Budget Day - what’s in it for Norwich North?

Budget Day – what’s in it for Norwich North?

I was in the Chamber of the House of Commons today as the Chancellor delivered the first Conservative Budget for almost 20 years. It was a Budget that put security first; to keep moving the country from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare economy the Conservatives were elected to deliver.

I think it was a moderate and determined Budget that delivers on the promises which were strongly endorsed by voters at the General Election. This was a Budget to support those who work hard and seek to get on, particularly those who are on the lowest incomes.  It continues to deal with our debts.  The strong focus on jobs and investment puts economic security at the heart of the Government’s plans. I strongly welcome the plans for a gradual transition to a National Living Wage; I have long supported businesses seeking to pay their staff a wage that fairly reflects the cost of living.  

There is real help within the Budget for people in Norwich. A promise delivered on increased childcare; and a promise delivered to boost apprenticeships and businesses.  There’s also help here for first time buyers, by reducing the disadvantage that first time buyers often face compared to those who ‘Buy to Let’.  This is a Budget that delivers fairness and opportunity; that seeks to support those who strive to get on, and protect the vulnerable.

The key announcements included: 

A new National Living Wage of over £9 an hour by 2020

From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020. Chloe has been a vocal supporter of firms seeking to pay a Living Wage where it will not affect jobs. She welcomes the gradual increase to allow firms to make preparations for the transition.

The tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016 

The amount people earn before they have to start paying Income Tax will increase to £11,000 in 2016-17. Increases to the Personal Allowance since 2010, when it was £6,475, mean that a typical taxpayer will be £905 a year better off in 2016-17. The government has an ambition to increase the Personal Allowance to £12,500 by 2020, and a law will be introduced so that once it reaches this level, people working 30 hours a week on the National Minimum Wage won’t pay Income Tax at all. This is real help for those on the lowest incomes in Norwich.

Taking the family home out of Inheritance Tax 

Currently, Inheritance Tax is charged at 40% on estates over the tax-free allowance of £325,000 per person. Married couples and civil partners can pass any unused allowance on to one another. From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18. The family home allowance will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21.The allowance will be gradually withdrawn for estates worth more than £2 million. 

This was a key promise in the Conservative Manifesto; a promise made, a promise delivered.

Reforms to Buy-to-Let tax relief  

We will create a more level playing-field between those buying a home to let, and those who are buying a home to live in. Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. All this has contributed to the rapid growth in buy-to-let properties, which now account for over 15% of new mortgages. The Government will retain mortgage interest relief on residential property, but it will now restrict it to the basic rate of income tax. And to help people who depend on the rental income from buy-to-let properties adjust, it will phase in the withdrawal of the higher rate reliefs over a four year period, and only start withdrawal in April 2017. 

30 hours of free childcare for 3 and 4 year olds 

From September 2017, working families with 3 and 4 year olds will receive 30 hours of free childcare – an increase from the 15 hours they’re currently offered.

Another Conservative Manifesto pledge delivered at the first opportunity to bring real help to families who need or want to return to work after having children. Since becoming a local MP, Chloe has spoken with dozens of parents to seek their views on the challenges of returning to work; this action will make it easier for them to access good quality, affordable childcare.

Corporation Tax will be cut to 19% in 2017 and 18% in 2020 

The main rate of Corporation Tax has already been cut from 28% in 2010 to 20%, in order to boost UK competitiveness. It will now fall further, from 20% to 19% in 2017, and then to 18% in 2020, benefiting over a million businesses.

The Employment Allowance will increase by a further £1,000 to £3,000

Businesses will have their employer National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000. The Employment Allowance gives businesses and charities a cut in the employer National Insurance they pay.

This means, next year, businesses will be able to employ 4 people full time on the National Living Wage and pay no National Insurance at all.

3 million new apprenticeships 

3 million new apprenticeships will be created by 2020, funded by a levy on large employers. Firms that are committed to training will be able to get back more than they put in. As the leader of the successful Norwich for Jobs scheme, Chloe has seen first-hand just how vital these high-quality opportunities are to ensuring young people’s place in the economy.

Road tax will be reformed and the money raised spent on the road network

The road tax system will be revised to make it fairer and sustainable. From 2017, there will be a flat rate of £140 for most cars, except in the first year when tax will remain linked to the CO2 emissions that cars produce. Electric cars won’t pay any road tax at all and the most expensive cars will pay more. Existing cars won’t be affected – no one will pay more for a car that they already own. The money brought in from road tax in England will be spent on England’s roads from 2020. The government will extend the deadline for the first MOT of new cars and motorcycles from 3 years to 4 years.

Chloe has been successful throughout the previous Parliament in campaigning for greater investment in transport infrastructure. Alongside the committed investment of £500m for the Great Eastern Mainline, she was instrumental in achieving major improvements to the A47 and the progression of the Norwich Distributor Road.

Reforming the welfare system to make it fair and sustainable 

The welfare system will be reformed to make it fairer for taxpayers who pay for it, while continuing to support the most vulnerable. Changes include:

These changes present a radical change to the welfare system to encourage people into work and to provide greater fairness for the taxpayers who fund it. Chloe has been clear, the surest route out of poverty is through work. These changes deliver that fairness while providing the support needed to help people into employment.

As always, do keep in touch with me on these issues.  I value all feedback I get from constituents who either live in Norwich North, or who have businesses and employ people there.

All the best -

Chloe