our thoughts on what this might mean. You can read through the full Budget document here.
From ‘austerity to prosperity’
Osborne began by stating that the UK economy is strong and the coalition have delivered the country from ‘austerity to prosperity.’ He said that employment is high, living standards are higher than in 2010, the national deficit is down by more than a half. He said that this would be a Budget for the ‘savers, pensioners, self- employed, small business owners and families.’
Decreasing the pension tax relief threshold
Osborne announced that they would reduce the lifetime allowance for pensions that benefit from tax relief from £1.25 million to £1million.
This is the same policy which was announced recently by Labour to fund their tuition fee cut of £3,000 – however, George Osborne today ruled out using the money in this way.
Instead, the Budget contains £1.25 billion funding for mental health services – including children’s mental health and mental health services for new mothers. Although this money wasn’t explicitly linked to the money gained from pension tax relief changes, it is likely that that is a key source of funding.
Postgraduate study and PhDs
Osborne announced £140 million funding for world class research across the UK, and also announced a number of measure to broaden and strengthen support for postgraduate researchers (masters and PhDs) including:
- Introducing income contingent loans of up to £25,000 for PhDs and research-based masters degrees, to complement existing funding streams.
- A review into how the government can strengthen funding for postgrad research, including available stipends.
- Assisting options to strengthen partnerships and co-funding between government, industry and charities, including through crowd-funding.
This is positive news - however we will be keen to see more of the details on how this, and will need to be part of the conversation with any new government on how we make sure that this truly widens participation and access to postgraduate study.
The student loan book sale
The Budget reaffirmed the government’s commitment to the sale of the pre-2012 income contingent repayment student loan book.
NUS has always been clear that selling the student loan book, at a discount rate, makes no financial sense. It is a short term approach to political problems without consideration for long term implications - and we will be raising concerns directly with the government on this.
There has however been recognition in the Budget documents that any sale would require borrowers’ loan terms to be fixed prior to a sale – this is evidence that, on this count at least, the concerns of NUS and students’ unions have been heard.
The Budget also announced the introduction of an ‘Apprenticeship Voucher’ scheme, intending to put employers in control of the government funding for apprenticeship training.
We will be keen to see more detail on this, but it will likely relate to an increase in commissioning power for employers on apprenticeships. NUS have previously expressed concerns about trends of increasing employer power on these grounds, without strong oversight on quality.
The Budget also contained some new actions on tax avoidance – including a number of things which the Tax Dodging Bill Campaign (of which we are a part) is campaigning for. This includes:
- Diverted profits tax – although this still contains an intra-loans loophole
- Country-by-country reporting – however this is still not public reporting
- Closing some minor loopholes – but without an entire review of all tax reliefs
New details will be announced of criminal penalties for tax dodgers and those facilitating tax dodging will be announced shortly