Hey there! Sign in to join this conversationNew here? Join for free

Statement from the Chancellor Of The Exchequer Watch

    • Community Assistant
    • Thread Starter
    Offline

    21
    ReputationRep:
    The People’s Budget Report 2017, Parliament XXV


    The People’s Budget Report 2017, Parliament XXV


    Introduction

    This Budget arrives during an unprecedented, unforeseen time which immediately presents a sense of abrasiveness and economic uncertainty. The aforementioned regards our nation’s departure from the European Union. This Government also recognises the economic climate and the need for clear-cut and honest policies to help our citizens.

    I believe, as a result, that serious changes are required to achieve that and the consideration of ways in which we can enrich our citizens and subsequently provide them the tools to allow them to thrive.

    Economic Context

    The months following the Brexit vote saw our economic growth holding up better than expected particularly with consumer spending in mind. However, the current average of independent GDP growth rate projections stands at 1.6%. This slow down from last year is a result of a drag on business investment from the uncertainty (both political and economic) with the outcome of negotiations surrounding our departure from the European Union. That being said, the weaker pound could contribute to greater net exports alleviating the current trends regarding GDP growth, address the current account deficit and further increase inbound tourism. Fundamentally, so long as the economy is in question, our departure from the European Union is a significant factor to consider. Should the aforementioned risks increase further, elements of our economy will be hindered and with the recent inflation rate further holding back real earnings it is easy to see why our citizens could perhaps feel a , justified, bleak future to come. With all this in mind, the Government will enact the following measures.

    Starting Point: Total Impact of successful MHoC Acts on Government Spending

    V1181: -£7,800,000,000
    V1200: +£1,000,000,000
    VM438: -£47,000,000
    V1262: -£5,000,000,000
    Defence SoI -£802,000,000
    Environment SoI: -£10,101,000,000
    Justice SoI: -£1,000,000,000
    Total impact on TME: -£23,750,000,000


    Healthcare Reforms


    Prescription charges have been proven to be a detriment and considerable barrier to people with long-term conditions. They have also been a limiting factor to the extent to which such patients can be assisted and cost our health service in terms of the value of health professionals’ times; costs brought about by additional consultations and treatment as a result of medicines not being taken appropriately because of the health barrier. This Government is therefore committed to waiving prescription fees to individuals with long-term conditions.

    A cash-strapped National Health Service coupled with complaints of patients missing appointments has meant that this Government is compelled to address the issues in a manner that alleviates concerns to a satisfying degree. Therefore, this government will introduce a fine for missed outpatient hospital appointments – immense help that would raise extra revenue for our service and assist with managing demand. The fine will initially be set at £10. Amounts raised from this measure will be ring-fenced for the NHS. Children under the age of 18 and those over the age of 65 will be exempt. Following this, prior to each appointment, the patient in question will receive a text message reminding them of the date, time and place; providing a number to call for re-arrangement; and detailing the cost to the NHS of missed appointments, currently standing at approximately £160. Department of Health research has suggested this will reduce missed appointments by 25% without any detrimental effect on patients or staff.

    Cumulatively, we anticipate a cost of £430m from the waiver and raising £280m per annum.


    Monarchy: sovereign grant


    This Government recognises that changes are required regarding the monarchy for the purposes of being responsible with public finances. We are therefore committed to amending the Sovereign Grant so that the annual disbursement of approximately 15% cease to continue. Instead, this Government will disburse an amount required by the monarchy for the next financial year which will be assessed by an independent body for the purposes of verification. In the 2014-15 fiscal year, the Sovereign Grant was £37.9m. We anticipate therefore that the total amount brought in from profits derived from the Crown Estate will be £252.6m. With these changes in mind, the Government will disburse an amount required by the monarchy for the next financial year which will be assessed based on the need for refurbishments to Royal property and the length and distance of trips abroad among other factors which are subject to change based on the need of the amount. The amount set for this term will be £28m, representing a £10m saving to the taxpayer.



