BUDGET 2016 STAKEHOLDER REACTION & MEDIA ANALYSIS
1 Contents
Page 3 Introduction
Page 4 Media Analysis
Page 5 Journalist Top Tweets
Page 8 Economy & Business
Page 9 Welfare & Tax
Page 10 Education
Page 11 Devolution
Page 12 Transport & Infrastructure
Page 13 Energy
Page 14 Housing
Page 15 Health
2 Introduction
George Osborne yesterday presented So what other issues got the public his eighth Budget statement to the talking, and were those issues of nation – but what did the nation think any interest to Westminster’s media of it? bubble? How did those directly affected respond? And who will be While the Chancellor tried to engage taking up George’s call to “fix roof the next generation of voters with a while the sun is shining” now that the series of saving incentives for younger “storm clouds” are gathering? people – and by repeating the phrase “next generation” 18 times – it was Our Stakeholder Reaction report his new tax on sugary drinks that rounds up the winners’ celebrations really caught the public imagination, and losers’ snark as we present the as Coca-Cola warned of an immediate real-time and the considered, the price rise and Jamie Oliver greedily insightful and the flip, and the best claimed responsibility. and the worst of the commentary on Budget 2016. Small businesses had reason to cheer over the reduction of red tape on VAT Kelly Scott and corporation tax, though not as Head of Political Services much as the increasingly devolved Vuelio authorities in Liverpool and Manchester who will be retaining 100 per cent of those business taxes to further fuel the Northern Powerhouse.
3 Media Analysis
As we can clearly see, Osborne’s might be an issue which lingered on in new Lifetime Isa dominated the the Brexit debate; both Osborne and twittersphere with more than double David Cameron will be hoping for EU the tweets of any other announcement. leaders to follow through with their Academies and PIP cuts did not have promises to abolish it. the same impact on social media, confirming that the Chancellor’s The below data visualisation is flagship policy resonated with the based on the 12 hours following the public. While the tampon tax failed to Chancellor’s speech. gather as much traction as the Lifetime Source: Vuelio Isa on social media, it looked like it
Social Media Mentions
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
PIP cuts Sugar Tax Academies Lifetime ISA Tampon Tax
A budget for the Fix the roof while next generation the sun is shining
4 Journalist Top Tweets ranked in order of Vuelio influence rating
87 Robert Peston @Peston
Cutting benefits to disabled raises £1.2bn, which is same as cost of cutting capital gains tax & raising 40% tax threshold. #Budget2016
86 Owen Jones @OwenJones84
A Chancellor who’s failed on his own terms takes money from disabled people to cut taxes for big business. Grim #Budget2016
85 Fraser Nelson @FraserNelson
CrossRail 2 being announced. More devolution to Manchester. All stuff that has nothing to do with Treasury now in the Budget to pad it out.
80 Laura Kuenssberg @bbclaurak
Budget for ‘next generation’ - or, as one minister already jokes, for ‘next PM’.
77 Allister Heath @AllisterHeath
The Chancellor’s cynical attempt to embrace populism will backfire.
5 Journalist Top Tweets ranked in order of Vuelio influence rating
76 Laura McInerney @miss_mcinerney
That’s a ridiculously unfair thing to say. Some councils are *amazing* at school improvement, & have saved asses of failing academies.
76 Adam Boulton @adamboultonSKY
JC if GO can fund giveaways why can’t he fund dignity for disabled people?
76 Richard Wellings @RichardWellings
Taxing fizzy drinks is a pointless burden on the less well-off.
75 Sam Coates @SamCoatesTimes
Much more interesting clash between Budget and Brexit is wildfire rebellion over the “tampon tax” which cd lead to finance bill defeat Tue.
73 Andrew Neil @afneil
Plough your way through to the very end of the Red Book you will discover net public investment falls from £35bn in 15/16 to £32bn 19/20.
6 Journalist Top Tweets ranked in order of Vuelio influence rating
72 Faisal Islam @faisalislam
Good line from Corbyn: there’s been 12 homes built for every Government press release on housebuilding in Ebbsfleet.
70 Isabel Hardman @IsabelHardman
To be fair, problem is not Corbyn’s response, which is actually pretty ok. It’s that those MPs don’t want Corbyn there.
55 Tim Montgomerie @montie
Osborne isn’t holding back on scaremongering about #Brexit - a risky move and a sign that he knows Remainian campaign isn’t yet succeeding.
7 Stakeholder Reaction: Economy & Business
“Russell Group “Whilst the universities are engines extension of business of growth in their regions rate relief lowers the and will be key partners in the formal business rate tax bill first wave of Science and Innovation for companies, the extent to Audits announced by the Chancellor which businesses actually benefit today. These audits will demonstrate depends on the extent to which how our leading universities generate landowners increase rents given global competitive advantage for this will likely boost land the UK through excellent research values.” and innovation and vibrant links Institute of Economic with business and the wider Affairs economy.” Russell Group
“The Chancellor “We were listened to FSB calls disappointed that for the tax system to be the Chancellor has not made simpler for small done more on business rate businesses and the self- reform. The removal of plant employed and taken and machinery from business important action on rates valuation would have business rates.” encouraged investment in innovative manufacturing FSB technologies.” SMMT “After a year of surprises, this was a stable Budget for business “The Chancellor facing global stormy “Overall, this is listened to our calls waters.” to avoid higher business a good Budget for CBI taxes and costs – and indeed small businesses, with moved to lower them in a number changes to capital gains of areas. He has finally taken real tax (CGT), entrepreneur’s action to lessen the crushing burden relief, corporation tax cuts, a of business rates, and sharpened boost to the small business incentives for entrepreneurship rates relief and abolishing and investment.’’ Class 2 National Insurance contributions.” British Chambers of Commerce Deloitte
8 Stakeholder Reaction: Welfare & Tax
“The Chancellor claims to be investing “The new in our physical and cultural Lifetime Isa and infrastructure but is ignoring Help to Save scheme an essential infrastructure of both have the potential “Help to our country – social care. Without to shape the habits of Save looks like a adequate social care funding, the next generation of measure to plaster disabled and older people are savers.” ignored and carers are forced to over the cracks opened BBA drop out of work.” up by earlier ones.” Care and Support Adam Smith Alliance Institute
“Today the Government “Following our calls has announced the for the Government introduction of life time ISAs to lead the introduction to help the under-40s to save. of a pensions and savings We accept that the flexibility of dashboard, we welcome a lifetime ISA may be attractive the commitment shown in but this must not come at the today’s Budget” cost of a proper pension in later life.” Which? AGE UK
“Cuts to “Scope hears Employment and from disabled Support Allowance (ESA) people every day who are and reforms to Personal struggling with their finances Independence Payment (PIP) will and who are having problems see disabled people across the getting the support they need. country struggle to make ends meet. We are concerned at how these However, there is still no long-term changes will impact on disabled solution for the knock-on effects of people’s ability to make ends these cuts, which are likely to lead meet and save for their to additional strain on other futures.” services such as the NHS.” Scope Sense
9 Stakeholder Reaction: Education
“A high quality “The Chancellor has given education system with one hand and taken with benefits everyone. But another. It will take a while to just because government figure out the balance. Extra funding ministers believe academies for extended schooling, for primary automatically improve sport and to ease the transition to a education does not mean they fair funding formula is welcome. But actually do: the evidence is how much of this will be cancelled mixed at best.” out by the rise in employer pension ATL contributions, which are a big chunk of school costs.” NAHT
“Removing local authority powers and local accountability to hand all England’s schools over to “George Osborne academy trust chains is the seems to be unaware result of political dogma and that schools already not based on evidence.” open earlier and later for Prospect clubs and activities.” NUT
“The Government must explain how its plan to make all schools in “The expectation England become academies that every school should will affect children with special become an academy is not educational needs, including autism. surprising given the direction of Local councils will continue to be recent policy. However, this is a responsible for making sure the most huge step away from the original vulnerable children in their area get purpose of academies – tackling the education they deserve.” failure in schools serving National Autistic Society poorer pupils.” Sutton Trust
10 Stakeholder Reaction: Devolution
“CCN welcome Government proposals for full devolution of business rates, but it is critical that the government and local authorities now collaborate on implementing “This is a bittersweet the policy in a fair and budget for councils at all inequitable manner.” levels with positive steps County Councils Network forward on devolution countered by a further reduction in spending on public services.” National Association of Local Councils “The Government also needs to hold up its end of the deal on devolution and resist the temptation to shift the goalposts as local government prepares to take on more responsibilities.” Centre for Cities
“Devolution deals agreed today are good news for councils which have worked hard to get them in place and rightly recognise “With the majority of the economic potential of today’s infrastructure England’s county and rural announcements focusing on areas.” the Northern Powerhouse, there is a hidden gem to be found in Local Government the Budget document, which Association will see a huge boost for the UK’s town centres.” KPMG
11 Stakeholder Reaction: Transport & Infrastructure
“The Chancellor’s backing of HS3 and Crossrail 2 is fantastic news. This commitment to the project, “The Chancellor’s alongside other major railway pledges to deliver investments nationwide, gives the infrastructure improvements engineering sector the confidence to ensure that the logistics and recruit in preparation and develop transport industry can continue the skills the industry needs to drive UK economic growth and to deliver these ambitious serve the fast-growing population schemes.” of the United Kingdom.” Chartered Institute of WSP Parsons Logistics and Transport Brinckerhoff
