2016 United Kingdom budget

The 2016 United Kingdom budget was delivered by George Osborne, the Chancellor of the Exchequer, to the House of Commons on Wednesday, 16 March 2016.

2016 (2016) United Kingdom budget
PresentedWednesday 16 March 2016
Parliament56th
PartyConservative Party
ChancellorGeorge Osborne
Total revenue£716 billion ($0.98 trillion)
Total expenditures£772 billion ($1.06 trillion)
Deficit£56 billion (2.9% of GDP)
Website2016 UK Budget
Chancellor George Osborne delivering his Budget Statement

It was the second fully Conservative budget delivered by Osborne, after the July 2015 budget. This was to be Osborne's last budget as Chancellor, as he was replaced by Philip Hammond on 13 July by way of Theresa May's cabinet reshuffle.

Background

In the November 2015 Autumn Statement, the independent Office for Budget Responsibility predicted that the UK economy would grow by 2.4% in 2016.[1]

Budget announcements

  • Osborne will introduce a sugar tax on soft drinks from 2018, raising around half a billion pounds which will be used to fund after-school activities such as sport and art.[2]
  • The predicted GDP growth for 2016 was lowered to 2% from 2.4%.[2]
  • The tax-free allowance will be raised to £11,500 and the 40p tax threshold will increase to £45,000.[2]
  • There will be a new savings account, the Lifetime ISA, for the under-40s, with the government putting in £1 for every £4 saved.[2]
  • Funding was earmarked for High Speed 3 (an east-west rail line across the North of England), Crossrail 2 (a north-south rail line across London), a road tunnel across the Pennines and upgrades to the M62 motorway.[2]
  • £115 million was allocated to tackle rough sleeping.[3]
  • Public sector employers will be required to contribute a higher proportion to their workers' pensions from 2019–2020.[4]
  • Tobacco duty was increased by 2%.[5]
  • Hand rolling tobacco duty was increased by 3%.[5]
  • Fuel duty frozen at 57.95p per litre.[6]
  • VAT on tampons was to be cut from 5% to 0%, as soon as EU obligations allowed.[7] (The tax on women's sanitary products was abolished on 1 January 2021, when the transitional Brexit period expired.)
  • The halving of tolls across both Severn Bridges from 2018.[8]

2016–17 taxes and spending

Taxes

Receipts2016-2017 revenues (£ billions).[9]
Income Tax182
Value Added Tax (VAT)138
National Insurance126
Excise duties48
Corporate Tax43
Council Tax30
Business rates28
Other120
Total Government revenue715

Spending

Department2016-2017 Expenditure (£ billions).[10]
Social protection240
Health145
Education102
Debt interest39
Defence46
Public order and safety34
Personal social services30
Housing and Environment34
Transport29
Industry, agriculture and employment24
Other49
Total Government spending772

Reactions

The Leader of the Opposition, Jeremy Corbyn, described the budget as having "unfairness at its very core", singling out cuts to disability benefits and corporate tax for particular criticism. However, he expressed his approval for the introduction of the sugar levy in his House of Commons response.[11]

Secretary of State for Work and Pensions, Iain Duncan Smith, resigned two days after the presentation of the budget, describing planned cuts within his department "as a compromise too far".[12]

See also

References