‘Era of austerity finally coming to an end’

Brief: The famous red Budget box dates back to 1860 (new ones have been used since). ©Getty

Should we share the Chancellor’s optimism? During yesterday’s Budget speech, Philip Hammond declared that Britain has a “bright future” — but not all agreed. Here are the Budget’s key points.

1/ The end of austerity? If there was one message the Chancellor wanted voters to remember, this was it. “The era of austerity is finally coming to an end,” he declared at the start of his speech (and repeated throughout). A £2.7 billion cash injection into the Universal Credit welfare system was one of several spending increases which he hoped would prove his point. Not everyone was convinced, and Labour leader Jeremy Corbyn angrily rejected the claim.

2/ Mental health. The Chancellor announced an extra £2 billion for mental health services, including money for specialised ambulances, support for schools and young people, and a 24-hour mental health hotline. It is a big increase on the £12 billion currently spent on mental health in England, but some experts fear it still will not be enough.

3/ Some money for schools (but more for roads). Schools will receive £400 million to help them buy “the little extras they need”. Meanwhile, local councils will get an extra £420 million to help fix potholes. The headteachers’ union claimed the move would “infuriate school leaders” and that “for schools and young people, austerity is most certainly not over.”

4/ Tax. “I didn’t come into politics to put taxes up,” the Chancellor said. And for many, tax bills will decrease slightly as of yesterday’s Budget. By increasing the personal allowance to £12,500, the average taxpayer will save £130 a year. A new digital services tax was also announced — specifically designed to target big internet companies like Amazon, Google and Facebook, all long-accused of contributing too little.

5/ The environment. Much has been made of the scourge of plastic pollution sweeping the globe. In response, extra taxes will be imposed on the production and import of plastic packaging that contains less than 30% recycled material. However, other environmental measures are small: £10 million to tackle dumped waste and £60 million for tree planting (by comparison, the Ministry of Defence received an extra £1 billion).

Should we share the Chancellor’s optimism?

Invested

Absolutely, some respond. The Chancellor is right — through sacrifice and hard work, the worst consequences of the Great Recession have been overcome. The government has the country’s finances under control, and these tax cuts mean many people will be better off. Cautious optimism is good.

Nonsense, others respond. There is every chance that Brexit will impoverish Britain — deal or no deal. The legacy of austerity is still felt by families suffering through poverty, or those forced to sleep on the street. And once again, the government has failed to take any meaningful steps to fight climate change. Things are not looking good.

You Decide

  1. Are you optimistic about the future?
  2. At what rate should the wealthiest in society be taxed — 10%, 30% or 50%?

Activities

  1. It is time to set your own budget! Imagine you have been given £1 billion. You must split the money between these six governmental areas: health, education, defence, international development, welfare and the environment. How would you divide the funds? Which should get the most and which should get the least? Share your budget with your classmates and explain your decisions.
  2. Watch the highlights of the Budget by following the link in Become An Expert. Philip Hammond is delivering his speech to MPs. What rhetorical techniques does he use to try and make his points effectively? Do you think he is a good public speaker? Why/why not?

Some People Say...

“The perseverance of the British people [is] finally paying off.”

Philip Hammond

What do you think?

Q & A

What do we know?
According to the Budget announcement, from April 2019, the National Living Wage will also increase by 4.9%, from £7.83 to £8.21 an hour. Wages growth is at its highest for almost a decade, and 3.3 million more people are in work now than in 2010, with 800,000 more jobs forecast by 2022.
What do we not know?
What the true impact of Brexit will be on the nation’s finances. The Chancellor has suggested that if Britain crashes out of the EU without a deal, the government may be forced to issue a new Budget. This claim was subsequently denied by No 10.

Word Watch

Austerity
Difficult economic conditions when a government takes measures to reduce public spending. The current period of austerity was a response to the financial crash in 2008.
Universal Credit
A benefits system devised by the government to combine a number of previously separate benefits, including jobseeker’s allowance and housing benefit. Work and Pensions Secretary Esther McVey has admitted that under the new system “some people will be worse off”.
Experts
The Institute for Public Policy Research (IPPR) think tank claimed that the £2 billion extra was only half what was needed to put spending on a par with that of physical health.
Personal allowance
The amount of money an individual is entitled to earn in a year before being charged tax.
Too little
For example, in 2017, Amazon UK paid £1.7 million in taxes despite profits of £72.3 million.

Subjects

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