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Budget 2016

Budget 2016 was, on the whole, fairly innocuous for health professionals. There were very few health-specific announcements (some money for children’s hospitals outside London) and a couple of measures that impact of vulnerable communities such as rough sleepers.

The Chancellor predicted a surplus by 2019/20 saying that this year the deficit will have been cut by almost two thirds from its peak and over the next 4 years, the deficit will have been eliminated and the government will be running a surplus. To achieve this, there will be a further £3.5 billion of savings from departmental spending in 2019-20, less than 50p in every £100 the government spends. There will be an efficiency review to inform future spending decisions.

You can read the Budget 2016 papers here.

Headlines from Budget 2016 are also below:

Health and education 

• A new sugar tax on the soft drinks industry to be introduced in two years' time, raising £520m a year to be spent on doubling funding for primary school sport
• Levy to be calculated on levels of sugar in sweetened drinks produced and imported, based on two bands
• Pure fruit juice and milk-based drinks to be excluded and small supplies will be exempt
• Secondary schools in England to bid for new funding for extra after-school activities like sport and art
• Plan for all schools in England to become academies by 2022
• Compulsory maths lessons until 18 to be looked at
• £500m to ensure "fair funding" formula for schools in England
• Libor bank fine funds to be spent on children's hospital services, specifically in Manchester, Sheffield, Birmingham and Southampton

The state of the economy

• Growth forecasts revised down markedly for next five years
• Growth forecast to be 2% in 2016, down from 2.4% in November's Autumn Statement
• GDP predicted to grow 2.2% and 2.1% in 2017 and 2018, down from 2.4% and 2.5% forecast four months ago
• Outlook for global economy is "materially weaker" and UK "not immune" to slowdown elsewhere
• The UK still forecast to grow faster than any other major Western economy
• A million jobs forecast to be created by 2020
• Inflation forecast to be 0.7% for 2016, rising to 1.6% next year

Public borrowing/deficit/spending

• Further cuts of £3.5bn by 2020, with spending as a share of GDP set to fall to 36.9%
• Debt targets to be missed. Forecast debt as a share of GDP revised up in each of the next five years to 82.6% in 2016-17 and 81.3%, 79.9%, 77.2% and 74.7% in subsequent years
• Debt to be £9bn lower in 2015-16 in cash terms
• Annual borrowing in 2015-6 forecast to be £72.2bn, £1.3bn lower than forecast in November
• Public finances still projected to achieve a £10.4bn surplus in 2019-2020
• But borrowing forecasts revised up to £55.5bn (+£5.6bn), £38.8bn (+£14bn) and £21.4bn (+16.8bn) in 2016-7, 2017-8 and 2018-9 respectively
• The deficit as a share of GDP is projected to fall to 2.9% in 2016-17, 1.9% in 2017-18 and 1% in 2018-19

Personal taxation

• The threshold at which people pay 40% income tax will rise from £42,385 now to £43,000 in April 2016 and £45,000 in April 2017
• Tax-free personal allowance, the point at which people pay income tax, to rise to £11,500 in April 2017
• Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers from April 2016
• 5% rise in insurance premium tax
• Class 2 National Insurance contributions abolished, which the government says gives a tax cut of more than £130 to three million self-employed workers from 2018

Alcohol, tobacco, gambling and fuel

• Fuel duty to be frozen at 57.95p per litre for sixth year in a row
• Beer, cider, and spirits duties to be frozen
• Excise duties on tobacco to rise by 2% above inflation

Pensions and savings

• Annual ISA limit to rise from £15,240 to £20,000
• New "lifetime" ISA for the under-40s, with government putting in £1 for every £4 saved
• People who save a maximum of £4,000 will receive an extra £1,000 a year until they turn 50
• New state-backed savings scheme for low-paid workers, worth up to £1,200 over four years
• The Money Advice Service, which has provided financial advice to consumers since 2010, is to be abolished

Business 

• Headline rate of corporation tax - currently 20% - to fall to 17% by 2020
• Anti-tax avoidance and evasion measures to raise £12bn by 2020
• Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms. Many with a  rateable value of £12,000 or less will pay no business rates.
• Supplementary charge for oil and gas producers to be halved from 20% to 10%
• Petroleum revenue tax to be "effectively abolished"
• Use of "personal service companies" by public sector employees to reduce tax liabilities to end
• Commercial stamp duty 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m, effective from midnight

Housing/ infrastructure/ transport/ regions/ energy/ culture

• Powers over criminal justice to be devolved to Greater Manchester and Greater London Assembly to retain business rates
• New rail lines to get green light, including £80m for Crossrail 2 in London and the £60m HS3 link between Manchester and Leeds
• More than £230m earmarked for road improvements in the north of England, including upgrades to M62
• £700m for flood defences schemes, including projects in York, Leeds, Calder Valley, Carlisle and across Cumbria
• Tolls on Severn River crossings between England and Wales to be halved by 2018
• £100m to provide 2,000 places to live for those moving on from hostels and refuges and £10m for schemes like No Second Night Out to tackle rough sleeping and homelessness
• In Scotland, Libor bank fines to pay for community facilities in Helensburgh and for naval personnel at Faslane
• New elected mayors for cities and towns in southern England
• New Shakespeare for the North theatre in Knowsley, Merseyside

Last updated : 17 Mar 2016

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