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The Summer Budget 2015 – what’s in it and how will it affect students?

Wednesday 08-07-2015 - 16:59

Today the Chancellor George Osborne delivered the first Conservative Budget since 1996 and set out the government’s fiscal plan for the next five years. 

He announced plans to continue to cut the national deficit by introducing £37billion of cuts by the next Parliament, however much of the detail on where these cuts will fall will not be announced until the Autumn, after the Comprehensive Spending Review has been completed. 

The key announcement from the Budget speech and the Budget document are as follows:

Higher education

The major news from today’s Budget affecting university students is the government’s plans to replace maintenance grants for university students with loans. Currently students from lower income backgrounds would receive a non-repayable grant to help with living costs, including food and accommodation, whilst studying. Today’s announcement will see these grants cut entirely from 2016-17. 

The loans which will be made available instead of grants will be up to £8,200, and these will be repaid on earnings over £21,000 (which is the same as with the current system of tuition fee loans.) 

NUS is deeply concerned about the slashing of this vital grant. The government has gravely underestimated the impact of total maintenance grant withdrawal on the ambitions and choices of poorer students. Having access to a grant enables students from lower income families make decisions about what to study and where, without additional worry about whether they will be able to afford the cost of living and about increased future debt. 
 
The budget also included the announcement that universities will now be able to raise the tuition fees they charge, in line with inflation, provided they can demonstrate that they can offer high teaching quality. The government will be consulting on the mechanisms on how this will be done. 

A consultation on freezing the loan repayment threshold of £21,000 (for all loans including tuition fees and maintenance) was also announced.  

Further education skills and apprenticeships

The Chancellor re-stated the government’s commitment to delivering 3 million new apprentice places. He also said that too many large companies leave the training of their apprentices up to others and has announced a new ‘apprenticeship levy’ on all large firms.

The apprenticeship levy will “provide funding that each employer can use to meet their individual needs. The funding will be directly controlled by employers via the digital apprenticeships voucher, and firms that are committed to training will be able to get back more than they put in.

The government claim that this will give businesses more power to shape and deliver their own apprenticeships, however this will likely mean decreased input from the education and skills sectors.  There also remains no guarantee for young people that the apprenticeship they are on is a worthwhile learning experience with progressive job prospects at the end.

The budget contained absolutely no mention of college based further education or adult education and skills delivered through colleges and in the community. College based FE has already received extremely damaging cuts, with access to education for those adults in the most need of it across the country being shut off. 

Welfare cuts

The Chancellor confirmed targets for savings in the welfare budget of £12bn by 2019/20, including: 

  • Cut automatic access to housing benefit for those aged 18-21 (with some exceptions for those who are particularly vulnerable) 
  • Legislate to freeze working age benefits for 4 years, DLA and ESA will be excluded from this freeze 
  • Reduce the benefits cap (the total amount a family can claim through the benefits system) to £20,000 (£23,000 in London) from £26,000.
  • From 2017, limit all additional tax credit and universal credit for families having more than two children. This will mean they will only receive it for their first two children, except in exceptional circumstances.

The Chancellor also announced a new youth obligation to ‘earn or learn,’ restricting the benefits available to them if they are not in work or training. The requirement will be that young people will receive support from day 1 of their benefit claim, and then “after 6 months they will be expected to apply for an apprenticeship or traineeship, gain work-based skills, or go on a mandatory work placement to give them the skills they need to move into sustainable employment.” 

National living wage and tax free personal allowance

As well as announcing an increase in personal tax allowance to £11,000, Osbourne has also announced a new National Living Wage for workers aged 25 and above. This is being referred to as a ‘living wage’ despite the fact that the proposed new NLW amount for next year is lower than the current living wage. The government plans for this National Living Wage to reach £9 by 2020. Younger workers (under 25s) will continue to fall under the existing National Minimum Wage structure. 

The Low Pay Commission will be tasked to report on how the new National Living Wage can reach £9 by 2020. 

This announcement has noticeable gaps, not least that nothing has been included on apprentice pay. Although if we continue to see a rise in adults taking up an apprenticeship (40 per cent of those starting apprenticeships this year over the age of 25), we can strongly assume the Low Pay Commission would need to revise their recommendations on having a different minimum wage for apprentices.

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