“We warmly welcome the Chancellor using this opportunity to back both “Transport Crossrail 2 and HS3. These are infrastructure again important projects, supported takes a leading role in by the National Infrastructure the Budget. This is hugely Commission, and vital for UK welcome…However, the absence growth.” of a national transport strategy Alstom, published on may end up with unintended Transport Times consequences.” Chartered Institute of Highways and Transportation “The government’s support for the National Infrastructure Commission “We welcome the is encouraging and the list of funding announced projects given the green light for further analysis of the such as HS3, Crossrail 2 and Trans-Pennine tunnel, HS3 and numerous other schemes across Crossrail 2…Nonetheless, there the country will please everyone is still a long way to go on these in the construction supply projects and it would be misleading chain.” and premature for anyone to Construction Products think they have either been Association approved or are proceeding.” PWC
12 Stakeholder Reaction: Energy
“The emphasis in today’s “Rather than hoping Budget is on energy taxation to extract more from at the expense of carbon pricing North Sea oil and gas, the – in a so-called attempt to ‘protect government should be looking businesses’. Yet our membership at a transition plan for the demonstrates the willingness of communities impacted by a business to take action on climate declining industry including change… because it is now a expanding offshore wind.” commercial imperative to do so.” Greenpeace UK Green Building Council
“A greater reliance on interconnectors to “Government will import electricity from lose little money in Europe and Scandinavia abolishing Petroleum is likely to lead to higher Revenue Tax.” electricity costs and less ICAEW energy security.” Institution of Mechanical Engineers
“The Chancellor’s ambition for the UK to “Small modular reactors become a world leader in could potentially play a electricity storage systems significant complementary role is a bold and promising step to the UK’s existing new build and echoes ICE’s view that this programme and it is welcome innovative technology could play a that the Government is looking crucial part in achieving secure, seriously at the development of affordable and cleaner energy.” SMRs.” Institution of Civil Engineers Nuclear Industry Association
13 Stakeholder Reaction: Housing
“Our own research shows that nine in 10 “We recognise that the of our YMCAs have been Government is working on unable to accept referrals in the a number of fronts to speed up past due to a lack of bed spaces the planning process and intervene while evidence also shows that to support first time buyers, and rough sleeping in London among 18 some of the measures in today’s Budget to 25-year-olds is on the rise It is are welcome steps forward. Yet these essential, however, that any money announcements are limited in scope and invested is done so in the right way won’t signal the step change that we and at the right level to provide need to see. We cannot afford to lose sustainable support.” momentum in the battle to beat the YMCA housing crisis.” Federation of Master Builders
“The nation is facing a chronic affordable housing “Until now the shortage and the government has not Chancellor’s plans to reduce considered community- social rents over the next led housing as a way to four years is unlikely to help alleviate the housing crisis so address the situation.” it’s very encouraging that this Stonewater money has been identified in the budget.” Locality
“To eradicate homelessness, the Chancellor can’t simply deal “CIH has been calling with the symptoms and ignore for more measures to the root causes. Every day at address homelessness and Shelter we see that homelessness rough sleeping and today’s is principally caused by decades announcement of an investment of failure to build genuinely of £115 million to tackle rough affordable homes and short- sleeping is good news.” sighted welfare cuts.” Chartered Institute of Shelter Housing
14 Stakeholder Reaction: Health
“It is disgraceful given “We have to the crisis facing the NHS remember that this tax that there was no promise isn’t a silver bullet – it’s just of extra funding for a health one tool to help in the fight to service that is buckling under get children eating and drinking pressure from rising patient more healthily, and we look forward demand, falling resources and to the full set of ‘game-changing’ staff shortages.” actions government has promised British Medical to deliver in the forthcoming Association childhood obesity strategy.” Children’s Food Trust
“this tax should not be absorbed by the soft drinks industry. Prices need to change otherwise there will be no impact on the health of nation.” Diabetes UK “We are extremely disappointed by today’s announcement of a new tax on some of the UK’s most successful and innovative companies. For nearly a year we have waited for an holistic strategy to tackle obesity. “This measure is What we’ve got today instead is a supported by a majority of piece of political theatre.” the public and sends a clear Food & Drink Federation signal to industry that the public’s health is a key part of the economic recovery.” The UK’s Faculty of Public Health
15 BUDGET 2016 MONITORING SUMMARY
| BUDGET 2016 | MONITORING SUMMARY | 11 Contents
Page 3 Analysis
Page 5 Economy & Business
Page 24 Welfare & Tax
Page 27 Education
Page 30 Devolution
Page 33 Transport & Infrastructure
Page 38 Energy
Page 41 Housing
Page 44 Health
Page 45 Culture, Media & Sport
Page 46 About the Authors
| BUDGET 2016 | MONITORING SUMMARY | 22 Analysis
Chancellor takes control of his instead he established himself as a own destiny with his 2016 Budget “force for stability” fighting for the security of hard working families. In what is sure to be George Osborne’s final Budget statement There are clear winners and losers before he makes a bid for Number in this Budget. The next generation 10, the Chancellor has successfully from all socio-economic backgrounds defied detractors by setting out his and across the country are the first bold ambitions for the UK’s “Next winners. They are to benefit from Generation”. longer school days, more sports, more maths and less management from With politics on every page, this the local authority control. Surely the was a Budget setting out Osborne’s boldest shift in education policy for credentials to be the next generation 50 years. of Prime Minister for the UK’s next generation of voters. This was more After 6 years of tinkering around than a rhetorical phrase – the the edges, the Chancellor has made Chancellor introduced ISAs for wholesale changes to business red the under 40s with government tape. Small business owners will contributions of £1 for every £4 saved welcome this much needed reform and a radical new schooling policy for to VAT registration, corporation tax all children by 2020. With this budget reductions and improvements to the the Chancellor did not sell the family way HMRC collect taxes. silver, or make sweeping tax cuts;
| BUDGET 2016 | MONITORING SUMMARY | 33 Analysis
The Devolution Revolution continues to be spent on teaching more sports across England with a roll-out of in schools. There is to be reduction elected Mayors across all the English of £3.5 Billion by 2020 in Government regions. We will see more devolved spending but there was no indication powers to London, and across the where these cuts will come from. Northern Powerhouse, with Liverpool But public sector workers and those City Region and Greater Manchester reliant on welfare benefits should be retaining 100% of all business rates nervous as there is little scope for cuts collected to help make up the shortfall elsewhere. The promise of a better and in local government grants announced secure future for the Next Generation in the Spending Review. The case for comes at significant cost to the staying in the EU was also a winner current Generation. with the OBR and IMF setting out the economic case for the UK to The biggest losers are the Brexit remain members, prompting delight campaigners and those harbouring and disdain in equal measure on the ambition to be the next occupant of Government benches. Number 10. Osborne has delivered one of the most political Budgets in recent Then there are the losers. The “Current years. He has shown his leadership Generation” of corporate tax evaders ambitions, re-ignited his efforts, and will be hit hard by 2020 under these strengthened his claim to be the proposals. The drinks industry faces a next Prime Minister to lead the Next new Sugar Tax set to raise £520 million Generation.
| BUDGET 2016 | MONITORING SUMMARY | 44 Economy & Business
Britain is forecast to grow faster than are forecast to grow faster than any other major advanced economy inflation, rising by 3.6% in 2016, and in 2016. The global economic outlook thereafter by an average of 4.0% until has deteriorated since the Spending 2020. The OBR forecasts CPI inflation Review and Autumn Statement 2015. to be below the 2.0% target in 2016 All G7 economies have seen lower before returning to target in 2018. productivity growth since the financial crisis. The UK was hit hard by the The OBR forecasts GDP growth of 2.0% financial crisis, and productivity fell in 2016, 2.2% in 2017 and 2.1% to the 2.2% from its pre-crisis peak in 2012, end of the forecast period. It forecasts since when output per hour has grown employment to be 31.5 million in each year and increased by 0.8% in 2016, rising each year to 32.1 million in 2015 to exceed its pre-crisis peak. The 2020. CPI is forecast to be below the UK is one of the most open trading 2.0% inflation target in 2016, returning economies in the world and is not gradually to 2.0% in 2018. immune to the weaker global outlook. The OBR forecasts GDP growth to Public sector net borrowing is forecast be 2.0% in 2016, rising to 2.2% in to fall to 3.8% of GDP in 2015-16 2017 and 2.1% in 2018. Productivity is and then to fall each year for the expected to grow by 1.0% in 2016 and remainder of the forecast period. The 1.7% in 2017, before rising to 2.0% for OBR forecasts that the public finances the remainder of the forecast period. will deliver a surplus of £10.4 billion in 2019-20 and £11.0 billion in 2020-21. The OBR predicts the UK’s strong Public sector net debt is forecast to labour market performance to fall to 74.7% of GDP in 2020-21. continue. The OBR revised up its forecast for employment in 2016 from In 2010, the IMF forecast the UK to 31.5 million to 31.6 million, and in have the largest budget deficit in 2017 employment reaches 31.7 million. the G20, at 11.4% of GDP. Today the The OBR forecasts employment to OBR forecast that the UK’s deficit as rise by 0.9 million by 2020, meaning a share of GDP will be reduced by that employment will have risen by 3 almost two-thirds to 3.8% of GDP in million since 2010. Wages and salaries 2015-16.
