Chancellor George Osborne has today unveiled the first Tory-only budget since the general election. Here are the key announcements.
A new “national living wage”
Starting next April, this new, mandatory minimum wage will be set at £7.20 an hour for anyone over the age of 25. By 2020, this will rise to “over £9.00 an hour.
The £7.20 rate is 70p higher than the £6.50 minimum wage currently in place, which is due to rise to £6.70 in October.
The Office for Budget Responsibility predicted Osborne’s “National Living Wage”, as he called it, will cost 60,000 jobs by 2021, overall employment will have risen by 1.1m by that date.
Lower corporation tax
Corporation tax will be further cut from 20% to 19% in 2017 and to 18% in 2020. Osborne said these further cuts would help businesses cope with the new mandatory living wage. He also announced National Insurance employment allowance for small firms will be increased by 50% to £3,000 from 2016 to help them fund higher wages.
As expected, Osborne announced plans to allow extended Sunday trading for retailers. He said there was “a growing appetite for shopping on a Sunday” and vowed to let local mayors and councils to determine Sunday trading rules for themselves.
A big drive on apprenticeships
The government has pledged to create three million new apprenticeships 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.”
Lower personal taxes
While there is no change in the headline tax rates, the tax free personal allowance will be raised to £11,000 next year and higher rate tax threshold will increase to £43,000 from £42,385.
Cuts to benefits and tax credits
However, consumer spending power could be hit by wide-ranging welfare cuts.
The benefits cap will be cut to £23,000 in London and £20,000 in the rest of the country. Tax credits and Universal Credit will be restricted to apply to famalies’ first two children and will come into effect for those born after April 2017. The income threshold for tax credits has also been cut from £6,420 to £3,850.
Working-age benefits will also be frozen for four years.