    Defending British Manufacturing


    It goes without saying that if Britain cannot make things, it cannot sell them. Our manufacturing base is weaker than ever, and often reliant on imported parts that may attract tariffs following our departure from the EU. Of particular note is the automotive industry. Accounting for 12% of UK exports and employing hundreds of thousands of people, it is of critical importance to our national economy and yet currently faces a severe threat. Components such as shock absorbers, batteries, steering wheels and more are commonly imported, with the UK primarily responsible for the process of putting them together. Should these attract tariffs, British cars will become uncompetitive and the sector faces a massive contraction. This fear is already having an impact, with investment in the industry falling from £2.5bn in 2015 prior to the Brexit vote to only £322m in the first six months of 2017.

    To that end, the government will today agree to ensure that carmakers will not suffer from any new tariffs as a result of Brexit, whether that be by the agreement of a trade deal with the EU or by the government arranging for the full subsidy of the tariffs should we fall back to WTO terms. Should the latter prove necessary, we estimate a cost from this measure of £990m per year.

    Of course, easing the process for cars to be manufactured in the UK is only half the battle: we must also ensure they are affordable in foreign markets. Should the UK leave the European free trade area and sign free trade agreements elsewhere as an alternative, it is commonly stipulated that at least 50% of parts must be manufactured in the UK for the final product to count as a British export and be sold tariff-free. At present, that ratio on average stands at only 44% for cars. This means it’s imperative we support the increase of that ratio as soon as possible – not only for cars, but for other goods too. Not only does this help to ensure a future for our exports, it is as a freestanding policy good for the UK – supporting a diverse range of industry rather than ever-increasing reliance in the service sector.

    Pursuant to this, we will be introducing new tax incentives to encourage this approach. Initially, this will apply to the automotive industry, with the scale involved allowing us to analyse the effectiveness and in the future apply it elsewhere. Here, each of the 30 components Automotive Council research found could but often are not manufactured in the UK will be equally considered: every one that is manufactured in the UK will attract a VAT rebate on the final vehicle (assembled in the UK) of 0.5% up to a total possible discount of 15%. This will encourage car makers where possible to move more of this process to Britain, creating jobs and preventing future issues for the industry. We expect total funding for this measure to be £85m, broadly similar to the £100m figure suggested by Nissan vice-president Colin Lawther but with the advantage of rewards ever more investment into British industry.

    While this all amounts to a substantial sum, we predict that as a result investment in the car industry will return to 75% of 2015 levels next year, representing a net increase to GDP of £1.24bn and as a result of that an increase to government net revenue of £425m.


    Wealth Taxation


    This government believes that in a globalised society, taxation by income is quickly becoming inefficient. Therefore, this Government will make strides towards taxing wealth, something we believe to be right. This term, we will begin that process by introducing a mansion tax, set at a rate of 1% of the value of a property over a threshold of £2m each year. For instance, a property valued at £3m would attract taxation of £10,000 per year. We estimate revenue from this of £2.25bn.

    However, we recognise that a small minority of those owning such homes are in situations where their cash assets are limited compared to their wealth. Therefore, those who have an income of lower than ten times the taxation charged, and whom have a demonstrable history of paying national insurance in the UK, will be allowed to opt out of immediately paying the tax in return for the sum owed being taken from their estate (after inheritance tax) upon their death.

    The other area we will be focussing on this term is capital gains tax. At present, capital gains are taxed at a substantially lower rate than other income: the highest rate being 28% for higher-rate taxpayers making gains on residential property they don’t abode in. This is fundamentally unfair; the state should not be taxing people more on the money they earn through hard work than on that they earn by trading property. We will resolve this issue by pegging the capital gains tax to the same rate as income tax. Accounting for the potential of changes in activity reducing sales attracting this tax, we still budget for an increase in revenue from it of 65%, resulting in an extra £5.8bn of income.