| BUDGET 2016 | MONITORING SUMMARY | 55 Economy & Business
This Budget sets out that the debt as a share of GDP is forecast Government will find a further £3.5 to fall over this Parliament, reaching billion of savings from public spending 77.2% of GDP by the end of 2019-20. in 2019-20, building on the plans set out at Spending Review 2015. To This Budget sets out the action inform future spending decisions the Government is taking to meet and the delivery of these savings, the the fiscal mandate, achieving an Government is launching an efficiency overall surplus of £10.4 billion on the review. After the public finances headline measure of public sector net move into surplus in 2019-20, total borrowing in 2019-20 and a surplus of departmental resource spending £11.0 billion in 2020-21. will grow in line with inflation from 2019-20 to 2020-21. Specific The Government’s spending priorities departmental budgets for 2020-21 remain unchanged. As set out in will be set out at the next Spending Spending Review 2015, the defence Review. and overseas aid commitments, the real-terms protections for the NHS in England, schools funding in England, Spending and Fiscal planning the police and science will be maintained. The NHS has an ambitious In 2009-10, the Government borrowed programme of work underway to around £1 in every £4 it spent. In deliver £22 billion of efficiency savings 2015-16 the Government is forecast and this is unchanged. to borrow around £1 in every £10 it spends and this is expected to reduce to around £1 in every £14 in Employment and Earnings 2016-17. The deficit as a share of GDP is forecast to be cut by almost The data for 2015 showed: two thirds from its 2009-10 post-war peak and will reach 3.8% of GDP • a record employment rate of 74.1% in 2015-16.40 the Government has in Q4 2015. addressed the rapid rise in public sector net debt (PSND) which more • the employment rate of women had than doubled as a share of GDP risen to 69.1% by the end of 2015, a between 2007-08 and 2011-12. Net record high.
| BUDGET 2016 | MONITORING SUMMARY | 66 Economy & Business
• 74% of the increase in employment in • a 3.4% increase in the rate for 16 2015 was driven by full-time workers. to 17 year olds (from £3.87 to £4.00 per hour). • high and medium skill occupations accounted for 92% of the growth in • a 3.0% increase in the rate for employment in the year to Q4 2015. apprentices (from £3.30 to £3.40 per hour). • a strong demand for labour with 767,000 vacancies in Q4 2015, a • a 12.1% increase in the accommo- record high. dation offset (from £5.35 to £6.00 a day). • the claimant count fell to a 40 year low in 2015. Alignment of the National • working age inactivity fell by over Minimum Wage and National 600,000 from 2010 to 2015. Living Wage cycles
• earnings grew in 2015 rose by 2.5% The Government will align the National on the year in nominal terms, and Minimum Wage and National Living 2.3% in real terms. Wage cycles so that both rates are amended in April each year. This will take effect from April 2017. National Minimum Wage Shared Parental Leave – the The Government will increase the Government will consult in May National Minimum Wage rates from 2016 on how to extend Shared October 2016. This includes: Parental Leave and Pay to working grandparents, options for streamlining • a 3.7% increase in the rate for 21 to the system and the potential to make 24 year olds (from £6.70 to £6.95 better use of digital technology. per hour). From 1 April 2016, low wage workers • a 4.7% increase in the rate for 18 to aged 25 and above will see a pay rise 20 year olds (from £5.30 to £5.55 as a result of the introduction of the per hour). National Living Wage (NLW). Initially
| BUDGET 2016 | MONITORING SUMMARY | 77 Economy & Business
set at £7.20, it will mean a £900 • lower tax rates to drive growth and cash increase for a full-time worker support small businesses. on the current National Minimum Wage (NMW). 2.9 million workers are • lower corporation tax. expected to benefit directly, and the OBR estimated up to 6 million could In the last Parliament, the Government see a pay rise as a result of a ripple cut the main rate of corporation tax effect causing pay to rise further up from 28% to 20%. The small profits the earnings distribution. rate was also cut to 20%, and the two rates were unified, in a major sim- plification of the tax system. Future Business reductions in this unified rate have already been announced: to 19% in The Government is building on its 2017 and 18% in 2020 to support small achievements in the last Parliament, and large businesses alike. with a new plan to focus support on small businesses through ambitious Budget 2016 announces that the reforms to business rates. The business Government will cut corporation tax tax road map will support investment further, so the rate will fall to 17% in while continuing to crack down on 2020. This measure will benefit over avoidance and aggressive tax planning, a million companies, large and small. making sure rules are fair and taxes Overall, the cuts to corporation tax paid. In particular, the road map will: delivered since 2010 will be worth almost £15 billion a year to business • cut tax rates to drive growth and by 2021. support small businesses. This Budget announces further • modernise the business tax system measures to drive productivity growth in line with international best across the UK: practice. • reducing distortive taxes by • ensure a level playing field, with continuing to lower both income large multinationals paying their fair tax and business taxes. share of tax.
| BUDGET 2016 | MONITORING SUMMARY | 88 Economy & Business
• improving education by accelerating separate lifetime limit of £10 million fairer schools funding and of gains. committing to full academisation of schools in England. • delivering long-term infrastruc- ture improvements, by giving • promoting enterprise through the green light to major projects business rate cuts for small recommended by the National businesses, cutting Capital Gains Infrastructure Commission Tax and extending entrepreneurs’ including Crossrail 2, and High relief to external investors in Speed 3 between Leeds and unlisted trading companies. From 6 Manchester. April 2016, the higher rate of Capital Gains Tax (CGT) will be reduced • improving economic decision-mak- from 28% to 20%, and the basic ing by devolving power to cities and ratewill be reduced from 18% to regions, including new devolution 10%. There will be an 8 percentage deals for the East and West of point surcharge on thesenew England. rates for carried interest and for gains on residential property. This • reducing the Supplementary Charge will ensure that CGT provides an from 20% to 10%, to send a strong incentive to invest in companies signal that the UK is open for over property. Private Residence business and in recognition of the Relief will continue to ensure that exceptionally challenging conditions an individual’s main home is not that are currently facing the sector. subject to CGT. The change will take effect from 1 January 2016 (p.54). • extending entrepreneurs’ relief to long term investors in unlisted • providing certainty that companies companies. This will provide a will be able to access tax relief on 10% rate of CGT for gains on their costs when they retain de- newly issued shares in unlisted commissioning liabilities for an companies purchased on or after asset after a sale, to encourage new 17 March 2016, provided they are entrants for late-life assets and the held for a minimum of three years development of late-life business from 6 April 2016, and subject to a models (p.54).
| BUDGET 2016 | MONITORING SUMMARY | 99 Economy & Business
• building on the new decommis- permanently double SBRR in sioning powers of the Oil and Gas England from 1 April 2017. Authority (OGA) by undertaking further work with the OGA and • Small Business Rate Relief: industry to reduce overall de- thresholds – the Government will commissioning costs, to deliver raise the SBRR threshold in England significant savings for industry to rateable values of up to £12,000 and the Exchequer. If significant tapering to £15,000 from 1 April progress can be made, the 2017. Government will explore whether decommissioning tax relief could • Business rates: standard multiplier better encourage transfers of – the Government will raise the late-life assets (p.54). threshold at which business rates bills in England are calculated using the standard multiplier to Business Rates properties with rateable values of £51,000 and above from 1 April 2017. The Government will pilot approaches to 100% retention of business rates • Business rates: public lavatories with Liverpool City Region, Greater – the Government will allow local Manchester and the Greater London authorities in England to use Authority. This offer is also available their discretionary relief powers to other city regions that have ratified to support publicly owned public their devolution deals. lavatories from 1 April 2018. • Business rates: indexation – the • Business rates: local newspapers Government will change the annual – the Government will introduce uprating of business rates in a £1,500 business rates discount England from the Retail Prices Index for office space occupied by local to the main measure of inflation, newspapers in England, up to a currently the Consumer Price Index, maximum of one discount per from 1 April 2020. local newspaper title and per hereditament, and up to state aid • Small Business Rate Relief (SBRR): limits, for 2 years from 1 April 2017. doubling – the Government will
| BUDGET 2016 | MONITORING SUMMARY | 1010 Economy & Business
• Business rates: long-term review businesses from having to register for – the Government will publish a VAT by the end of the 2016-17 financial summary of the responses received year. as part of the long-term review of business rates in England in March 2016. Corporation Tax At Summer Budget 2015, the • Business rates: modernisation – Government announced that the Government will work with corporation tax payment dates for local authorities in England to the largest and most profitable standardise business rates bills companies in the UK – those with by 1 April 2017, ensure that all profits in excess of £20 million – ratepayers can receive bills and make payments online by 1 April would be brought forward, so tax 2017 and ensure that all local is paid closer to the point at which authority billing and collection these companies make a profit. These systems link with HMRC digital tax companies will be required to make accounts by 2022. payments in the third, sixth, ninth and twelfth months of their accounting period. The Government will defer the • Business rates: valuation reform introduction of this measure, to give – the Government will aim to businesses more time to prepare for introduce more frequent (at the transition to the new payment least 3 yearly) revaluations of schedule. The new schedule will apply properties in England for business rates purposes and will publish to accounting periods starting on or a discussion paper in March 2016 after 1 April 2019, and it will have a outlining options to deliver this. broadly neutral impact on the public finances over the scorecard period.
