By Hallum Cowell
Last Monday Chancellor Philip Hammond outlined the government’s plans for the 2018 budget. This marks the last UK budget before the Brexit departure date of March 29th, 2019. The Chancellor announced a wide array of new policies which will affect the UK in the coming years.
The most eye-catching of these policies is the changes to personal tax allowance and the higher rate threshold in 2019 a year earlier than promised in the Conservative election manifesto. Changing personal tax allowance means that instead of having to earn £11,850 a year before being placed in the 1st tax bracket, now people must earn at least £12,500. Higher rate threshold is similar, currently the bracket stands at £46,350 a year and will be raised to £50,000. The left-leaning resolution foundation reported that these changes will mean the wealthiest 10% of the country will gain £410 while the poorest 10% will gain £30.
This change to taxation comes 4 weeks after the Prime Minister, Theresa May, vowed to end austerity. However, leader of the opposition, Jeremy Corbyn responded to the budget “What we’ve heard today are half measures and quick fixes while austerity grinds on”.
Another policy is the implementation of further funding for mental health services to assist with the crisis in this healthcare area. This is part of a minimum £2 billion boost for the year, with the aim of funding the NHS £20.5 billion over the next 5 years. Particular highlights of the extra mental health service funding are a 24-hour mental health crisis hotline and increased mental health ambulances. Additionally, an extra £700 million will be given to councils for the care of the elderly and those with disabilities. Labour responded that the extra money for mental health would “do little to relieve the severe pressures [on the NHS]”.
Philip Hammond also introduced a new digital service tax to come into force in April 2020. The new tax will be targeted at online companies like Google, Amazon and Facebook. Firms will only pay the tax if they earn at least £500 million globally or £25 million in the UK. The budget projects £400 million return from this tax but the Institute of Government said it was “the most uncertain figure in the budget”. Some have been keen to point out that this tax will be too little too late for companies such as Facebook who have been avoiding UK taxation for years.
There was also news for the Welsh Government who will receive an extra £550 million over the next 3 years. Public services in Cardiff will get £115.7 million in 2018/19 and £425.9 million in 2019/20. There was also backing for the North Wales Growth Deal with £120 million of separate funding. Despite this, the Welsh Government is under pressure from local government to boost council funds after further cuts were announced. The Welsh government dubbed the budget “disappointing” while Welsh finance minister Mark Drakeford said the announcement showed there was no evidence austerity was over.