    Spending Reforms


    This Government recognises that spending needs to be looked at and altered for the purposes of alleviating the pressures of the deficit and ensuring effectiveness. Measures that will be implemented to that end are scrapping the Christmas Bonus – a wasteful amount spent that ultimately amounts and contributes to nothing – which would save £152m per annum and target concessionary bus passes to elderly individuals genuinely in need saving £550m. This Government will allocate resources to upgrading current trains, especially where investment is needed such as the North East and Wales – we will allocate £80m for these purposes. We anticipate to save a figure of £702m as a result of these measures.


    VAT


    While past Governments have have made good advances forward such as increasing the personal allowance, great mistakes have been made such as the increase of VAT to 20%. This regressive tax accounts for a large proportion of the expenditure of the poor and insignificant proportion for the rich while stifling consumer spending at a time when confidence is low and inflation is high. To this end, we will be using the revenue raised from the measures in this Budget to immediately reduce VAT to 17.5%. We anticipate this to have an up-front cost of £12bn. However, it represents a reduction of 1% in the price of all consumer goods and services on which VAT is currently charged, and we anticipate that after accounting for this the overall cost will be £8.4bn.


    Aviation Reforms


    Our aviation industry is very lightly taxed. This, naturally, rids us of opportunities, the most significant of which is contributing to our country’s future growth and extending from that, our success. What very little tax that was levied on this industry was removed when Parliament passed B1155 – a mistake. Granted, APD was never an environmental tax, but removing it risks us boosting aviation growth without measures to limit the scale of environmental challenges we face. It is for these reasons this Government will reinstate Air Passenger Duty. To further combat the largely tax exempt nature of the industry, this Government will impose duty on aviation fuel at a provisional 45.8p a litre. Not only does this allow revenue to be raised, the fiscal advantage of it being relatively easy to collect benefits us further, conversely, it allows us to place environmental costs on the polluter. Cumulatively, we anticipate raising £6.2bn from these measures, £3.2bn from reinstating Air Passenger Duty and £3bn from imposing duty in aviation fuel.


    Household Broadcasting Levy


    This Government recognises the issues surrounding the current TV Licence system. It comes at a high cost insomuch as collection is concerned at £102m and experiences roughly a 5.5% evasion rate limiting to a degree its utility. As a result, we will scrap the current TV Licence fee system in order to implement a Household Broadcasting Levy whereby an amount is levied on all households in the United Kingdom. This system would end the need to identify evaders and work towards a favourable atmosphere for those who only use BBC radio and online services with respect to contributing to costs. The amount levied from households will be set at a provisional £12.50 pcm. Students will be exempt as will all individuals over the age of 65. We anticipate raising £4.1bn from this measure which effectively raises a further £306m when compared to the TV Licence system.


    Trade Unions


    Unions are voluntary organisations and while this Government accepts and appreciates their existence, financial support should not come from the taxpayer. It is with this in mind that this Government will scrap trade union’s subsidies of facility time, grants and office space – a measure we anticipate saving £90m from. This Government understands the hesitation Trade Unions might experience however and will also allow Unions to reapply for subsidies should they require them once again. This process will be simple and must be adhered to.


    Winter Fuel Payments: Cold Weather Payment scheme


    This Government recognises the gradual shift in time since the Winter Fuel Payment was introduced in 1997/98 to tackle the issue of fuel poverty amongst pensions, although the intentions in that policy were commendable and necessary the current climate demands that amendments be made surrounding the issue of fuel poverty. Not least because pensioners are the age group least likely to live in fuel poverty and systems existing that are better prepared and reasoned to tackle this issue greatly diminishing the reasons for containing to permit the Winter Fuel Payment system. Therefore, this Government will look into scrapping the Winter Fuel Payment system and instead dedicate resources to placing a precedence to tackle the issue of fuel poverty through the Cold Weather Payments scheme which prevents wasting money further and allowing low income pensioners to live comfortably. Although this would save £2.2bn it will not be considered to have an impact on this Budget as it will not be pursued this term.


