George Osborne promised there would be no giveaways in the Budget, but with the election looming just next month there was always a chance the Chancellor would throw in a couple of vote-winning moves in there.
Penny Clarke, Programme Director BSc Accounting, felt this was a typical safe pre-election budget, “This was a populist budget – to make voters feel like they’ve been given something. The £11k personal allowance had been hinted at for several weeks and whilst the increase of the allowance has been staggered to reach £11k in a few years – it is not being implemented with immediate effect and could indeed be repeated by the next party in power.”
One area the Chancellor failed to address in this pre-election Budget was detail on where the planned cuts in both public services and welfare payments over the years 2016-1 ad 2017-18 would fall. “A major gap in the Budget was any discussion of social investment. The Chancellor had been provided with ample ideas for a new more inclusive approach to investment in the Women’s Budget Group’s proposed Plan F for a sustainable and caring economy. Instead the budget talks about boosts for beer drinkers, white van drivers and video game producers but childcare, child benefits, hospital and social housing do note merit a mention, despite he implied major changes”, commented Jill Rubery, Professor for Comparative Employment Systems.
Looking past the Budget, perhaps one of the significant longer term implications can be found in the freedom to spend one’s pension pot. Rubery added, “These developments are set to move the UK further away from the Beveridge system of collective insurance – if fewer people are paying in to the collective fund then one can expect the level of benefits to fall.”
Osborne called that whatever additional resources had will be used to get the debt and deficit falling, with overall national debt projected to reduce by only 10% of GDP. Nick Clifford, Senior Fellow, felt that structural debt is optimistic – £90bn down to £13bn – but this represents the continued gap between government income and government spending. He added, “There are no discussions or projections around the rise in in interest rates and the effect this will have on repayment costs on the existing debts and the impact on the Budget deficit.”
In the first Budget since the Chancellor’s plans for ‘devo-Manc’ were announced, Manchester was bound to take some of the spotlight. “Overall, this was a confident and impressive Budget presentation. It was good to hear Manchester and the Northern Powerhouse featured prominently, however it was disappointing not to have heard reference for funding for HS3, but presumably that will still be forthcoming”, commented Michael Luger, Director of CID, at the North West Business Insider’s live Budget event.
For Manchester-based businesses the Budget should be well-received, “It was particularly heartening to hear the proposal for Greater Manchester to have the ability to retain 100% of its business rates. The speech included several positive changes in business taxes and incentives that should be viewed positively by businesses”, Luger continued.
Michael Luger explains why infrastructure investment is essential to the economy, and why the £10bn budget is not oversized
The North is soon to receive £10bn to spend on infrastructure projects, in a bid to connect major regions in the North through the completion of the HS3 rail system.
In a squeezed economy, granting a budget of this size may not seem of huge benefit. However, infrastructure spending is critical for economic development, job growth, and other essential factors we need to strengthen the economy. This project will help to integrate Northern regions and create one labour market, giving people access to jobs and making commuting time between areas more convenient for passengers.
Cutting travel time between Manchester and Leeds by 18 minutes may not seem like a big improvement, but it’s already a 35% improvement on what we have now. That given, it’s not just about the speed, it’s about upgrading infrastructure as a whole by building new tunnels and improving the state of tracks. It’s also about bringing significant benefits for passengers by increasing the reliability of connection between cities through putting on new trains, increasing the frequency of service and improving passenger comfort.
Some may question where this money will come from? In some ways it is coming from what we are already using. The government is redistributing tax payers money from all over England to the North, which counterbalances our previous spending we have seen in the past on Crossrail and other developments in London and the South East.
The HS3 rail system is a major development for the North and is part of a wider package in creating the northern powerhouse. Councils from all over the North are working together to try and glamorise and blend the region. Although we may not feel the benefits of this development for up to 15 years, these investments and big projects that have a long lead period are designed to have a long life and for a Northern powerhouse to withstand time, it needs an infrastructure set up to reflect this.