How the Conservative budget will affect you

[Oliver Price | News Manager]

Yesterday, chancellor George Osborne announced the first budget of the new fully Conservative government. But if you can’t be bothered to traipse the internet looking for the specific bits that will affect you, we’ve summarised the parts of the budget that will most affect you, students at the University of Hertfordshire.

Maintenance grants scrapped

The first major development that will be relevant to students: The Conservatives have announced that university maintenance grants will be scrapped from September 2016. The grant is currently available in part to students whose household incomes are £45,000 or less, and in full (£3,387) to students with a household income of less that £25,000. The grant will be replaced with an addition to the student loan, increasing it to £8,200, all of which will have to be paid back.This means that students from low income families will accumulate £17,200 per year, a total of £51,600 worth of debt over a three year course. The grant is currently available to more than half a million students, and costs a total of £1.57 billion a year, which is what is will be saved by scrapping it.

This move has been criticised by those fearing that this could affect students from middle and working class backgrounds, Sir Peter Lampl, chairman of the Sutton Trust and of the Education Endowment Foundation says:

“Since grants were reintroduced, there have been significant improvements in participation from full time less advantaged students, and this will be put at risk by today’s Budget plans. The reality is that the government has miscalculated the levels of repayments it will get from its student loans under the new fees system. Rather than penalising poorer students, it should have a fundamental review of the repayments system.”

However, George Osborne has said there was a “basic unfairness in asking taxpayers to fund grants for people who are likely to earn a lot more than them,” and that, “If we don’t tackle this problem, then universities will become under-funded and our students won’t get places, and I’m not prepared to let that happen.”

Minimum wage rise

If you’re currently employed, let’s face it, you’re probably earning the minimum wage for a little bit extra to help you through uni. The minimum wage is going up to £7.20 an hour, with an aim to raise it to £9.00 by 2020, although this increase will only be available to those over 25. The government have called this their plan to implement a living wage. However, the Living Wage Foundation currently set the living wage at £7.85 an hour outside of London. Although, if the living wage is set to increase at a similar rate to what it is at the moment, it should be a hair over £9.00 by 2020.

Tax credit and benefits cuts

However, this rise in the minimum wage comes with a cut of tax credits. Tax credits are essentially extra money you get from the government to be in work. Working tax credits are extra money given to people in work. Over 870,000 families claim tax credits at current. The threshold at which tax credits are reduced will go down by nearly half, meaning that you will likely be worse off with regards to receiving working tax credits, possibly by around £1,000 if you have children, according to the Guardian’s budget calculator. Work out how your position will change! Tax credits and working-age benefits will also be frozen (so they won’t increase with inflation) for four years; maternity pay and disability benefits are excluded from this freeze.

Income tax reduction

There is a raise in the tax free allowance, so that you will no longer have to pay tax on any income earned below £11,000 resulting in a tax cut for most people. If you don’t have children, and earn £11,000 or over you will be £80 better off a year! It’s all a very big change, where many people of different beliefs will argue if the rise in the minimum wage and tax reduction will offset the tax credit cuts. If you work 35 hours a week on minimum wage (old vs. new), without children, you will be nearly £1,000, about 8.5%, better off a year. If you have two children, you will be over £1,250, about 6%, worse off a year.

Other tax reductions

If you are set to inherit a house from relatives, then you will no longer need to pay inheritance tax on the property up to £1,000,000. Corporation tax is set to go down a few percent to 18% by 2020. Corporation tax is a tax on profits imposed on businesses, small and large.

Housing

If you or your family live in council or housing association housing and the household income is over £30,000, or £40,000 in London, then you will have to pay market rates instead of the rates set by the council or HA. People aged 18-21 will no longer be automatically able to access housing benefits, with George Osborne saying that young people must, “earn or learn”.

Public sector pay increase cap

The chancellor announced a cap of 1% increases per year on public sector pay rises. This is currently above inflation, but inflation at the moment is historically low, so this could easily turn into a real terms pay decrease if inflation goes back to normal levels. This will affect many students at the University of Hertfordshire, such as the nurses and paramedics, who will almost certainly end up working for the NHS, as well as anyone else who ends up working for the public sector.

Thoughts from Welwyn Hatfield

With the budget directly affecting students at the University of Hertfordshire and members of the local community, we spoke to opposing representatives from both Conservative and Labour at the Welwyn Hatfield Borough Council to gain their thoughts. Labour Councillor, Kieran Thorpe, said that: “Once again, younger generations, statistically the least engaged politically, find themselves losing out the most.

“This has been a budget that attacks the working poor and the disabled.  A budget that ignores completely the housing crisis, and a budget that will for many young people make their lives extremely difficult. In the same speech [the budget], the Chancellor announced tax breaks for businesses, and reductions in inheritance tax that will benefit among many others, those already rather well off. They are styling themselves as a ‘one nation’ government, but it’s clear that George Osborne is very happy to play divide and rule with the youth of the nation.”

Conservative Councillor John Dean was “delighted with what the Chancellor said.” He said that the, “best thing, would be that we’re now aiming to balance the books and have a balanced budget over the next parliament.”

Dean added that it was, “really quite exciting, when one considers that we haven’t had a balanced budget for decades,” and that the increase of the inheritance tax threshold was, “something that had been promised for a long long time.”

“Apprenticeships are very very exciting… for the young people who don’t have the opportunity of going to university, then it’s very good that they can get professional qualifications,” said Dean. He added that it was a, “very good move.”

If there is one thing that Dean said that nearly everyone can agree with, is that this was a “quite a controversial budget”. And it definitely is, with praise and opposition coming from all over the spectrum, and not necessarily where you might expect it.

What do you think of the Budget changes? Let us know in the comments below or on Twitter @TridentMediaUK!

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How the Conservative budget will affect you