    Sex Industry Taxation


    Our sex industry is thriving, increasingly so than real life when the fact that brothels have previously been legalised by a previous parliament. It makes no fiscal sense for billions of our GDP - £4.3bn in 2014 alone – to not be felt by our Treasury. This Government is therefore glad to announce its intentions to look into and subsequently tax the purchase of sex in our country. This measure will not be considered to have an impact on the total revenue of this budget. We anticipate raising £430m from this measure.


    Encouraging Tourism


    We have been very pleased to note the significant growth in tourism to the UK over the last year. A record-breaking 10.75m people visited the UK in the second quarter of 2017, supporting millions of jobs across Britain. However, there is still more we can do. While there has been an increase of 29% in visitors from North America, the growth in visitors from Europe has been only 3%.

    With the current exchange rates remaining highly favourable to these visits, this slower growth can be primarily attributed to concerns in the wake of the Brexit vote that the UK is less welcoming to visitors than it once was. This idea must be killed in this chamber today: no matter your race, your religion or your nation, you are welcome to come to Britain. To facilitate this while keeping our country safe, I will be increasing the funding for our Border Force to the level of £5.80 per person entering the UK as it was in 2011. This means less time waiting in airport queues, and more time getting on with your holiday – both for those visiting Britain, and for Brits travelling abroad. The cost of this measure is £50m, offset by an increase in employment of 1,500 – we therefore estimate an initial net spend of £35m.


    Tax Reform


    This Government will set-up a Royal Commision to look at taxation to address two issues. The first issue being that of the UK tax code – tens of thousands of pages that provides a state of complication and a lack of comprehensibility – and looking into simplification. The second issue is that of general taxation and assessing from an angle that looks at making taxation simpler and automatic negating the need for tax returns – something our citizens should not have to do.


    Department Changes/Spending


    This Government intends to make the following changes to its Departments; changes not mentioned mean respective Departments remained unchanged in any way. The following will also outline Governmental spending on Departments.

    Department for Education

    This Government is committed to ensuring a wholesome, strong and untempered education system for young people in this country. As a result of this commitment, we present the following undertakings.

    We will invest in distance learning courses, increase investment towards the degree level apprenticeship scheme, invest in mental health intervention schemes and extend free school meals to all primary school children.

    We will allocate £900m for these purposes.

    Department for Health

    This Government will inject and dedicate £10bn to the NHS to further help areas of our healthcare system such as social care, primary care and mental health.

    This Government will also bring a halt to branded medicines being prescribed when there are cheaper generic alternatives available which are just as effective to patients. In line with information provided by the Commons Health Committee, we anticipate saving approximately £140m from this measure.

    Department for Work and Pensions

    This Government will look into means-testing child care allowances (child benefits) as their universal nature is fundamentally unjustified.

    Other Public Spending

    For far too long our devolved regions have faced harsh cuts in resource spending resulting in a disservice to constituents with recent rounds of cuts of around 9% of their budgets. This must be addressed and so this Government will increase resources spending in Northern Ireland, Scotland and Wales by 10% which will amount to a total cost of approximately £5bn


    Costing


    Total RL Spending

    Public Pensions: £156,000,000,000
    National Health Care: £144,000,000,000
    Education: £87,000,000,000
    Defence: £40,002,000,000
    Social Security: £112,000,000,000
    State Protection: £30,000,000,000
    Transport: £30,000,000,000
    General Government: £15,000,000,000
    Other Public Services: £112,000,000,000
    Public Sector Interest: £49,000,000,000
    Total: £780,000,000,000

    Total MHoC Spending

    Public Pensions: £156,000,000,000
    National Health Care: £154,290,000,000
    Education: £87,900,000,000
    Defence: £40,802,000,000
    Social Security: £111,298,000,000
    State Protection: £30,082,000,000
    Transport: £30,080,000,000
    General Government: £32,076,000,000
    Other Public Services: £112,000,000,000
    Public Sector Interest: £49,000,000,000
    Total: £803,528,000,000

    Total RL Revenue

    Income and Capital Taxes: £241,000,000,000
    National Insurance: £126,000,000,000
    Indirect Taxes: £297,000,000,000
    Business and Other Revenue: £63,000,000,000
    Total: £730,000,000,000

