And at my back I always hear
Time’s winged chariot drawing near
So it’s the end of austerity is it? Hmmm. I’ll believe that when I see it. Chancellor Phillip Hammond’s latest Budget on Monday was, on the surface, full of treats rather than tricks. Apparently they moved it from its traditional Wednesday slot to avoid a clash with Halloween and the inevitable headline-writing trick-or-treat puns (1. Fail – too good an opportunity for any writer worth their salt and 2. When did Halloween become ‘a thing’? In my day we were happy with Bonfire Night).
Fiddling around with the tax threshold might make people feel slightly better off for a couple of months, but as the rise will come after April just as the inevitable council tax increases kick in, I rather suspect it’s all academic.
Talk to anyone who works in local government, social services, the NHS or education and they will tell you that austerity doesn’t just end because the PM and the Chancellor have deemed it so. The money promised for education for Hammond’s ‘little extras’ won’t go very far at my children’s secondary schools, which are bursting at the seams and chronically underfunded, while the money promised for housebuilding will be enough to build thousands of homes, rather than the hundreds of thousands actually required.
Incidentally, the tax threshold rises will also kick in just after the UK exits the EU next year, so any benefit could get swallowed up in whatever mire we are left in should we not get a deal.
We’ve written here before about the agreement that the BMF have come to regarding import VAT should there be a no deal Brexit, however the no-deal VAT question just won’t go away.
If we leave without a deal, there will be a huge hole in the Government coffers because there will be no agreement or mechanism about how to collect VAT owing on imported goods. In fact, VAT as it exists currently isn’t even going to apply as those of us of advancing years will remember that the replacement of Purchase Tax by Value Added Tax was a consequence of the UK’s joining the EU in April 1973. There’s a possibility that we will need to have an entirely new British purchase tax, as we had back in the Dark Ages of the early 1970s.
One of the things that the EU brought us was reduced VAT payments on energy saving products: insulation, TRVs, condensing boilers etc. With the government’s piggy-bank rapidly emptying, what’s to say that HMRC won’t try and make up the shortfall by closing down the EU-agreed lower rates of 5% on, say, the supply & installation of energy-saving materials, because ministers are desperate for money. This, clearly, will have rotten implications for any merchants and manufacturers who sell insulation, heating & hot water systems, heating controls, heat pumps, solar panels, etc, because prices will revert to the 20% standard rate. The Tories love their VAT. The chances of any new purchase tax being lower than the current 20% rate, I would suggest, pretty zero-rated.
An image went viral yesterday of the rather fabulous Yvette Cooper with her head in her hands, staring aghast at the Immigration Minister, uttering the words: “it’s only five months”. This was at a committee meeting about immigration and EU workers’ rights and status post-Brexit, but it could as easily have been about anything else to do with our exit.
Five months. As of today, that’s just over 21 weeks, and two of them are useless because they are Christmas. Someone in Government had better get their skates on.