Was it a good Budget for young people? Some positives, but it doesn't go near far enough
Another Budget has been and gone, and it’s time for us (and countless journalists and policy bods) to reflect on what it really means for our finances.
As Claire wrote in our in our Millennial Budget wish list last week, the Budget is a financial and political affair in which the Chancellor sets out both to reassure existing party supporters and to woo new fans.
Will so-called millennials, those of us born in the ‘80s or ‘90s, be reassured or impressed? Claire summarised: “Between the bad dad jokes Hammond made a surprising amount of small giveaways, with everyone from community police officers to small builders benefiting.
“My sense was that he wanted everyone to be able to hear something positive. There were lots of incentives aimed at small businesses and the mood was about retaining the faith in the British economy ahead of Brexit.”
“Hammond repeatedly reminded us that they want to support ‘hard working’ people, and to that end there was the surprise announcement to raise personal allowance,” Claire said.
An increase in the personal tax allowance essentially means we keep more of what we earn before tax - in this case, £130 a year for a basic rate tax payer or £860 for those on a higher rate.
But Claire’s verdict on help for first-time buyers was that “it doesn’t go nearly far enough”.
Here’s our round-up of the bits that mattered to some of us in the MoneyLens team.
1. Very welcome mental health funding
The Chancellor announced £2 billion towards mental health spending (of an extra £20.5 billion the Prime Minister already promised to the NHS in England over the next five years).
A 24-hour mental health hotline will also be included in a new 10-year plan for the NHS. He said: “There are many pressing demands on additional NHS funding but few more pressing than the needs of those who suffer mental illness.”
This £2 billion pledge is very welcome news, we’re delighted about this.
2. No mention of the tampon tax
There was no mention of scrapping the tampon tax, even though it seems like an obvious thing to address. Claire said: “We were surprised he didn’t at least say this would be reviewed post-Brexit. Increasingly countries are removing tax on sanitary products. Come on Philip Hammond!”.
Only last month The Sun wrote a piece describing the tampon tax as “one of the most controversial of all levies”.
India scrapped their equivalent, the “blood tax”, in July. In an article for Metro about this, Amika George, founder of #FreePeriods, said: “In the UK, and in accordance with EU law, menstrual products are classed as ‘luxury items’. It doesn’t make sense.”
In early October, Australia scrapped its “tampon tax”.
In the UK it has been said all EU countries would have to agree to any changes to rules that VAT can’t be lowered below 5%. Surely Brexit means scrapping it can be seriously reviewed now?
In previous Budgets, the VAT paid on sanitary products was given to a fund to support women’s issues – the “Tampon Tax Fund” – but no new money was provided this time.
3. Some help for people trying to get on the property ladder – but how many will it help?
Suggestions landlords should be given an incentive to sell their buy-to-let properties to long-term tenants need consideration, according to Claire. One example would be to exempt landlords from capital gains tax where the tenant is the buyer.
Nothing that radical has materialised or been hinted at, but the Chancellor did announce an extension of stamp duty exemption on first home purchases up to £500,000.
This applies where the property is part of a shared ownership programme (for those in England and Northern Ireland). Previously the tax free threshold was £300,000 for all first-time buyers.
There was also some investment for housebuilding (£2 billion for an Affordable Homes Programme, £1 billion for British Business Bank funding towards small housebuilders, and £500 million for a Housing Infrastructure Fund). Good news for housebuilders.
Claire said: “Waiving stamp duty for first-time buyers of shared ownership properties up to £500,000 sounds good but is such a small segment of the market and I feel that this together with the stimulus for housebuilders is good but doesn’t go nearly far enough. It doesn’t help the millions of young people who can’t afford to get on the property ladder and I’d rather have seen more creative thinking here.”
The Help to Buy equity loan scheme has been extended to 2023 and new regional price caps will range from £600,000 in London to £186,000 in the North East.
But first-time buyers purchasing new homes can only use it between 2021 and 2023, and details in the small print suggest the scheme will be “significantly rolled back”. That leads me to our final call…
4. We said no tokenistic gestures or gimmicks
There was nothing as blatantly tokenistic as the millennial railcard announcement of last year (the 26-30s railcard that was a bit of a fiasco in the end).
Arguably the Chancellor’s not got much to play with. Instead of the “rabbit out of the hat” moment Hammond’s predecessor George Osborne became known for, Hammond delivered what Young Money Blogger Iona Bain described as “teeny tiny micro bunnies”.
Top of her list of micro bunnies was “a shot in the arm for credit unions” (non-profit-making cooperatives).
Some of the MoneyLens team were pleased to see:
· Confirmation student tuition fees would be frozen in September 2019.
· The increase in the personal tax allowance to £12,500 (amounting to an extra £130 a year for most, we’re told) one year earlier than pledged in the Conservatives’ manifesto.
· An increase in the National Living Wage to £8.31 (38p) for those over 25. From 2019 it will be £7.70 for people aged 21 to 24, £6.15 for 18 to 20 year olds and £4.25 for those under 18. For apprentices it will be £3.90.
· A tax on plastic packaging which does not contain 30% recyclable material.
Many will be celebrating a tax freeze across beer, cider and spirits and the fact the Budget has been considered “the best small business Budget he has delivered”.
And I think we’re all agreed, because it’s not just about us, when it comes to the environment there really is an awful lot more that can and should be done too.