VAT Loss relief is an important part of the corporation tax regime, but the The Government will increase the current system is outdated and in VAT registration threshold in line with need of reform. First, under the inflation to £83,000 from 1 April 2016. current system, losses carried forward This will save around 2,000 small can only be used by the company
| BUDGET 2016 | MONITORING SUMMARY | 1111 Economy & Business
that incurred the loss, and not used profits in excess of £5 million. This in other companies in a group. In allowance will ensure that 99% of addition, some losses carried forward all companies are unaffected by the can only be set against profits from restriction. certain types of income, for example trading losses can only be set against This package of reforms will ensure trading profits. This produces unfair that large companies make a tax outcomes and is out of step with contribution when they make the way businesses now operate. significant profits. It will modernise So the Budget makes these rules one of the most outdated elements of more flexible, benefiting over 70,000 the tax regime, and bring the UK into companies. For losses incurred on or line with international best practice. after 1 April 2017, businesses will be The Government will consult on the able to use carried forward losses design of the reforms in 2016, and will against profits from other income legislate in 2017. streams or from other companies within a group. Stamp duty on commercial Second, the current rules enable property companies to offset all of their eligible taxable profits through losses carried The Government will reform Stamp forward. This can lead to a situation Duty Land Tax (SDLT) on non-resi- where a large company pays no tax dential property transactions. This in a year when it makes substantial will cut the tax for many businesses profits. To address this, the Budget purchasing property. Currently, SDLT applies a restriction of the amount rates on freehold and lease premium of profit that can be offset through transactions operate on a slab system, losses carried forward. The majority of where one tax rate is due on the G7 countries already have restrictions entire transaction value. This creates of this kind in place.129 From 1 April distortions in the market and leads to 2017 the Government will restrict to large increases in SDLT as transactions 50% the amount of profit that can be move into higher tax bands. A small offset through losses carried forward. business buying a property for The restriction will only apply to £250,000 pays £2,500 in SDLT. If the
| BUDGET 2016 | MONITORING SUMMARY | 1212 Economy & Business
price is just £1 higher, their tax bill is Of the remainder that do pay SDLT, trebled. This Budget announces that around 43% will pay less tax and a these rates will be reformed to a slice further 42% will pay the same. system, so that SDLT is payable on the portion of the transaction value As a result of these changes, over which falls within each tax band. The 90% of non-residential property new rates will be 0% for the portion of transactions will pay the same or less the transaction value between £0 and in SDLT,134 with only 9% paying more. £150,000; 2% between £150,001 and £250,000; and 5% above £250,000. These changes will take effect on 17 This means that all freehold and lease March 2016. For those transactions premium transactions below £1.05 which have already exchanged contracts million will pay the same or less in but not completed when the changes SDLT. come into force, transitional rules will ensure taxpayers will not lose out. The Government will also introduce a new 2% rate for leasehold rent transactions where the net present Sectors value is above £5 million. These transactions are already taxed on Manufacturing a slice basis. All leasehold rent transactions up to £5 million will The manufacturing, construction and remain unaffected. service sectors are now all larger than at the beginning of 2010. By the end of In combination, these changes 2015, 62.6% of all employment growth ensure that businesses purchasing since 2010 has been in high skilled the highest value freeholds and occupations. Within manufactur- leases make a larger contribution ing, aerospace production has grown whilst delivering a tax cut for those by almost 30% and car production purchasers, often smaller businesses, has increased by over 60% since the who purchase less expensive start of 2010. Between 2010 and 2014, properties. Around 42% of commercial 16,000 new jobs in car production have property transactions pay no SDLT at been created and in 2015 car manufac- all due to the generous nil-rate bands. turing exports reached a record high.
| BUDGET 2016 | MONITORING SUMMARY | 1313 Economy & Business
Science and technology Bizfitech, Funding Options and Funding Xchange will be designated Scientific research and development as finance platforms to help match has grown by 24.4% and architecture borrowers and alternative lenders. and engineering activities have grown by 42.5% since 2010. • commit £45 million of banking fines over the next 4 years to support military charities and other good Financial services causes.
The Government will: • reduce the amount of profit that banks can offset with pre-2015 • establish more proportionate capital losses from 50% to 25% from 1 April requirements for small banks and 2016. This will rightfully maintain building societies in the EU. the exceptional treatment of banks’ losses relating to the financial • work with the New Bank Start-up crisis and subsequent misconduct Unit to promote the authorisation scandals. Banks’ post-2015 losses, of new banks, building on the three as well as any pre-2015 losses new banks already authorised in covered by the existing reliefs for this Parliament. new-entrant banks and building societies, will be treated in the • support SME access to finance, same way as other industry groups. setting out a £1 billion package to support SMEs through the British Business Bank. It will support the Digital Technology first loans under its Help to Grow programme from spring 2016, The Government will: supporting at least £200 million of lending. • establish a new Broadband Investment Fund, in partnership • ensure small firms that are rejected with private sector investors, to for finance by high-street banks support the growth of alternative will be able to access new options broadband networks by providing as the Budget announces that greater access to finance.
| BUDGET 2016 | MONITORING SUMMARY | 1414 Economy & Business
• deliver a 5G strategy in 2017, based authoritative address register that on an assessment by the National is open and freely available. Infrastructure Commission of how the UK can become a world leader • Institute for Coding – the in 5G. Government will establish a panel of leading experts to help shape • establish a panel of leading experts, the £20 million Institute for Coding chaired by Kathryn Parsons, to competition. shape the £20 million Institute for Coding competition. Remote gaming operators currently benefit from a more generous tax • provide up to £5 million to develop treatment when they offer discounted options for an authoritative address or free gambling (‘freeplays’) to register that is open and freely customers in Remote Gaming available – making wider use of Duty than would be the case for more precise address data and operators offering free bets on things ensuring it is frequently updated like football and horseracing. The will unlock opportunities for Government will therefore amend the innovation. tax treatment of freeplays in Remote Gaming Duty to bring it into line with • Digital standards in construction – the tax treatment of free bets in the Government will develop the General Betting Duty. next digital.
• standard for the construction Devolution sector – Building Information Further allocation of the Local Growth Modelling 3 – to save owners of Fund – the Government will conclude built assets billions of pounds a a further round of Growth Deals with year in unnecessary costs, and Local Enterprise Partnerships. maintain the UK’s global leadership
in digital construction. Snow Hill regeneration – the Government will provide £2 million • Open address data – the to support Greater Birmingham and Government will provide up to £5 Solihull Local Enterprise Partnership million to develop options for an
| BUDGET 2016 | MONITORING SUMMARY | 1515 Economy & Business
to develop a regeneration master plan These measures build on the for Birmingham’s Snow Hill district. devolution revolution confirmed at Autumn Statement 2015, which will Enhanced Capital Allowances in allow local government to keep the Enterprise Zones – the Government rates they collect from business, give will ensure that all Enterprise Zones councils the power to cut business are able to offer Enhanced Capital rates to boost growth, and give Allowances for eight years from elected city-wide mayors the power the establishment of relevant sites. to levy a business rates premium for (Finance Bill 2016). local infrastructure projects – with the support of local business. Local New Enterprise Zones and extensions government will be compensated for – the Government will create a new the loss of income as a result of the Cornwall Marine Hub Enterprise Zone business rates measures above, and following the transfer of Wave Hub (a the impact considered as part of the wave energy testing facility). Government’s consultation on the implementation of 100% business rate The Government has asked Lord retention in summer 2016. Heseltine to lead the Thames Estuary 2050 Growth Commission. The Commission will develop an ambitious British Business Bank vision and delivery plan for North The Government confirms up to £1 Kent, South Essex and East London up billion of commitments to support to 2050. This will focus on supporting small businesses to access the the development of high productivity finance that they need to grow by: clusters in specific locations. It will examine how the area can develop, attract and retain skilled workers. • agreeing with LEPs in the Midlands It will also look at how to make the and the British Business Bank most of opportunities from planned to establish a Midlands Engine infrastructure such as the Lower Investment Fund to invest in local Thames Crossing. It will report back SMEs, subject to final funding at Autumn Statement 2017 with a arrangements. clear and affordable delivery plan for achieving this vision.
| BUDGET 2016 | MONITORING SUMMARY | 1616 Economy & Business
• launching the first transactions two years early. As set out in Spending from the British Business Bank’s Review 2015, capital budgets will be Help to Grow programme from £12 billion higher than planned at spring 2016. Summer Budget 2015.
