Budget 2018, dissected for students
On Monday, 29th of October, the government announced their newly-laid-out budget and a supposed end to austerity. While normally conducted on a Wednesday (which would in this case coincide with Halloween), Philip Hammond, Chancellor of the Exchequer, expressed a wish to avoid the possibility of ‘Hammo’s House of Horrors’ headlining the newspapers.
That’s not to say this year’s budget was not wanting for a few tricks—or treats, depending on your views and/or tax bracket (we’re talking nuclear submarines! Commemorative Brexit coins! And £30 billion towards filling potholes!)
Spend some time this reading week perusing the exciting document. Or, simply read the LS guide to what Budget 2018 means for students.
Personal Allowance and Minimum Wage Increase
Working part-time? You may have something more to gain. This April, personal allowance thresholds—the amount of income you don’t have to pay tax on—will increase from £11,850 to £12,500.
The national minimum wage for over-25s will also increase by 4.4%, from its current rate of £7.50 to £7.83. The increase is even steeper for younger wage-earners—4.7% to £7.38 for 21-24-year-olds and 5.4% to £5.90 for 18-20-year-olds.
Increases are expected to exceed projected inflation, meaning a rise in real terms earnings for minimum-wage workers. The catch? Current growth projections are still a far cry from achieving a £9/hour national living wage by 2020, as promised by the government in 2016. And while wage overall wage growth is at its highest in nearly a decade, that says a lot more about the dismalness of the decade than the current upswing we are experiencing.
Student Loan Sales Continue
The government announced that it will continue the sale of student loans for another year, raising expected proceeds from £12 billion to £15 billion.
The securitisation deal, which sells pre-2012 student loans to private investors, began last year with the stated goal of reducing the public sector net debt. This is despite the fact that such portfolios sold thus far have been sold well below their asset valuation. Many pre-2012 student loans have also already been paid, raising doubts about the credit quality of the remaining loans.
All that’s not to mention the loss of future loan revenues, revenues which would have benefitted the taxpayers who funded the student loans in the first place. In 2017, this loss was estimated to be £600 million by the National Auditing Office.
So what does this all mean? For the government, it means some face-saving quick cash to reduce the national debt. For the taxpayer, it means lost income down the line. And for student borrowers? Not much. The bottom line is you still have to pay your loans.
More Funding for University Enterprise Zones
In one of their programmes to help regional growth, the government has allocated £5 million for the support of new university enterprise zones.
University Enterprise Zones, or UEZs, are part of a pilot programme launched in 2014 intended to foster innovation and economic growth in specific geographical areas in partnership with university and businesssafs dfdsj ;fdslkje ads fjjjjjjjjjj… oh sorry… my head must’ve hit the keyboard when I nodded off there.
Alcohol Duty Freezes Continue
In other news perhaps most relevant to students, duty freezes for beer, cider, and spirits will continue another year. This amounts to a 2p saving on a pint of beer, or an annual £2.38 in savings if you drink like the average Brit.
Bad news for other bad habits, however. Duties on tobacco kicked in about 90 minutes after Hammond finished his speech, raising the price of a 20-pack of cigarettes by 33p and a 30g pack of hand-rolling tobacco by 48p.
And that’s a wrap for the last budget ever before uncertain doom kicks in this March. Hammond’s budget speech this year was especially rife with the weak puns and punchlines the chancellor is known for, and indeed, the Tories had many reasons to be jubilant: a self-declared end to austerity, more money for schools and the NHS, and real wage increases. We can only hope post-Brexit Budget 2019 will be similarly optimistic.