For all the facts and figures dominating the headlines in the week of the Budget, we cannot lose sight of the human stories that make up our economy. Behind any tax cut or fall in inflation there is more money in household budgets, behind GDP there are small business owners getting ahead, and behind investments to improve public services is support in times of need.
As the Chancellor stepped out of No.11 Downing Street holding the famous red box, all of this was front of mind for my Treasury colleagues and I. As a team we have been working flat out to build a Budget that delivers for you; a plan for working people to keep more of what they earn; a plan to help businesses thrive; and a plan for a more efficient NHS.
In his Budget, the Chancellor cut employee National Insurance Contributions (NICs) from 10% to 8%, on top of the cut he announced at last year’s Autumn Statement. Taken together, these translate to a tax cut of over £900 for the average worker, and create the lowest effective personal tax rate of any G7 country.
The underlying principle of this priority is that working people, not Whitehall, are the foundation of our long-term growth. Hard work should therefore be incentivised and rewarded, and indeed the independent Office for Budget Responsibility has found that cuts to NICs will add the equivalent of 200,000 people to our country’s workforce.
Last year, the Chancellor announced a significant expansion to the provision of free childcare to enable 60,000 parents to return to work, with eligible parents of children aged 9 months and above entitled to free childcare from 2025. At this week’s budget, to complement these reforms, eligibility for child benefit was extended to help another 10,000 parents back into work with support worth £1,300 to 500,000 families.
It is worth highlighting some additional tax measures which I am sure will be welcomed by both businesses and individuals in our community. The extended freeze of Alcohol duty will be welcomed by pubs and pub-goers alike. Meanwhile, the retained 5p cut to fuel duty and extended duty freeze are particularly important to more rural areas like ours, where cars help us get to and from the high street as well as work.
For small businesses specifically, thousands in our region will receive their own tax cut after the Chancellor raised the threshold for VAT registration to £90,000. This will help them to compete on price and invest in their growth. The Government will itself invest £200m in loan guarantees to help SMEs access the finance they need to improve productivity.
Similarly, £3.4 billion will be invested to boost NHS productivity with modernised IT systems so doctors, nurses, and ward staff can spend less time form-filling and more time using their skills to help patients and save lives. In future, a similar approach will be taken across all public services to invest in productivity improvements which pay for themselves in the long run and help deliver a higher standard of service for all.
All of this (and much more than I can fit in this column!) is possible because our economy has turned a corner after a difficult few years following a number of significant global challenges. Inflation has now halved and is continuing to fall, meaning interest rates are also set to come down. Wages are now outpacing inflation, national debt is on a downward path, and investor confidence is returning.
Together, we have achieved so much - we must continue to stick with the plan.
