Commenting on the Budget, Ryan Shorthouse, Director of Bright Blue, said:
“The Government should celebrate strong economic growth and record levels for employment, particularly for women and young people. But there are two growing economic problems in the UK that need urgent attention: poor productivity and reduced living standards for ordinary, working-class people.
“The Government should be applauded for taking necessary and radical steps to try and increase participation in quality technical education and lifelong learning. But the Government is not doing enough to support those on modest incomes who feel and are left behind by the advance of globalisation and free markets. There will come a time when the Prime Minister is judged on her record, not just her rhetoric, in supporting ‘ordinary, working-class people’.
“Today’s Budget was a missed opportunity to transform the living standards and life chances of those who need and deserve the most support from government. The Government should have prioritised softening the blow on the living standards of working-class families by ending unjustified and unnecessary tax relief for those with the broadest shoulders, such as the inheritance and higher rate tax cuts.”
Self-employment NICs
The main rate of Class 4 National Insurance contributions will increase from 95 to 10% in April 2018 and to 11% in April 2019.
Commenting, Director of Bright Blue, Ryan Shorthouse, said:
“Bright Blue’s research first showed the discrepancy in the amount of National Insurance contributed by employees and the self-employed on the same income. The Government is right to increase Class 4 National Insurance so those who are self-employed contribute to the public purse a more similar amount to employees.
“However, if self-employed people are contributing more similar amounts, this will and should raise the question of whether they should be entitled to the more generous maternity pay that employees are entitled to.”
See Bright Blue’s report on self-employment: Standing alone? Self-employment for those on low income
Dividend taxation
The dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
“Currently, director shareholders are entitled to significant tax relief on their income from their company because they can be subject to divided rather than income tax. Employees of their company, often paid much less but still also contributing enormously to the success of it, are subject to higher rates of taxation.
“What is also unfair is that directors of not-for-profit companies – also generating significant social and economic value – are subject to higher rates of taxation than director shareholders. Lowering the dividend allowance is a welcome step, but more needs to be done to tackle this unfairness in the tax system which leads to a significant loss in potential revenue for public services.”
Income tax thresholds
The Government committed to raising the personal tax allowance by £500 to £11,500 and the higher rate tax threshold will increase to £45,000 in 2017.
Commenting, Director of Bright Blue, Ryan Shorthouse, said:
“The Government’s gradual increases over this parliament in the income threshold for the payment of income tax and higher-rate taxation is poorly targeted. In the years ahead, ordinary working-class families are facing higher inflation and cuts to their benefits.
“The Government missed the opportunity to use the billions per year planned to be spent in reducing income taxation for relatively more affluent people to relieving the pressure on the living standards of those from more modest backgrounds. In particular, the 63% withdrawal rate for the Universal Credit should be lowered to enable people to keep more of their benefits as they transit into work.”
Technical Education
Government will introduce T-Levels as part of boosting technical education and has announced maintenance loans for students pursuing technical education at higher levels
Commenting, James Dobson, Researcher at Bright Blue, said:
“The Chancellor’s plans for technical education are ambitious and welcome, especially the introduction of T-levels and maintenance loans for those undertaking higher technical qualifications.
“However, the Government should also introduce maintenance loans for apprentices. The apprenticeship minimum wage is significantly below the national minimum wage, and these low wages can prevent would-be apprentices from enrolling or moving to a different area of the country to access the most suitable and high-quality apprenticeship.
“Though extending eligibility to maintenance loans is welcome, Bright Blue’s research shows that the biggest deterrent for potential learners accessing courses is the cost of tuition. It is vital that Government extends the eligibility for accessing tuition fee loans for all types of higher qualifications, including for those undertaking equivalent or lower qualifications.”
See Bright Blue’s report on part-time higher education: Going part-time: Understanding and reversing the decline in part-time higher
Lifelong learning
Government will spend up to £40m by 2018-19 to test different approaches to help people to retrain and upskill throughout their working lives.
Commenting, James Dobson, Researcher at Bright Blue, said:
“The Chancellor’s announcement that the government will pilot new ways to improve access to lifelong learning is welcome. Lifelong learning is crucial to allowing people to retrain or gain new skills. This is increasingly important in the modern labour market where people will work for longer and growing automation will require people to change occupations regularly.
“As part of its pilots, the government should trial offering a new lifetime loan account of a certain amount to enable adults to pay for any number of higher qualifications – academic, vocational or technical – in England during their lifetime, including courses which are equivalent or lower to ones they have already completed.”
See Bright Blue’s report on part-time higher education: Going part-time: Understanding and reversing the decline in part-time higher
Selective Free Schools
Government is to extend the free schools programme to include selective schools.
Commenting, James Dobson, Researcher at Bright Blue, said:
“The Government is right to enable hundreds more free schools to open, but wrong to enable them to select at age 11. The crusade to increase grammar schools is driven by personal experience rather than the evidence.
“Of course some from modest backgrounds have benefited from attending selective schools. But, in aggregate, poorer children do worse in selective areas than their peers in non-selective areas.
“Selective schooling is the very epitome of the hyper-individualism that the PM has railed against since they are based on the premise that high-achieving pupils should escape certain children, rather than help them.”
Sugar Tax
The soft drink levy will go in effect in April 2018.
Commenting, Ryan Shorthouse, Director of Bright Blue, said:
“The new sugar levy on soft drinks is a step in the right direction. It is already having an impact as soft drink producers are reformulating their products to include less sugar.
“However, Britain is facing an obesity crisis and bolder action is needed. One further steps could be that the Government imposes a levy on all drinks and foodstuffs with high sugar content. It is fair and right that those who cause significant externalities should be taxed accordingly.”
Road funding and development of new transport technologies
Government announced new funding for roads and for the development of new transport technologies.
Commenting, Sam Hall, Senior Researcher at Bright Blue, said:
“The Budget contained some sensible, but modest measures to improve Britain’s transport system that will increase road capacity and support new technologies. The Chancellor missed the opportunity to take bold action to tackle illegal levels of air pollution in towns and cities throughout Britain.
“It is vital that, as the Government considers its new air quality strategy, it reforms vehicle taxation to provide fiscal incentives to motorists to transition away from diesel to electric vehicles. The Treasury should also release more funds to English cities to enable them to set up low emission zones in pollution hotspots.”
Levy Control Framework for low carbon subsidies
The Budget announced that the Levy Control Framework, which controls the costs of low carbon subsidies, will be replaced by a new set of controls to be set out later in the year.
Commenting on the outline of the post-2020 Levy Control Framework, Sam Hall, Senior Researcher at Bright Blue said:
“Cutting carbon emissions must be done at the lowest possible cost to the consumer. So it was welcome news that the Government will later this year set out a new control mechanism for low-carbon subsidies.
“But the falling costs of established low-carbon technologies like solar and onshore wind mean that they no longer require additional subsidy relative to other forms of generation. The new control mechanism should reflect this, and allow the cheapest technologies to compete in auctions on a zero-subsidy basis, which would drive down energy costs for households and businesses.”
For further comment or to arrange an interview please get in touch with Laura Round laura@brightblue.org.uk or 07543759844.
