Today, George Osborne announced the budget. For those that have kept up with the news, there weren’t many surprises at all. With the government leaking policies like a BP oil tanker in the Atlantic, Osborne’s budget was far from a political or economic shock. And while there were very few policies mentioned that directly touch students, unbeknownst to you there are quite a few that in some way will mean a lot to us at one stage or another. Here are some of the key policies of the budget and how they may affect your student life:
The increase in the tax-free personal allowance to £10,000 by April 2014: Even if you’re not thinking about it, after university you’re going to be expected to get a job. For students leaving university this will be a welcomed tax cut, lowering a large amount of the tax we’ll have to pay in our first few years of work. While it won’t change the fact that youth unemployment is at record levels, at least we now know that when we eventually find that job we’ll be able to hold onto a bit more of the money we’re given. That is, until we use that money to pay back the debt the government has saddled us with. They give with one hand, take with the other.
The freeze to of the national minimum wage for 18-20 year olds: This one is a bit of a sore point, as shown by Helena Kaznowska in her recent article. If we accept the Vince Cable logic that it should lead to an increase in jobs for young people then hopefully it will mean more of us in work, yet it seems a bit of a long shot. That logic rests on the presumption that the labour market is perfectly competitive, a claim that is quite easy to challenge. At the moment, businesses seem reluctant to hire more staff due to lack of confidence in the future rather than the level of the national minimum wage, meaning more woe for us and very little benefits to others.
The reduction of the 50p rate of tax to 45p for the top rate of income: Okay, so unless your parents earn over £150,000 (lucky you) or you expect to come out of university and land yourself with a £150,000+ a year job (VERY lucky you) then this policy isn’t really going to affect you. Nevertheless, this is probably the mostly hotly debated part of the budget for the very fact that it is a tax break for the better off. If it works, then the tax cut will help to attract wealthy businessmen to the UK which may help to give us some much needed GDP growth. Unfortunately, though it seems that many see this as a risky move, and one that could cost the country millions of pounds if it goes wrong.
Alcohol remains the same, but there’s a 5% rise on the cost of cigarettes: For students this may be the greatest relief. The £1 shots at Willow will remain £1 and the cost of the average night out destroying the liver should remain the same (discounting inflation). Yet, with Summer exams approaching us soon we will have to find some other outlet for stress if we want to keep the purse full. With cigarette duty being raised by 5% it will mean the average pack of cigarettes will increase by 37p. It’s not all bad though; the increase in cigarette duty may just lead to an increase in profits for stress ball manufacturers. And everyone likes a stress ball.
Technology and entertainment tax credits: The budget for the creative industry has been hugely beneficial with news that tax credits will be given for video games, high end TV industries and animations. For us it’ll mean that night-in will be a little more enjoyable and, with increased funding for Wi-Fi infrastructure, procrastinating will be made that much easier. As for the economy, it will hopefully encourage new businesses in the technology sector – and more video games, TV programmes and Wallace and Gromit movies for us. With £100 million going to support university science facilities, the governments focus on encouraging science and technology may mean better equipment for us and less dependence on morally questionable arms companies for funding in York.
So there are some of the key aspects of George Osborne’s budget and the effects that you may feel in the coming year or two. As for the future, it’s not looking too sunny. With the deficit still looming over the UK like a bad smell, youth unemployment soaring and the economy growing at the pace of a geriatric snail, it seems that what little benefits this budget brings can’t hide the problems that lay ahead. It kind of brings a new meaning to that well known Keynesian phrase: ‘In the long run, we’re all dead’.
Max,
Good article, and good work getting it up so quickly! The Alcohol point isn’t quite right though. Osborn announced there would be no change from his predecessor – Which is still an increase. Previously Alcohol duty was set to rise over a number of years, and this is still the case. I forget how much it goes up by, but it increases slightly on Friday I believe.
