The Budget 2011: How will it affect students?
‘Labour thinks that the Chancellor George Osborne is cutting "too far too fast".’ (BBC News)
The UK is essentially in a financial position similar to most students; it’s in the red and desperate to get back into the black by any means.
If you drive you’ll no doubt have noticed the price of petrol has rocketed in recent months due to international events driving the price of crude oil up, and the blessed VAT rise.
Similarly, tobacco prices have risen drastically because it's easily taxable and puts money back into the economy. When once in a time far-far-away you would have expected to pay £2.50 for a packet of 10 Malboro Lights, you’ll now be lucky to get them at £3.50. Perhaps smoker students will be heading off on more trips abroad with the likes of EasyJet..
The Budget- 23rd March 2011
As far as further fuel price increases are concerned, Chancellor George Osborne announced in the House of Commons that the Labour government’s plans to increase fuel prices by 1p per litre have been scrapped, and the duty on fuel will in fact be decreased by 1p.
This decrease will cost £1.9bn; to cover this cost there will be a tax increase on North Sea oil and gas production: £1.78bn.
So far this sounds less than horrifying and like it might even be a good thing. But before you jump for joy clinging to your penny saved, remember the added 3p to petrol costs due to Osborne’s VAT increase.
How it will affect students
- A 7.2% increase on alcohol prices; equating to 4p per pint and 2% above the rate of inflation.
- The budget supports first-time buyers with FirstBuy: Costs £250m. However, this only counts when buying a new property.
- Corporation tax has been lowered by 2% making it one of the lowest in the world, and therefore making the UK an attractive place to start up a new business aswell as appealing to foreign investors.
- Will create 50,000 more apprenticeships: Costs £100m.
- Extra technical colleges: Costs £150m.
- Taxpayers will lose the extra money they gain from the increase in the income tax threshold from other tax changes.
- Tobacco duty to increase by 2% above inflation.
- Personal tax allowance will go up by £630 to £8,105 next April. That means 1.1m people will have been taken out of tax altogether; meaning that no more people should be pulled into a higher rate tax band.
- Inheritance tax to be cut for people who leave 10% of their estate to charity. Osborne predicts charities will raise £300m from this.
- New export credits for manufacturers, a technology and innovation centre and nine new university centres.
- Unemployment is now set to be higher since the Office for Budget Responsibility produced its figures in November.
- Climate change levy discount on electricity for those signing up to climate change agreements will rise.
The increase in the price of alcohol will damage the industry substantially as it means that 70% of the cost of a bottle of gin is now taxable. This makes the cost of sustaining the industry much higher; from the brewer to the pubs themselves as people won’t be able to afford the demanding prices.
Osborne also confirmed that there will be an additional duty on high-strength beers, increase of 25p per can, but reduced duty on lower-strength beers. This will mean a 4p increase on beer, 15p on wine and 54p on bottles of spirits.
If you were looking for any inspiration to bite the bullet and quit smoking have a look at this; hand-rolling tobacco will go up by 67p, a pack of economy cigarettes up 50p and premium cigarettes up 33p.
The decrease in Corporation Tax by 2% makes the UK's rate one of the lowest in the world. Therefore making the UK an attractive place to start up a new business, as well as appealing to foreign investors.
In theory, these new businesses should grow, therefore needing more employees like us students and graduates in years to come which is why we should, in theory, see this as a good thing.
The major effects of this years’ budget will be on those with the largest incomes, large estates, pensioners, tax-payers, public sector workers and smokers and drinkers. Rather a lot of the population, and potentially a lot of students.