• extending the British Business Bank’s Enterprise Finance Welfare Guarantee programme until at least Summer Budget 2015 and Autumn 2018 2.356 Trade finance – the Statement 2015 announced reforms Government will trial a streamlined to ensure that the welfare system is approach to trade finance provision, both fair and sustainable. The Welfare through ending duplicated credit Reform and Work Bill legislates for the and other due diligence between lenders and UK Export Finance. majority of these reforms. Spending in 2015-16 on PIP and its predecessor, the Disability Living Allowance, Capital investment is expected to be over £3 billion higher in real terms than in 2009-10. The Spending Review prioritised long Spending on these benefits is forecast term investment over day-to-day to be higher in real terms in 2019-20 spending. This Budget accelerates its than in 2009-10. commitment to invest £100 billion in infrastructure by 2020-21. The The Government is committed to Government is now accelerating its launching a retail sale of Lloyds investment plans in priority areas to Banking Group shares and to fully deliver around £1.5 billion investment returning its stake to the private in areas such as housing, schools and sector in 2016-17. The Government is transport over the next three years making progress towards achieving that would otherwise have taken place a further £5 billion of corporate and at the end of the decade. This will financial asset sales by March 2020. include bringing forward funding for the Highways Maintenance Challenge Fund and the Pothole Action Fund, and enabling the delivery of thirteen thousand shared ownership homes
| BUDGET 2016 | MONITORING SUMMARY | 1717 Economy & Business
Individual taxes Apprenticeships
The Government is raising the The Government is committed to personal allowance to £12,500, and increasing the quality and quantity the higher rate threshold to £50,000 of apprenticeships, and will deliver by the end of this parliament. This 3 million apprenticeship starts by is a change from £11,000 in 2016-17 2020. As announced at the Autumn to £11,500 in 2017-18. As a result, a Statement 2015, an apprenticeship typical basic rate taxpayer will pay levy will be introduced in April 2017, over £1,000 less income tax in 2017-18 and employers that are committed to than in 2010-11.The Government will training will be able to get out more increase the higher rate threshold by than they put in. £2,000 to £45,000 in 2017-18 resulting in 585,000 fewer higher rate taxpayers From April 2017, employers will receive than at the start of the parliament. a 10% top-up to their monthly levy contributions in England and this The Government believes that will be available for them to spend Employee Shareholder Status (ESS) on apprenticeship training through provides vital flexibility for early their digital account. The Government stage firms, and that it is right that will set out further details on the employee shareholders receive operating model in April and draft tax benefits on shares awarded in funding rates will be published in exchange for relinquishing certain June. employment rights. However, the Government wants to ensure that the benefits for individuals are proportion- Multinational business ate and fair. Budget 2016 introduces At Autumn Statement 2014, the an individual lifetime limit of £100,000 Government announced new on gains eligible for Capital Gains rules to address hybrid mismatch Tax (CGT) exemption through ESS. arrangements, which are used by This limit will apply to arrangements some multinational companies to entered into on or after 17 March 2016.
| BUDGET 2016 | MONITORING SUMMARY | 1818 Economy & Business
avoid tax by exploiting differences Forthcoming Changes between countries’ rules to avoid paying tax in either country, or to get excessive tax relief by deducting Modernising tax collection the same expense in more than one country. To strengthen these At the March 2015 Budget the proposals, Budget 2016 announces Government committed to transform that the rules will be extended to the tax system through digital cover hybrid mismatches arising from technology and end the need permanent establishments, further for annual tax returns. Spending restricting the opportunities for tax Review and Autumn Statement 2015 avoidance by multinationals. announced a major investment in The Government will introduce HMRC to deliver this. To make further legislation in Finance Bill 2016 to progress towards this transformation, ensure offshore structures cannot be the Budget announces that: used to avoid UK tax on profits that are generated from developing UK • from 2018 businesses, self-em- property. ployed people and landlords who are keeping their records digitally HMRC will also create a task force to and providing regular digital focus on offshore property developers. updates to HMRC will if they wish be able to adopt pay-as-you-go tax The Government will increase HMRC payments – this will enable them compliance activity to tackle tax on a voluntary basis to choose evasion and non-compliance across payment patterns that suit them the waste supply chain – waste-relat- and better manage their cashflow. ed crime is a blight on communities and undermines the environmental • the Government will explore objectives of landfill tax. This is why options to simplify the tax rules HMRC and the Environment Agency for businesses, landlords, and are already working together to tackle the self-employed, to reduce ad- fraud and tax evasion in the waste ministrative burdens and ensure sector. The Government will provide that regular digital updates work additional funding for HMRC to increase smoothly. its compliance activity in this area.
| BUDGET 2016 | MONITORING SUMMARY | 1919 Economy & Business
The Government will consult on these help and support about filing and measures in 2016, alongside publishing paying their taxes for the first time, detailed proposals for other elements and on the transition to using of the Making Tax Digital programme digital services. announced previously. Individuals and businesses should be able to Bank share sales – the Government get the help and support they need will continue to return its financial from HMRC, when they need it. By assets to the private sector through the end of this Parliament, HMRC’s launching a retail sale in 2016-17 and digital transformation will have made fully exiting its stake in Lloyds Banking it quicker and easier for customers to Group and raising up to £25 billion report and pay their taxes online. But from its stake in RBS over the course the Government recognises that more of this Parliament. needs to be done now, and is investing £71 million to improve the service it UKAR future asset sales – UK Asset provides taxpayers. This investment Resolution have been exploring the will deliver: possibility of a major sales programme of Bradford & Bingley (B&B) mortgages. • a 7-day a week service by 2017, This programme of sales will be with extended hours and Sunday designed to raise sufficient proceeds opening on online services and the for B&B to repay the £15.65 billion tax and tax credits phone lines, so debt to the Financial Services that people and businesses have Compensation Scheme (FSCS) and for more opportunity to contact HMRC the FSCS to repay its corresponding outside of working hours. loan from the Treasury. Any sales will be subject to market conditions and • improved telephone services and ensuring value for money. reduced call waiting times by recruiting over 800 new staff into Government procurement – the HMRC call centres. public sector can drive competition via open procurement practices. The • a dedicated phone line and online Government wants to ensure the forum for new businesses and £60 billion local authorities spend to self-employed individuals to get procure services is done in an efficient
| BUDGET 2016 | MONITORING SUMMARY | 2020 Economy & Business
and competitive way. The Government role of the Competition and Markets will consult on new rules requiring Authority in the regulated sectors. local authorities to be transparent The Government will continue to look about the cost of the in-house at further changes. The Government services they provide, and whether will also look to drive efficiency, by there could be savings from using working with economic regulators competitive external providers. to review the business case for co-locating and sharing back office Legal services – where competitive functions across regulators, reporting pricing can make some of the biggest by summer 2016. decisions in life, from buying a house to setting up a business, easier. The Competition in legal services – the Government will launch a consultation Government will shortly consult shortly on how to reduce regulatory on reforms to improve choice and barriers so that new providers can competition in legal services by provide legal advice. making it easier for new providers to enter the market. Streamline regulators - E-Serve will be split off from Ofgem to Unlocking of mobile phones – ensure Ofgem can focus on its core the Government is committed to functions of economic regulation consulting this year on ending the and promoting competition. DECC practice of handset locking for are committed to consolidating their customers outside any initial contract delivery providers and will set out the period. The Government welcomes future of consumer-facing functions, voluntary commitments, but also including those currently undertaken stands ready to consult on legislative by E-Serve, at Autumn Statement options if necessary. 2016. The Government will continue to consider whether economic Transparency in local authority regulators’ functions can be further services – the Government will streamlined by legislating to give consult on new rules requiring Local Ofgem more power to make sure the Authorities to be transparent about system of industry codes supports the cost of the in-house services they competition and by enhancing the provide.
| BUDGET 2016 | MONITORING SUMMARY | 2121 Economy & Business
Competition in rail – the Government • enhance its Annual Concurrency welcomes the CMA’s report on Report on the operation of the increasing competition in railways concurrency arrangements between and will work with the CMA to explore the CMA and the sectoral regulators how their recommendations could to improve competition in the potentially be implemented as part of regulated sectors. In future, the the wider reform programme arising report will cover new regulations from the Shaw Report. put in place during the year which might significantly affect Protections for the smallest competition and innovation. It businesses acting as consumers – will also propose areas where the Government is consulting on changes to regulation might allow measures to ensure that the smallest competition and innovation to work businesses – including sole traders – better. understand their rights and have the protections they need when they are • include an estimate of the impact acting as consumers. of its contribution to competition enforcement cases led by sector Improving the home buying process – regulators in its published the Government will shortly publish performance monitoring benefit to a call for evidence looking at the cost ratios. process of buying a home. Trigger points to promote switching – Reducing regulatory burdens – Ofwat the Government will shortly publish will work with the water and sewerage the first of two reports, compiled by industry to simplify and streamline research firm GFK-NOP, into the role water companies’ licences in order that key trigger points can play in to reduce regulation and facilitate empowering consumers. deregulatory changes in future. Ofgem and DECC will review energy Role of the Competition and Markets supply licence conditions to ensure Authority – The Competition and they are as clear as possible, provide Markets Authority (CMA) will:
| BUDGET 2016 | MONITORING SUMMARY | 2222 Economy & Business
appropriate protections for consumers and do not act as a barrier to new companies entering the market, expanding or innovating.
