9 July 2015

Unfortunately the Chancellor chose a rainy day to repeat his boast that the Government would mend the roof while the sun was shining but his meaning was clear: the cuts would go ahead; the long-term economic plan was working.

In his second Budget of 2015, the first without a coalition partner, George Osborne held up Greece as a warning of what happens when a country fails to control its debt and said that the UK has left the "age of irresponsibility" behind.

However, he warned: "Britain still spends too much, borrows too much, and our weak productivity shows we don't train enough or build enough or invest enough."


Arguing that some firms are taking a free ride by letting others train workers who they then poach, the Chancellor introduced a new apprenticeship levy for large employers. This is expected to create three million more apprenticeships, with the money being directly controlled by employers. Those that offer apprenticeships can "get more back than they put in".


As widely trailed, the benefits cap will be reduced to £23,000 in London, and to £20,000 elsewhere. Tax credits and universal credit will only support the first two children (unless you have triplets). Working-age benefits will be frozen for four years although this does not include statutory benefits such as maternity pay and disability benefits.


The Chancellor confirmed the manifesto pledge of 30 hours of free childcare for parents of three and four year-olds from 2017.


From 2016/17 student maintenance grants (paid to students with family incomes below £42,000) will be replaced by loans (of £8200) payable on incomes above £21,000.


"Those who can work will be expected to work", Mr Osborne said, and those aged 18 to 21 "must earn or learn" (so no automatic housing benefit). He also said that it could not be right that firms are given money by the taxpayer so that they can continue to pay low wages. The tax credits system, which tops up the wages of low-paid workers, costs the country £30 billion a year and employers should be paying more of a share.

They should be looking to give their employees a pay raise, the Chancellor went on, and, through the national living wage (see Pay below), they will be.


On top of the £2 billion which the Government has already promised, the NHS can look forward to receiving a further £8 billion by 2020.

Northern Powerhouse

The flagship authority for Mr Osborne's plans to devolve powers, Greater Manchester, is to be given control of fire services, land and children services. In addition, the Oyster card will go north with £30 million being made available to set up a public transport payment scheme.

Sheffield, Liverpool and West Yorkshire (Leeds and Bradford) are considering following Manchester's lead.


The big Budget surprise and the announcement that was not leaked in advance: the introduction of a national living wage to be set at £9 per hour by 2020 for people aged 25 and older. A rate of £7.20 an hour will be introduced in April 2016 (which is 50p an hour more than was expected from the National Minimum Wage (NMW) due in October). By 2020, the national living wage (not yet confirmed as the official name) will be 13% higher than the NMW would probably have been.

The living wage will be compulsory and will, the Chancellor said, have minimal impact on unemployment (perhaps a 0.2% rise).

While they wait for those changes to be delivered, public sector workers will see their pay rises capped at 1% for another four years.


The annual tax relief on pension contributions will be limited to £10,000 a year and the Government is to publish a Green Paper regarding a radical change to the pension saving system.

Sunday trading

To no great surprise, the Chancellor confirmed leaks to the media which had indicated that local councils and elected mayors will be given powers to relax Sunday trading hours in their areas. The retail union USDAW has already said that it will fight this proposal.


Corporation tax will be cut from 20% to 19% in 2017 in a bid to create more jobs. It will fall to 18% by the end of this Parliament (2020). The personal allowance will rise to £11,000 from next year, while the threshold at which the higher rate (40%) must be paid will go up from £42,385 to £43,000.


Vehicle Excise Duty (VED) will be re-introduced for all cars bought in the future but the money will be put into a new fund to boost spending on roads (already described by Greenpeace as a return to the 1980s).

There will be no increase in fuel duty this year.