Budget update – Croydon shopkeepers score huge win!

I usually stick to local news, but thought you might appreciate an update on Monday’s budget – starting with an issue that Croydon shopkeepers have been pressing for and which has been delivered.

Business Rates Cut for Small Shops
The Chancellor announced Business Rates will be cut by 1/3rd for all smaller shops, compared to current plans. Shops with a rateable value under £51,000 will be eligible, which means almost all high streets shops will qualify. This is something that the Purley Business Improvement District has been calling for over a period of many months. I took their concerns to the Chancellor and I have been pressing hard to get this done for some time. I am delighted that the Chancellor has responded positively – local shops are the lifeblood of our community, and it is really important that we support them. This Business Rates cut will really help smaller shops across Croydon and indeed across the whole country.

Head of the Purley Business Improvement District Simon Cripps said yesterday, “Local traders really appreciate that Chris listened to our concerns about Business Rates and then lobbied the Chancellor so effectively on our behalf. I’m delighted that the Chancellor listened – it’s great that the voice of local shopkeepers in Croydon is now being heard in the Treasury.”

The Chancellor very kindly said during the budget speech that the Business Rates cut was in response to campaigning by me and by two other MPs (my colleagues Justine Greening who represents Putney, and Damien Moore who represents Southport in the north west).

At the same time, the very largest multinational online companies who have historically been paying very little UK tax will have to pay £400 million per year in a Digital Services Tax from April 2020, to help level the tax playing field. The UK is leading calls for international tax law to catch up with the practices of companies like Google, but the UK will act unilaterally in the meantime as we cannot wait any longer.

Big Minimum Wage Increase
The minimum wage (now called the Living Wage) will increase from £7.83 an hour to £8.21 an hour next April. This is up from £5.93 when the Conservatives came to office in 2010, a 38% increase. Together with the personal allowance increase, this means that the post-tax income of someone working full time on the minimum wage is up 44% since 2010 (nearly double the rate of inflation over that period). I strongly support increasing the minimum wage – companies should pay people enough to live on. Helping people on lower incomes who are doing the right thing by working is a personal priority of mine. I want to see minimum wage increases continue. Some people did worry that increasing the minimum wage would cause unemployment as some firms may not be able to afford to pay it, but that has not happened in practice – unemployment is now at a 43-year low. Companies have been helped to offset higher minimum wage costs as corporation tax has been cut from 28% in 2010 to 19% today – which has actually resulted in more corporation tax being collected in pound terms, as companies have invested more to expand or have chosen to locate in the UK.

£20 billion NHS Spending Increase
NHS spending is being hugely increased over the course of the next 5 years, by £20 billion per year after adjusting for inflation – around a 15% real terms increase by 2023. Supporting our NHS is rightly a national priority. We are seeing benefits already in Croydon, with the new A&E at Croydon University Hospital due to open in the next month or two, and the Minor Injury Unit at Purley Hospital (staffed by GPs and nurses; now called a “GP Hub”) open 8am to 8pm 365 days a year. Mental health spending, an area of concern, is being substantially increased too.

Personal Allowance Threshold
The personal allowance (the amount you can earn each year before you start to pay income tax) is being increased to £12,500 from next April.  This was around £6,500 in 2010 so the increase is saving 30 million working people £1,200 per year in tax compared to the old threshold in 2010 (calculation: £12,500 less £6,500 = £6,000 x 20% tax rate). People don’t often notice this, but everyone’s income tax bill is a lot less than it would have been without these changes. The higher rate tax threshold is also being raised to £50,000 from next April.

Duty on beer, cider, spirits has been frozen again to help our pub industry. Petrol and fuel duty has been frozen for a 9th consecutive year to help businesses that rely on road transport and also individuals who rely on their cars.

Overall Economy
In 2010 when Labour left office, unemployment stood at a high of 8% and the Government had a gigantic deficit – around 10% of GDP – amongst the very highest in Europe. We simply couldn’t keep on spending more than we could afford every year. When the Government borrows huge amounts of money every year, it means our children and grandchildren have to pay it back through higher taxes in decades to come. That is irresponsible and immoral – plus the interest charges on the higher debt would have crippled public finances. Running a huge deficit on an ongoing basis was never an option. The last 8 years have seen a lot of hard work by everyone to get this deficit down – it is now less than 2% of GDP and forecast to fall further next year. At the same time, since 2010, there have been 3 million new jobs created (80% of those full time; only 3% of jobs in the economy are zero hours). Unemployment has halved and is now lower than it has been at any time since 1975 at around 4%. Fixing the mess of 2010 has taken 8 years and has been painful at times. But we are now in a much better place. This means that we can now spend more on public services – while remaining responsible. The NHS is rightly the first beneficiary of this (see above) and other departments will outline their future spending plans next year. It’s been a tough 8 years, but we have done the right thing and it has worked. Better days lie ahead.

I discussed some of these general points in a short (it was time limited) budget speech in Parliament on Monday, which can be viewed here – https://www.youtube.com/watch?v=RZG1ehdcKbU&t=4s