    Total MHoC Revenue

    Income and Capital Taxes: £253,586,000,000
    National Insurance: £121,000,000,000
    Indirect Taxes: £283,480,000,000
    Business and Other Revenue: £63,000,000,000
    Total: £721,066,000,000


    Concluding remarks


    Despite our shortcomings, this country has many things to be proud of, even amidst the sense of hesitation engulfing us as we approach our departure from the European Union. Unemployment rates are at their lowest since July 2005 (4.5%), all regions of the United Kingdom suggest either flat or gently increasing employment rates and our GDP growth rate has been higher in recent years than the average growth rate of our neighbours. This Budget is honest in its aims, it gears the country towards more sensible spending and dedicates our financial resources to wholesome, positive endeavours.

    While there is an immediate cost which is affordable, these investments will provide for Britain’s economic future: a future with revitalised industry, where wealth is taxed fairly and where we maintain our NHS. Only by laying these foundations, even in tough times, can we hope to continue the British dream – that each generation will be more prosperous than that which came before it. And on that note, I commend this budget to the House.

    I would like to thank two individuals in particular with the creation of the Budget along with all members of this coalition. My Chief Secretary to the Treasury, cranbrook_aspie, for the majority of this term whose continued involvement and attention has helped this Budget and Saoirse:3 for her sizeable contributions that not only balance the outlooks of the parties, but also contribute to a better Britain.

    In total, the revenue from this Budget brings the total amount to £721bn - the total cost, however, comes at £803.5. With all things considered, a deficit emerges at -£82.7bn.
    Offline

    19
    ReputationRep:
    Conceited wrote this so nay
    • Wiki Support Team
    Offline

    19
    ReputationRep:
    I thank the Chancellor for his hard work in producing this draft budget. Whilst the process up to this point hasn't always been completely plain sailing, this is a comprehensive document with a number of excellent policies.
    Offline

    19
    ReputationRep:
    It’s sad to see that this government is deliberately trying to cause economic harm by reinstating taxes that harm it.

    This is a budget that harms those from higher incomes and lower incomes, so congratulations on ****ing everyone I guess.
    • Political Ambassador
    Offline

    14
    ReputationRep:
    God no.
    • Political Ambassador
    Offline

    13
    ReputationRep:
    The government has made up figures for how much the NHS changes will cost, has invented the savings for reforming the funding of the Monarchy, has not justified the cost for regulated tariffs on car manufacturing after Brexit, states a mansion tax will generate £2.5bn in revenue when the Labour Party states it will generate £1.2bn in revenue, claims increasing Capital Gains Tax will bring in £5.8bn when the Liberal Democrats say £1.92bn, makes up figures from aviation changes when the tourism and business aspect of the industry has not been evaluated, talks about Winter Fuel Payments when TSR has replaced them, wants to encourage tourism but increases the cost of visiting the country, and has increased the deficit to £82bn which is £30bn above real life.

    The biggest problem with this budget is not the made up figures, it is not using the financial impact of Acts passed before previous budgets which were not fully considered, meaning the predictions for spending in all government departments in this budget are wrong. This budget is rushed, of low quality, and does not provide the things it wants to provide because full research has not been done. I invite Conceited to provide sources for all of the figures in this budget which can be 147% above real life predictions, explain why writing 1400 words has fivew months, and tell the MHoC when the primary legislation is going to be introduced.
    Offline

    19
    ReputationRep:
    (Original post by Saracen's Fez)
    I thank the Chancellor for his hard work in producing this draft budget. Whilst the process up to this point hasn't always been completely plain sailing, this is a comprehensive document with a number of excellent policies.
    And some economic harm thrown in for good measure
    • Very Important Poster
    • Welcome Squad
    Offline

    22
    ReputationRep:
    (Original post by joecphillips)
    Conceited wrote this so nay
    Great argument, I’m so convinced.
    Offline

