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NatCen Insights: Summer Budget

Posted on 08 July 2015 by NatCen, Research .
Tags: austerity, budget, politics, public services

Today Chancellor George Osborne delivers his seventh budget statement to the House of Commons. Free from the vetoes of a coalition partner, this Emergency Budget will set the party’s priorities for the next five years of government.

In this blog, we draw on NatCen data to shed light on how the public are likely to react to today’s Budget statement.

We will add more to this blog as we digest the announcements.

Tax and spend

Budget surplus

The Chancellor announced plans to reduce the deficit by around 1% of GDP year on year. This means a surplus will be achieved in 2019-20, and debt will fall in every year. The Office for Budget Responsibility (OBR) forecasts a surplus of £10.0bn in 2019-20. This will be achieved by £37bn of further spending cuts by 2020, including £12bn of welfare cuts. NatCen’s British Social Attitudes survey (BSA) shows us that proposals to spend less may be out of step with the public’s views. In 2014, only 7% favoured lowering taxes and spending less, with the majority (52%) preferring to keep taxation and spending at the same level.

 Spending priorities

The Chancellor announced changes to the Government’s spending priorities in the budget, including £12bn in cuts to the welfare budget and an extra £8bn for the NHS by 2020. It also said that it would meet the NATO pledge to spend 2% of national income on defence every year of this decade and that it would reform road tax to raise money to spend on the road network.

But what about the public’s priorities?

Since we launched the British Social Attitudes survey in 1983, health and education have consistently been the public’s top priorities for extra government spending. 

 

Tax evasion and avoidance

George Osborne said that the Government will spend an extra £750m on dealing with tax avoidance and evasion and expects to raise £7.2bn.

In our latest British Social Attitudes survey 72% of the public said that never trying to evade taxes is “very important” (7 on a scale of 1-7) to being a good citizen. This is higher than the 64% in 2004. 

Welfare cuts

The Prime Minister has agreed to protect pensions, disability benefits and child benefit, so we haven’t seen any cuts in these areas today, although the responsibility for TV licences for over-75s has been transferred to the BBC. However, we have seen cuts to welfare benefits for other groups, such as freezing working-age benefits for 4 years, restricting tax credits and universal credit to the first two children only and abolishing the automatic entitlement to housing benefit for 18-21 year olds. This should go down well with the Tories’ core supporters: just 17% of Conservative identifiers think the Government should spend more money on welfare benefits for the poor.

Spend More On Welfare By Party

In addition, Osborne also announced a cut to the benefits cap from £26,000 per year to £23,000 in Greater London and £20,000 in the rest of the UK. In 2014, three-quarters (73%) of people agreed that that no household should receive more in benefits than the national average income, although we don’t know if the public will support this new level.

Inheritance tax

The Government announced that it will raise the inheritance tax threshold from £325,000 to £500,000 per person, coming in to effect from April 2017. Married couples will be able to pass on assets of up to £1 million without paying any inheritance tax. The English Longitudinal Study of Ageing (ELSA) shows that 28% of people over-50 have ever received an inheritance from someone other than their spouse. Of those people who have received any inheritance, 1 in 10 people received over £200,000. So this change will affect a small proportion of the population.

 ELSA Inheritance Value

Increased NHS spending

In their election manifesto, the Conservatives pledged to increase NHS spending year on year until at least 2020. The NHS will receive a further £8bn by 2020. This is likely to be well received by the public. NatCen’s most recent BSA found that there is an almost unanimous feeling that the NHS is facing a funding problem (92% of people agree).

 BSA NHS funding infographic

However, there is no such consensus on where any additional funding should come from. The most popular option is that the NHS should live within its means – not least perhaps because (in response to a separate question) as many as 51% said that “the NHS often wastes money”.

Scrapping maintenance grants for students

In order to increase the number of university places, maintenance grants for university students from low-income families are to be scrapped from 2016/17, it was announced today. The will be replaced with loans of up to £8,200 per year, which people will pay back when they earn over £21,000.

According to the Student Income and Expenditure Survey, around a third of full-time students and two thirds of part-time students said that the funding and support available to them had affected their decisions about higher education. Of these students, over two thirds said they would have chosen not to study at all without funding (70% of full-time and 65% of part-time students).

Apprenticeships

The Chancellor said that 3 million new apprenticeships will be created by 2020, funded by a levy on large employers. In BSA, we ask people whether practical or academic skills create more opportunities in life.

Education Apprenticeships Opportunities

Housing

Planning shake-up to release brownfield sites for new homes

Business Secretary Sajid Javid unveiled plans to give housing developers automatic planning permission to build homes on previously developed land. BSA data shows that opposition to building new homes in England fell substantially between 2010 and 2014. In 2010 46 per cent of respondents said they would oppose new homes being built in their local area. This fell to only 21 per cent in 2014. Similarly, the proportion of people who are supportive of house building in their local area rose from 28 per cent in 2010 to 56 per cent in 2014.

BSA Support For New Homes

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