Co-location and sharing back office functions – the Government will work with economic regulators to review the business case and implementa- tion issues around co-locating and sharing back office functions across regulators, reporting by summer 2016.
| BUDGET 2016 | MONITORING SUMMARY | 2323 Welfare & Tax
• The Government will introduce two • The rate of Petroleum Revenue Tax reforms of loss relief from April is to be permanently reduced from 2017. Its current streaming rules 35% to 0%, while the rate of the will be made more flexible so that Supplementary Charge will drop losses occurring on or after 1 April from 20% to 10%. 2017 will be useable, when carried forward, against profits from other • The duty rates on beer, spirits and income streams or other companies most ciders will be frozen for 2016 within a group, while companies but rates on most wines and higher will only be able to use losses strength sparkling cider will go up carried forward against up to 50% by RPI from 21 March 2016. of any profits above £5 million. • Duty rates on all tobacco products • The Renewals Allowance, which will increase by 2% above RPI provides traders and property inflation. Hand-rolling tobacco will businesses with tax relief for see an extra increase to 5% above the cost of replacing tools is to RPI. be withdrawn. Costs incurred on replacement of tools will be • A new soft drinks industry levy is to obtained under the same rules as be paid by producers and importers those which apply to other capital of soft drinks that contain added equipment. sugar. Small operators will be excluded from the charge. • The Government will cut the proportion of a banking company’s • The main rate of fuel duty for petrol annual taxable profit that can be and diesel will stay frozen at 57.95 offset by pre-April 2015 carried-for- pence per litre during 2016-2017. ward losses from 50% to 25% from 1 April 2016. The restriction will • The Government is to scrap the remain subject to a £25 million Carbon Reduction Commitment allowance for building societies and (CRC) energy efficiency scheme an exemption for losses incurred by from the end of the 2018-19 new-entrant banks. compliance year.
| BUDGET 2016 | MONITORING SUMMARY | 2424 Welfare & Tax
• Higher rates of Stamp Duty will digitally and provide regular be introduced on purchases of updates to HMRC will be able to additional residential properties make pay-as-you-go tax payments from 1 April 2016. from 2018.
• Stamp duty rates on non-resi- • Nine banks will be legally required dential transactions will also be by the Government to offer basic changed so that they apply to the bank accounts in a bid to help portion of the purchase price within more people access basic banking each band. A transaction value up services. to £150,000 will be charged at a rate of 0%, the portion between • Financial guidance providers the £150,001 and £250,000 at a rate of Money Advice Service, The Pensions 2%, and the portion over £250,000 Advisory Service and Pension Wise at 5%. will be restructured to make sure people can access the help they • The Government will reduce the need to make effective financial higher rate of Capital Gains Tax decisions. from 28% to 20% while the basic rate will drop from 18% to 10%. • The Government is increasing the personal tax free allowance • HMRC has been set a compliance from £11,000 in 2016-17 to £11,500 yield target for 2016-17 of £27 in 2017-18, while the higher rate billion. threshold will rise to £43,000 in April. • £71 million will be invested to make it quicker and easier for individuals • From April 2017 a new Lifetime ISA and small businesses to deal with will be launched. Adults under 40 HMRC. It hopes to have phone lines can save up to £4,000 each year open seven days a week to improve and receive a 25% bonus on every call waiting times. pound they put in.
• Businesses, self-employed people and landlords who keep records
| BUDGET 2016 | MONITORING SUMMARY | 2525 Welfare & Tax
• For those on low incomes, the • The loans to participators tax rate Government will introduce a Help will rise from 25% to 32.5% as of to Save scheme. A 50% bonus on April 2016. up to £50 of monthly savings will be provided. • Recipients of Guardian’s Allowance, Carer’s Allowance and the carers • From early 2017, Tax-Free Childcare element of Universal Credit from is being introduced to help working the household benefit cap, which parents with childcare costs, caps the amount of benefits ensuring those who want to can go out-of-work working-age families out to work or increase their hours. can receive at £20,000, and at £23,000 in Greater London, will • The new mandatory National Living receive exemptions from the Wage will be brought in from 1 Autumn. April 2016, set at £7.20 an hour for those aged 25 and above, while the • The Government is changing National Minimum Wage will be set the way that entitlement to at £6.95 from October 2016. Personal Independence Payment is determined. There will be • The Government will continue to a reduction in the number of support those who lose their job. assessment points awarded for The first £30,000 of a termination needing to use an aid or appliance payment will remain free from to carry out two of the ‘daily living’ income tax and the full payment activities assessed. will be outside the scope of employee national insurance • The deduction of tax at source contributions. regime is to be changed to bring all international royalty payments • An increase in the rate of tax arising in the UK within the charge payable by close companies under to income tax, unless those taxing the loans to participators rules rights have been given up under a so that it continues to mirror the double taxation agreement or the higher rate of dividend tax has been EU Interest and Royalties Directive. announced.
| BUDGET 2016 | MONITORING SUMMARY | 2626 Education
• By 2020 all schools are expected • There will be funding to establish either to be academies, or to have a Northern branch of the New an academy order in place to Schools Network and investment convert by 2022. to expand the best academy chains and develop new sponsors in the • The current system for allocating North. school funding will be replaced by the first National Funding • The primary school PE and sport Formula for schools from 2017-18. premium will be doubled from £160 Subject to consultation, by 2020 million per year to £320 million per the Government aims for 90% of year from September 2017. schools that gain additional funding to receive the full amount they are • Up to £285 million a year will be due. provided to give 25% of secondary schools increased opportunity to • £500 million additional core funding extend their school day. will be provided to schools over the course of this Spending Review. • £10 million funding a year will be provided to expand breakfast clubs • Professor Sir Adrian Smith will in up to 1,600 schools starting from publish a report during 2016 September 2017. reviewing the case for how to improve the study of maths from 16 • There will be increased funding to 18, and the feasibility for more available for improved activity in or all students continuing to study coasting and vulnerable schools. maths to 18. • The Government will provide £14 • £20 million a year will be invested million over the Spending Review into a Northern Powerhouse period to deliver a mentoring Schools Strategy. Sir Nick Weller scheme for disadvantaged young will lead a report into reforming teenagers. education across the Northern Powerhouse.
| BUDGET 2016 | MONITORING SUMMARY | 2727 Education
Further Education • The Government will continue to free up student number controls for • Loans will be introduced for level alternative providers predominantly 3 to level 6 training in further offering degree level courses for the education, part-time second 2017-18 academic year. degrees in STEM, and postgraduate taught master’s courses. • There will be extra funding for the Royal College of Art’s Battersea • From 2018-19, loans of up to Campus. £25,000 will be available to any English student without a Research Science and innovation Council living allowance who can win a place for doctoral study at • £50 million will be invested in the a UK university. A repayment rate Quadram Institute, a world leading of 9% for doctoral loans and a centre for food and health research combined 9% repayment rate will at the Norwich Research Park. be set if people take out a doctoral and master’s loan. A 6% rate will • There will be science and be set for those who only take out innovation audits in Greater a master’s loan. The Government Manchester and East Cheshire, will also extend the eligibility Edinburgh and the Lothians, South of master’s loans to include West England and South East three-year part-time courses with Wales, Sheffield City Region and no full-time equivalent. Lancashire LEP and the Midlands, to map the regions’ research • There will be a review of the gaps and innovation strengths and in support for lifetime learning, identify areas of potential global including for flexible and part-time competitive advantage. study.
| BUDGET 2016 | MONITORING SUMMARY | 2828 Education
• The Government will invest £50 million up to 2020-21 to establish a new Compound Semiconductor Applications Catapult in Wales.
• Dyson will receive a grant of up to £16 million to support research and development for battery technology at their site in Malmesbury.
• The National Institute for Smart Data Innovation in Newcastle will be awarded £15 million subject to approved business case.
• Over £16 million, matched by industry, will be provided to companies and research organisations in the Midlands to support aerospace R&D.
• £38 million will be awarded, matched by industry, for collaborative R&D into low emission vehicles.
| BUDGET 2016 | MONITORING SUMMARY | 2929 Devolution
• The Government and the Welsh sensitive to the needs of all government will begin negotiations possible users. The consultation on a City Deal for Swansea Bay City will end on the 26th May. Region. • The way the country is run will • The Government will commence be changed, the economy will be negotiations on a potential City rebalanced for the next generation Deal for both Edinburgh and the through devolution. Radical new South East Scotland. powers are being given to local leaders and responsibility for • A new mayoral devolution deal with driving growth in their local region the West of England, will give the through devolution deals, the West of England significant powers ability to retain business rates and over improved transport, planning, targeted investment in response to skills and employment. The West local priorities. of England will gain control over a £900 million investment fund to • Budget 2016 declares new boost economic growth over 30 devolution deals with the West of years. England, East Anglia, and Greater Lincolnshire. This builds on existing • All Enterprise Zones will be able to devolution deals with Greater offer Enhanced Capital Allowances Manchester, Liverpool City Region, for eight years once appropriate Sheffield City Region, the North sites have been established. East and Tees Valley, meaning that over 55% of the population of the • All Local Enterprise Partnerships North of England will be have an will be required to have a Small elected mayor. The Government Business Representative on their also continues to devolve powers board. to Scotland, Wales and Northern Ireland. • A consultation will today be launched on the provision of • £4.5 million from banking fines will crematoria to calculate whether be used to help establish an Air they are fit for purpose and Ambulance for Northern Ireland.
| BUDGET 2016 | MONITORING SUMMARY | 3030 Devolution
• The Scotland Bill will deliver the • Significant budgets will be legislative elements of the Smith transferred to the local level, Commission, covering tax, welfare building on the mayoral devolution and borrowing, while the new agreements with Greater Fiscal Framework for the Scottish Manchester, Sheffield City Region, Government was agreed in February the North East, Tees Valley, 2016. Liverpool City Region and the West Midlands. Mayoral devolution deals • The Budget includes a zero rating have been agreed with English Petroleum Revenue Tax and cuts counties and southern cities, the Supplementary Charge in half reaching agreements with the West to 10% to help support the industry of England, East Anglia and Greater through the current challenging Lincolnshire. conditions. • A further devolution deal has been • Tolls will be halved on the Severn agreed with Greater Manchester, River Crossings, once the crossings including a commitment to work enter public ownership, subject towards the devolution of criminal to public consultation. The justice powers. There is also the Government will also review the desire to work towards a second case for free-flow tolling on the devolution deal with Liverpool City crossings. Region.
