Government issues the Budget
On 6 March, Jeremy Hunt, the Chancellor of the Exchequer (see panel), set out his spring Budget in a speech to MPs gathered in Parliament.
What is the Budget?
The Budget is the Government’s plan for the country’s finances, including how it will collect and spend money. It includes plans for changes to tax. Tax is money that most adults pay the Government out of the wages they earn and the money they spend. The Government uses taxes to pay for things such as the NHS, education and the military. A general election is expected to take place this autumn, so this Budget could be the last one by the current Government.
What was in the Budget?
Hunt announced a cut to the rate of National Insurance (NI). This is a tax that is taken out of people’s wages. It pays for things including pensions (money older people get after retiring from work). From 6 April, the main rate of NI will fall from 10% to 8%. The system is quite complicated but someone who earns £30,000 a year, for example, will save £349. Hunt also announced changes to the child benefits system, which is the money some parents receive to help bring up their children. Whether people can claim child benefit, and how much, depends on what they earn. Hunt changed the rules so that adults who earn up to £80,000, rather than up to £60,000, will now receive it. It means that nearly half a million families will be better off by an average of £1,260 a year.
What was the response?
Labour Party leader Keir Starmer called the Budget “the last desperate act of a party that has failed” and said people were “paying more for less”. Money expert Martin Lewis said the Budget “should put money in people’s pockets”. Paul Johnson, from an organisation called the Institute for Fiscal Studies, said the NI cuts will benefit lots of people but added that it doesn’t “change anything very significantly”.