    19
    ReputationRep:
    (Original post by Aph)
    Great argument, I’m so convinced.
    That was a joke
    • Political Ambassador
    Offline

    13
    ReputationRep:
    (Original post by Saracen's Fez)
    I thank the Chancellor for his hard work in producing this draft budget. Whilst the process up to this point hasn't always been completely plain sailing, this is a comprehensive document with a number of excellent policies.
    I would have thought the minimum standard for a budget would be not talking about things which have been replaced on TSR like Winter Fuel Payments which were abolished in V826 Energy for the Elderly Act 2015: a bill written by a member of the government.
    Offline

    19
    ReputationRep:
    (Original post by Jacob E)
    I would have thought the minimum standard for a budget would be not talking about things which have been replaced on TSR like Winter Fuel Payments which were abolished in V826 Energy for the Elderly Act 2015.
    It shouldn’t happen especially when they have the person who submitted it in their government.
    Offline

    19
    ReputationRep:
    Conceited can you explain how you will increase revenue by reinstating a tax that when I repealed it paid for itself so there was no loss?
    • Political Ambassador
    Offline

    13
    ReputationRep:
    (Original post by joecphillips)
    It shouldn’t happen especially when they have the person who submitted it in their government.
    That is a good point; the Government has revealed there is a problem with communication in the coalition.
    Offline

    19
    ReputationRep:
    Can we get a full list of sources for this please?
    • Community Assistant
    • Political Ambassador
    • Welcome Squad
    Offline

    19
    ReputationRep:
    This Budget does not show fiscal prudence, especially when the deficit is significantly larger than that in RL thus increasing the time it would take for us to reach a surplus. With The Financier's Budget we would have seen a surplus in 2018-2019. I'd like to see all the sources for the figures especially with extending free school meals because the IFS said that it would cost £950m. It's also important to notice in that link that the IFS says "Extending free school meals to all primary school children... would not directly benefit the poorest children, who are already entitled to free lunches. While there is some evidence it might raise attainment overall, we don't understand how or why, and so the effect of extending this nationwide is uncertain. In the context of constrained public resources it is important to be much clearer about effectiveness before spending a large amount of money on a new universal entitlement." - doesn't look like word of caution is taken seriously by this Government.

    It's a Nay from me.
    • Community Assistant
    • Political Ambassador
    • Welcome Squad
    Offline

    19
    ReputationRep:
    (Original post by Jacob E)
    I would have thought the minimum standard for a budget would be not talking about things which have been replaced on TSR like Winter Fuel Payments which were abolished in V826 Energy for the Elderly Act 2015: a bill written by a member of the government.
    Saracen's Fez I would expect after waiting this long for the Budget that it would be thoroughly checked - I am greatly disappointed. I can't believe that after being told that it's "coming soon" and "in due course" that this is what we get after 5 months.

    The lack of communication in this Government, probably from its inactivity, justifies the MoNC currently in the division and I hope all Government members who have voted against it reconsider because this is absolutely appalling.
    • TSR Support Team
    • Clearing and Applications Advisor
    Offline

    20
    ReputationRep:
    The budget always arrives during exam week... :rolleyes:

    For now, what jumps out the most are several assumptions that you've made without explaining their underlying basis. Could you explain, in greater detail, your calculations for your mansion tax revenue, sex industry tax revenue, broadcasting levy and revenue from the car industry?

    I'll write up a more comprehensive response later when I've had the chance to go through it more carefully.
    Offline

    19
    ReputationRep:
    “the abolition of APD would most likely lead to a net revenue gain for the Government of around £350m to £400m per annum through to 2020.“

    http://airlinesuk.org/wp-content/upl...-May-20151.pdf

    So there’s a £3.6bn mistake already
    • Political Ambassador
    Online

    21
    ReputationRep:
    I'm guessing the Liberals had no say in this what so ever, either that or they have lurched even further left that I initially thought, after a brief skim through at least.
    Offline

    19
    ReputationRep:
    Would the Household Broadcasting Levy not effect the poor most?
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    What newspaper do you read/prefer?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.