• A £1.2 billion city deal for the Cardiff • A pilot of 100% business rates Capital Region has been agreed. retention in Greater Manchester The Government will contribute and Liverpool City Region will be £500 million to the deal which will implemented, alongside an increase provide an investment fund for the of business rates retained in region and support electrification of London, contributing to developing the Valley Lines railways. the apparatuses required to manage risk and reward under 100% rates retention.
| BUDGET 2016 | MONITORING SUMMARY | 3131 Devolution
• Greater Manchester and the Government will work towards the devolution of powers over criminal justice services, as well as the establishment of a Life Chances Investment Fund. Greater Manchester will be able to offer a smooth experience for offenders as they transition between prisons and the community.
• A further mayoral devolution deal with Liverpool City Region has been agreed. This builds upon Liverpool’s mayoral deal, and will give new powers over transport, pilots the approach to 100% business rate retention across the region, and puts in place the commitment for the city region to work with the Government concerning children’s services, health, housing and justice.
• £20 million a year of new funding will go towards a Northern Powerhouse Schools Strategy.
• The Northern Ireland Executive, Scottish Government and Welsh Government will each see increases in their budgets, to be allocated as they see fit.
| BUDGET 2016 | MONITORING SUMMARY | 3232 Transport & Infrastructure
Infrastructure • A new commission led by Lord Heseltine has been tasked with • The Petroleum Revenue Tax will be the development of an ambitious effectively abolished through the vision and delivery plan for North permanent reduction of the rate Kent, South Essex and East London from 35% to 0%. This change will up to 2050. The plan will focus on come into effect 1 January 2016. supporting the development of high productivity clusters in specific • The National Infrastructure locations and examining how the Commission is set to carry out two area can develop, attract and retain new studies into infrastructure skilled workers. The Commission challenges. One will look at how the will report back in the 2017 Autumn UK can become the world leader Statement. in 5G deployment and how it can reap all the potential benefits that • The Government is set to deliver 5G services offer. The other study a 5G strategy in 2017, which will assess proposals for unlocking will be based on the National growth, housing and jobs in the Infrastructure Commission investi- Cambridge-Milton Keynes-Oxford gation into how the UK can become corridor. a world leader in 5G. In addition, the Government will support the • Spending for flood defence and development of a network planning resilience will increase by over £700 tool to be trialled in Bournemouth. million by 2020-21. £150 million will be invested in flood defence • South Gloucestershire Council will schemes for Leeds, Cumbria, Calder receive £500,000 to fund a study Valley and York which will in turn into a new junction 18a on the M4 protect 7,400 properties. to link with the Avon ring road A4174. • £5 million will be provided to establish a fund that supports • Sir John Parker has been appointed smaller local infrastructure projects to lead the national ship building in outer London boroughs. strategy, and will produce his report by the Autumn Statement of this year.
| BUDGET 2016 | MONITORING SUMMARY | 3333 Transport & Infrastructure
Energy & Infrastructure • At least £30 million will be allocated for a small modular • The recommendations from reactor, enabling an advanced the National Infrastructure manufacturing R&D programme to Commission’s energy study ‘Smart develop nuclear skills capacity. Power’ will be implemented to reform the UK’s energy sector, and • £700 million of extra funding will the Government will work with be provided for flood defence and Ofgem to remove regulatory and resilience funding by 2020-21, policy barriers. funded by a 0.5% increase in the standard rate of Insurance Premium • In the next five years, at least Tax. £50 million will be allocated for innovation in energy storage, Transport demand-side response and other smart technologies, which is • The freeze on fuel duty will designed to help new technologies continue, meaning the average and business models access small business with a van saves the market. Ofgem will launch a £12 each time they fill their tank consultation later this year on the compared to fuel escalator plans future of the £100 million Network in place prior to 2010. 138 Hauliers Innovation Competition. have on average saved a total of £14,400 over the last six years. The • The Government will auction rates of HGV VED and Road User Contracts for Difference of up to Levy will remain frozen in 2016-17. £730 million this parliament for up to 4 GigaWatts of offshore wind and • To support the transition to zero other less established renewables, and ultra-low emission vehicles, with a first auction of £290 million. the 100% First Year Allowance Support for offshore wind will be (FYA) for businesses buying low capped initially at £105/MWh (in emission cars will be extended for 2011-12 prices), falling to £85/MWh an additional 3 years to April 2021, for projects commissioning by 2026.
| BUDGET 2016 | MONITORING SUMMARY | 3434 Transport & Infrastructure
the main rate threshold for capital 2016-17, for local authorities to fill allowances for business cars will be nearly a million potholes. There reduced to 110 grams/kilometre of will be a further £130 million to CO2, and the FYA threshold to 50 fix roads and bridges damaged by grams/kilometre of CO2, reflecting Storms Desmond and Eva. decreasing vehicle emissions. Company Car Tax will continue to • Crossrail 2 has been given the be based on CO2 emissions. go-ahead with £80 million to help fund development, while • There will be an increase in capital High Speed 3 between Leeds and investment in the transport network Manchester has been approved to by 50% over this parliament, bring journey times to around 30 investing £61 billion. minutes.
• The Government intends to • The Government will take establish the UK as a world centre forward the proposals set out of excellence in connected and by Transport for North in their autonomous vehicles, with trials of Northern Transport Strategy, and driverless cars on the strategic road the proposals from the National network beginning by 2017 following Infrastructure Commission, with a consultation this summer on £300 million of funding. £60 million removing regulatory barriers to will be provided to develop plans enable autonomous vehicles on for both the Leeds-Manchester England’s major roads. route by 2017 and to improve transport connections between • A £15 million ‘connected corridor’ cities of the North. To advance the will be established between London expansion of the M62, there will be and Dover to enable vehicles to an extra £161 million to advance communicate wirelessly with in- by 2 years the upgrade between frastructure and potentially other junction 10-12, and advance work vehicles. on junction 20-25.
• £50 million of Pothole Action Fund • £75 million will be allocated to for England is being allocated in develop the transformation of
| BUDGET 2016 | MONITORING SUMMARY | 3535 Transport & Infrastructure
east-west road connections, capacity enhancements to the M1 including a Trans-Pennine tunnel at junctions 35a- 39 Rotherham under the Peak District between to Wakefield, and upgrades to Sheffield and Manchester, as well the M56 at junctions 6-8 south of as options to enhance the A66, A69 Manchester. and the north-west quadrant of the M60. This includes developing a • There will be £151 million to business case for these schemes by fund new river crossings at both the end of 2016. Lowestoft and Ipswich (subject to final business case approval). The • The Government will allocate £4 Government is now inviting further million towards the development of bids for the £475 million Local High Speed 2 Growth Strategies for Majors Fund announced in 2015. Manchester Piccadilly, Manchester Airport and Leeds stations. • The Government will provide £80 million to allow Crossrail 2 to • The main rate of fuel duty for proceed to the next stage with petrol and diesel will continue to the intention of bringing forward a be frozen at 57.95 pence per litre in Hybrid Bill within this parliament. 2016-2017. • After the existing concession on • From April 2016 the 3 percentage the Severn River Crossings ends point differential between diesel in 2018, subject to consultation, cars and petrol cars will be retained tolls will halve. The costs and until April 2021. benefits for developing a free-flow barrier-free tolling system will also • There will be £5 million to develop be evaluated. options for improving the resilience of the rail line between Exeter and • £16 million funding is being Newton Abbot (via Dawlish), once allocated to improve rail station study by Network Rail reports. facilities at Market Harborough, St Albans, Redhill, Newbury, • There will be an acceleration to High Wycombe, Exeter St the development of the Lofthouse Davids, Weston-Super-Mare, and and Simister Island junctions, Cheltenham Spa.
| BUDGET 2016 | MONITORING SUMMARY | 3636 Transport & Infrastructure
• By the end of 2018 Midlands • £8 million will be allocated during Connect will be set-up as a 2016-2017 to fill around 157,000 statutory sub-national transport potholes, and £7 million to improve body with statutory duties. rail stations in the South East.
• Upgrades will be made to the M1 for a continuous smart motorway from London to Yorkshire and to the M42 and M5 around Birmingham to four lane smart motorway, while there will be improvements to the A46 Newark bypass and its junction with the A1, and to the single carriageway link on the A45 Stanwick to Thrapston.
• The new Local Majors Fund will support local areas in the South West in bids for funding for large local transport schemes. There will be £500,000 to fund a study into a new junction 18a on the M4 to link with the Avon ring road A4174.
• TfL has been invited to bring forward proposals for financing infrastructure projects from land value increases. TfL is being supported in its plans to generate revenue from property assets through means including consultation on reforms to compulsory purchase orders.
| BUDGET 2016 | MONITORING SUMMARY | 3737 Energy
• At least £30 million will be • Around £20 million of funding will allocated for a 21st century nuclear be provided for seismic surveys, as manufacturing programme. announced in January.