Otherwise spot on! I think the main issue will just be the general terrible performance of the economy resulting is less jobs and spending to raise our disposable income. In the longer term we’re going to have terrible Pension benefits compared to current oldies, but it’s best to just not think about that at the moment.
But did Mr Osborne reveal 7million more unemployed than than 2.8 milliom we know about? If so where are we now – “dead”?
In the budget today, George Osborne referred to “20 million tax payers” which leaves 7 billion unemployed or extremely ill indeed!
Unless my figures (below) are grossly inaccurate there are approximately 7 million British residents not accounted for by statistics.
UK population = 62 million
less students (3million) = 59million
less under 16years (12 million) =47 million
less men women over 65 ( 11million) = 36 million
less 5.8 million (say 6 million) working age benefit claimants at August 2011. = 30 million
less “20 million tax payers” (George Osborne 21 March 2012) = 10 million
less 2.68m unemployed (Guardian 18th January 2012) = 7 million
Where or who are the 7 million – can anyone clarify?
The cutting of the 50p tax rate is a joke.
The governments logic is that:
1) People who are that wealthy just avoid paying tax anyway through offshore accounts. Well maybe instead of rewarding them for this anti-social behaviour by cutting the tax they should focus more heavily on cutting down tax avoidance.
2) The higher tax rates disincentivies the wealthiest in todays society from living in the UK therefore having a detrimental impact on growth and investment. However, despite this tax and the other (yet declining) progressive taxes we have in this country the UK, according to the 2012 Global Competitiveness report is 3rd highest in the world at attracting investment and wealth to our country.
So it is clear these reasons are simply excuses used to mask the Conservatives ideological hatred of a progressive public system which they are slowly dismantling piece by piece starting with the NHS.
In the year that it was announced Britain is as unequal now as it was prior to the First World War. Never been a better time to move. I hear Greece is nice this time of year.
Mary,
The ‘missing’ 7 million are those persons who don’t fit into any of those categories you mentioned and are not in the labour force. Labour force = employed (’20 million taxpayers’) + unemployed persons who are looking for a job (2.68 million). If you are of working age and not in the labour force or claiming benefits – a stay at home parent, say – you are not included in any of those numbers.
V to the I to the NCE (Cable)
you are clearly someone who believes in an ideology rather then the reality of the world and human nature i have a few issues with you,
1) your envious and jealous approach to life is highlighted by your refering to “unequalness” rather then looking at the bottom line, i can assure you the “bottom rung” are dar better off now then they were pre WW1, dont be jealous of those who have worked hard to get to the top. (very few people are handed things to get the top in the same way not evey poor person is a benifit scrounger)
2) Dont pretend you understand the mindset of the 1% since you are clearly as disacociated from them as they are from those at the bottom.
finnaly the NHS is hemeraging money, as noble as it is, we need to make drastic changes before it bankrupts us. Only a heartless b@stard would dsagree with the NHS etc but ultimately its an ideological bastion that needs to be fixed before it gets damaged (bankrupt) beyond repair.
Also why should someone pay a higher percentage of tax just for earning more, in a labour world that demands equality for all surely they should pay the same rate as everyone else, especially when they use the least public services and employ people.
“bing bong”, I think you just managed to say most of the “things rich people need to stop saying” off this list http://www.cracked.com/blog/6-things-rich-people-need-to-stop-saying/ . Though being a student, I doubt you’re in the 1%, which is really emblematic of the divisive, class-based society we find ourselves in. As they said about the Tea Party, “take a day off to protest your boss’ tax rise”…
The government announced yesterday that they were going to increase the cost of alcohol to 40p a unit yesterday, still not effecting the Willlow shots but will effect pre-drinking. They clearly brought this out so soon after the budget to detract attention from its obvious shortcomings and divert controversy.
Yeh it’s a real shame seeing as that was probably the best thing about the budget for the collective student body (obviously the best for the technology students is still that £100 million). Seems like they won’t even allow us to drink our financial problems away!