How windy was it last week?
The Government published a joint Spending Review and Autumn Statement on the 25th November. £4 trillion of spending has been allocated by the Government over the next five years. Most of this has been pre-allocated to the NHS, defence and housing. In 2014, the deficit was halved in contrast to its 2009-2010 level. By 2016, it will be down by three quarters. By 2019-2020, the Government expects a £10 billion surplus.
Key points announced:
· Tax credits – The plan to cut tax credits has been scrapped. The Government will propose no further changes to the universal credit taper, or to the work allowances beyond those that passed through Parliament. The Government will still achieve the £12 billion per year welfare savings as promised.
· A new Help to Buy equity loan scheme for London will give buyers 40% of the home value from early 2016, as opposed to 20% (as per the current scheme).
· In light of the Paris attacks, it is no surprise that the Government has announced that it will protect the overall policing spending in line with inflation. This represents an increase of £900 million by 2019-20. The Policing budget has always been the one budget which has been threatened previously.
· The NHS will receive £10 billion more a year in real terms by 2020 than in 2014-15. This equates to 800,000 more operations and treatments, 5.5 million more outpatient appointments and access to GP services in the evenings and at the weekend.
· The basic state pension will rise to £119.30 a week from April 2016 (an increase of £3.35).
· School funding will be protected in line with inflation. £23 billion will be invested in school buildings which will create 600,000 extra school places.
· New penalties will be enforced to deal with tax evasion. HMRC is due to make efficiency savings worth 18% of its budget.
· To tighten up the rise of personal claims, the Government is ending the right to cash compensation for minor whiplash claims. Good news for drivers, as annual insurance costs should fall by £40-£50 per year.
· The Ministry of Defence’s budget will be increased by more than £5 billion by 2020-2021. £1.9 billion will be spent on cyber security over the next five years, including a new centre to protect the UK against attacks. Counter terrorism spending will increase providing 1,900 new intelligence staff.
As for where the money comes from, the chancellor has declared some budgets are protected and he has pledged extra help in other areas, such as more money for security services after the Paris attacks. However, does this mean that some areas of the Government may be more vulnerable than others? In any event, if the above changes put in place, can lead the UK to a budget surplus by 2019-20, then the Autumn budget should be seen as positive.Disclaimers