• There will be a Government • £730 million for offshore wind and consultation on the priorities and other less established renewable delivery models for the Shale technologies will be auctioned this Wealth Fund and how it can be parliament for projects in 2021 to deployed. 2026. The first auction will offer £290 million of support. • All remaining energy generation activities will be excluded from the • There will be legislation to license Enterprise Investment Scheme, industry code administrators and the Seed Enterprise Investment give Ofgem increased power to set Scheme and Venture Capital Trusts strategic direction and intervene to with effect from 6 April 2016, as deliver essential changes to codes well as from Social Investment Tax quickly. Relief when enlarged. (99) • Ofwat will take steps to simplify • Ownership of the wave energy and streamline water companies’ testing facility Wave Hub will be licences to reduce regulation and transferred to Cornwall Council, facilitate deregulatory changes in and around £15 million will be future. Ofgem and DECC will review provided to develop the facility as energy supply licence conditions to part of a new MarineHub Enterprise ensure they align with competition Zone. guidelines.
| BUDGET 2016 | MONITORING SUMMARY | 3838 Energy
Energy Taxes • CCL main rates will increase in line with RPI from 1 April 2017 and 1 • There will be a reform of business April 2018. energy taxes. Changes will include abolishing the Carbon Reduction • The allowance prices for CRC Commitment (CRC) energy energy efficiency scheme (CRC) will efficiency scheme with effect from increase in line with RPI in 2016-17, the end of 2018-2019. 2017-18 and 2018-19.
• The main rates of Climate Change • The Aggregates Levy rate will Levy (CCL) will be increased from 1 remain frozen at £2 per tonne in April 2019, to cover the cost of CRC 2016-17. abolition. • The standard and lower rates of • The CCL discount for sectors with Landfill Tax will increase in line with Climate Change Agreements will be RPI to the nearest 5 pence, from increased. For electricity this will 1 April 2017 and again from 1 April increase from 90% to 93%, and for 2018. gas will increase from 65% to 78% from 1 April 2019. Motoring taxes
• The main rates of CCL will be • Fuel duty will be frozen, and the rebalanced for different fuel types Government has also kept the rates to reflect recent data on the fuel of HGV VED and Road User Levy mix used in electricity generation. frozen in 2016-17. Ultimately the Government intends to reach a 1:1 ratio of gas and electricity rates by 2025.
| BUDGET 2016 | MONITORING SUMMARY | 3939 Energy
Steps to support transition Support for the oil and gas to cleaner zero and ultra-low sector via tax changes emission vehicles • Petroleum Revenue Tax will be • The 100% First Year Allowance (FYA) abolished by permanently reducing for businesses purchasing low the rate from 35% to 0%, which will emission cars will be extended for a take effect from 1 January 2016. further 3 years to April 2021. • The Supplementary Charge will be • The main rate threshold for capital reduced from 20% to 10%, which allowances for business cars will be will take effect from 1 January 2016. reduced to 110. • The Investment and Cluster Area • grams/kilometre of CO2 and Allowances will be extended to the FYA threshold to 50 grams/ include tariff income. This will kilometre of CO2 from April 2018. encourage investment in key infrastructure maintained for third • Company Car Tax will continue to party benefit. be based on CO2 emissions of cars. • The decommissioning powers of the Oil and Gas Authority (OGA) will be developed through further work between the OGA and industry to reduce overall decommissioning costs. If significant progress is made, the Government will explore whether decommissioning tax relief could better encourage transfers of late-life assets.
| BUDGET 2016 | MONITORING SUMMARY | 4040 Housing
• £19 million funding will be provided • The Government has announced for community-led housing its intention to move towards a schemes in areas most impacted more zonal and red line planning by holiday homes, funded through approach, which will see local Stamp Duty Land Tax revenue raised authorities using their local plans from the higher rates for purchases to signal their development of additional properties. strategy from the outset and make maximum use of permission in • The business case for a new principle. Thameslink station at Brent Cross Cricklewood has been approved, • There are new measures that aim unlocking 7,500 new homes. to make the planning system faster, minimise delays caused by planning • A Starter Homes Land Fund conditions and ensure the delivery prospectus has been launched, of local plans by 2017. inviting local authorities to access £1.2 billion of funding to remediate • A consultation will be opened into brownfield land that will be used for options for increasing transparency housing, in order to deliver 30,000 in the property market, including starter homes. proposals to increase the visibility of information relating to options to • 13,000 affordable homes will be purchase or lease land. delivered two years early through bringing forward £250 million of • The delivery of provisions to provide capital spending to 2017-18 and greater freedoms and flexibilities 2018-19. for the deployment of mobile infrastructure, to include reducing • There will shortly be a call for evidence planning restrictions for existing published by the Government telecoms infrastructure, allowing for on how to make the housing taller masts to be built and in turn transactions better value for money unlocking more land for housing. and more consumer friendly. Each year consumers spend £270 million on failed housing transactions.
| BUDGET 2016 | MONITORING SUMMARY | 4141 Housing
• Local Authorities are collaborating making the CPO process clearer, with central government on a fairer and quicker. local government land ambition, working with partners to release • Following a consultation on the land with the capacity for 160,000 decision to raise Stamp Duty Tax homes, helping to support the the government has decided to Government’s policy on estates help those moving in in difficult regeneration. circumstances. Purchasers will have 36 months rather than the 18 • The Homes and Communities originally proposed to either claim Agency will work in tandem with a refund from the higher rates or Network Rail and local authorities before the higher rates will apply, in to create land around stations for the event that there is a period of housing, commercial development overlap or a gap in ownership of a and regeneration. The government main residence. will shortly set out which sites are scheduled to take part in the • There will also be no exemptions scheme. from the higher rates for significant investor and the higher rates will • To increase densities on brownfield be applied equally to purchases by land, following the consultation individuals and corporate investors. on ‘building up’ in London, the Government will be consulting on • £60 million of the additional providing similar powers through receipts from higher rates on the devolution deals. additional residential properties will be provided to enable community- • The Government plans to legislate led housing developments. to make it easier for local authorities to work together to • £100 million will be provided create new garden towns as well to deliver ‘second stage’ as consult on a second wave of accommodation for rough sleepers Compulsory Purchase Order (CPO) leaving hostel accommodation and reforms with the objective of domestic abuse victims and their
| BUDGET 2016 | MONITORING SUMMARY | 4242 Housing
families moving on from refuges. This investment will provide 2,000 places to enable independent living for vulnerable households and individual, which in turn will free up hostels and refuges for people in most acute need.
• There will be a £10 million investment over two years to support and scale up innovative ways to prevent and reduce rough sleeping.
• Funding for the Rough Sleeping Impact Bond will double from £5million to £10million.
• The Government will change the calculation of SDLT on freehold and leasehold premium non-residential transactions so the rates apply to the portion of the purchase price within each band.
| BUDGET 2016 | MONITORING SUMMARY | 4343 Health
• £2 million in banking fines will • War pension payments will be be given to University Hospital exempt from the social care means Southampton NHS Foundation test in England from April 2017. Trust. This will facilitate the building of a Paediatric Emergency • A new soft drinks industry levy and Trauma Department, bringing will be introduced to encourage units that treat sick children to one producers and importers of soft location. drinks to reduce added sugar content of the drinks. This levy is • The defibrillator grant scheme will projected to raise £520 million in be extended with an additional £1 year one, with the OBR anticipating million. this number falling over time as behaviours change. • The Government will invest £1.5 million in children’s sports • £10 million funding per year to prosthetics and create a fund expand breakfast clubs in up to develop state-of-the-art to 1,600 schools starting from prosthetics for the NHS. September 2017, providing more children with a healthy breakfast.
| BUDGET 2016 | MONITORING SUMMARY | 4444 Culture, Media & Sport
• £14.5 million in grants will be • A new tax relief will be provided for provided to extend ultrafast the creative sector from 1 April 2017 broadband coverage in the South available for the costs of developing West, £4.5 million more than temporary or touring exhibitions, the £10 million allocated in the following a consultation on its Spending Review. The National design over this coming summer. Infrastructure Commission will use the South West as a case study • £5 million will be provided to when assessing the ability of the support the building of Shakespeare UK to become a world leader in 5G North, a new theatre in Knowsley, connectivity. subject to planning permission and a business case. • Building upon London’s world-class cultural and educational appeal, • The Government will support a bid help will be given to fund the to host the Rugby Football League expansion of the Royal College of World Cup in 2021. Art’s Battersea Campus. This will be alongside the British Library’s goal • In partnership with the private to develop land to the north of its sector the Government will create St Pancras site. a new Broadband Investment Fund. This fund will operate on • The Government’s creative sector a commercial basis to support tax reliefs have been highly the growth of alternative network successful at supporting growth, developers by providing more investment and innovation in access to finance. industries that employ 1.8 million people. To encourage museums and galleries to develop creative new exhibitions and display their collections across the country.
| BUDGET 2016 | MONITORING SUMMARY | 4545 About the Authors
Analysis by David Holden-Locke About Vuelio
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Summary by Vuelio Political Services Content Team
Contributors: Tippi Creed-Waring, Daniel Loman, Tomas Shepherd, James Bishop & Anthony Brothwood.
| BUDGET 2016 | MONITORING SUMMARY | 4646