How Does George Osborne's 'Next Generation' Budget Actually Add Up For Millennials?
The Debrief: George Osborne called today's budget ‘a budget that puts the next generation first’. Sounds good doesn’t it. But how does it actually affect us?
Today was the day of #budget2016. That’s right, the day that comes around once a year on which the Government announces how the economy is doing and says how spending will change over the course of the coming year.
It’s not exactly a riot…it’s sort of like your student loan. You know it’s there, you know it’s happening but sometimes ignorance is bliss. There’s always lots of stuff about the price of beer, which obviously people get incredibly excited about. Often there’s a thing or too about spending on infrastructure – you know, things like housebuilding, HS2 or urban planning. There’s also normally a fair bit of hype about pensions and local government spending.
This year the Chancellor, George Osborne, has a pretty snappy catchphrase for his announcement. He called it ‘a budget that puts the next generation first’. Sounds good doesn’t it. But how does it actually affect us? Is the same government who raised tuition fees, froze the student loan repayment threshold, has allowed renting to go unregulated and brought in Help to Buy which, arguably, only served to further inflate the housing market, really starting to think about the future of this country’s youth now?
A few times during his speech the Chancellor made reference to the fact that the youth of today have had a bit of a rough ride financially and haven’t benefited from the same economic prosperity as their parents’ generation. So, here’s all the stuff which happened today that we should probably pay attention to because it actually affects us:
1. George Osborne has reformed pensions for the under-40s
The Chancellor announced that he was introducing new pension Isas, he’s calling them ‘Lifetime Isas’ and they’re aimed at our generation. Effectvely these will work as a secondary pension system, running alongside the current one, but only available to people under the age of 40. He said that for every £4 people who have these Isas save, the government will match them with £1. Withdrawals can be made without paying tax and the scheme will be available from April 2017.
Sounds good but is this enough to fix the fact that young people today can’t really afford to save? Osborne said in his speech 'young people aren't saving enough', he sort of missed the point. It's not that young people 'aren't savign enough' it's that they can't save enough because wages are, relatively speaking, low to the cost of living, which is high.
And, as Katie Morley, personal finance reporter for the Telegraph points out:
Government's new Lifetime Isa has EARLY EXIT FEES of 5pc. Given just announced cap in private sector seems v hypocritical #budget2016— Katie Morley (@KatieMorley_) March 16, 2016
The Debrief says: 5/10 - it's better than nothing but the government hasn't actually put any money behind millennials here. This sort of feels like giving someone a plaster for a broken leg.
2. George Osborne has increased the threshold for top rate income tax
The Chancellor described this move as ‘social justice, the Conservative way’ but this move will only benefit people who earn over £42,385, as the higher-rate tax threshold goes up to £45,000. To put that in context, the national average salary in this country is £26,500, so that’s not actually too many people.
The Debrief says: 0/10 - not very helpful, George (unless you work in the city, maybe)
3. Osborne has also, finally, announced a sugar tax
If you’ve got a sweet tooth it could be costing you a bit more from now on. The Chancellor has revealed that a new tax will be imposed on sugary drinks such as Coca Cola, Red Bull and Irn Bru. They’ve been talking about this one and we all know the drill: sugar is the devil, sugar is our enemy, sugar is so bad for us etc. etc. What the government makes in tax from such products will be used to provide more sports funding for schools. This actually sounds pretty good, unless you’re Coca-Cola that is…
The Debrief says: 7/10 - nice one, guys. The government have been talking about a sugar tax for a while so it's good that it's finally happening and ploughing money back into keeping people fit seems sensible. They could have been more ambitious though...
4. Osborne wants to simplify tax for self-employed people
The Chancellor announced that National Insurance contributions for self-employed people will change from 2018. From then on, you will only have to pay National Insurance if you’re a self-employed person making over £8,060 a year. Previously you had to pay if you made more than £5,965 a year. This is obviously good news if you’re self-employed but could also benefit young people who have a small business on the side of their main job, or a sideline as many members of the ‘slash’ generation do.
The Debrief says: 4/10 - alright. This is a nice idea, more young people than every are self-employed. However, we'd have liked to see something a bit mre adventurous from the chancellor on this one. Changes won't come into effect until 2018 and the personal tax free allowance could still be better.
5. Everyone’s really worried about the European Referendum in June
Several times Mr Osborne referred to the forthcoming vote and made it clear that a decision to leave the European Union would be A.Really.Bad.Thing for this country’s economy.
So there you have it. Osborne says he’s putting ‘the next generation first’, saying we need to ‘act now so we don’t pay later.’ He’s come up with some OK ideas but are any of them really enough to win young people over or fix the economic plight of many millennials? This is the same government who have sneakily frozen the student loan repayment threshold, scrapped student maintenance grants and mucked about with funding for services for women suffering from domestic violence, let’s not forget.
The financial commitments to the generation that the Chancellor made the focus of his budget today are fairly minimal and low effort, this is hardly radical stuff. And, it all feels a bit like too little too late. It’s also interesting that he has decided to use such rhetoric, in recent years (pre-election years) the focus of his budget’s have been gaining support from older generations and pensioners, yep, that’s right: the one’s most likely to vote Conservative.
The Debrief says: 5/10 - it's good that Osborne is pointing out that leaving Europe could have negative consequences for the country. BUT, it's his government who have called a referendum in the first place to keep all the massive Tories out there happy and try to claw back supporters the party has lost to UKIP.
6. George Osborne is 'wanted' by Sisters Uncut
This morning posters baring the face of chancellor, George Osborne, were pasted on bus stops, tube stations, street signs and basically any available service. Direct action group Sisters Uncut are targeting him because of further cuts made today to services for the victims of domestic violence. Despite a rise in violent crime against women since 2010, the group say that services to support victims, particularly BME women who rely on specialist services, have been cut by almost 30% under the current goverment. Earlier this week Sisters Uncut barricaded the entrance to HM Treasury's building in Whitehall to protest the cuts which would be made today.
The Debrief says: 0/10 - try harder, George
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