Published: 23rd October 2019
Sajid Javid’s first Budget is scheduled to take place on 6 November. Put off by the uncertainty caused by ongoing Brexit negotiations, the Budget has already been pushed back from its original October date and was expected to be the first Budget announcement to be made since Britain officially left the EU.
However, with uncertainty regarding an exit deal still raging, and Johnson's three-day timetable to get the with Withdrawal Agreement through Parliament being voted down on October 22, Javid will be setting out his proposals with Britain still officially part of the European Union after all despite his best efforts to avoid such a situation.
There has been no indication that the Budget will be postponed again following the rejection of the Withdrawal Agreement meaning Javid faces outlining the plans for Britain’s future spending policies during what is arguably be the most uncertain time in the country’s recent history.
The current state of play
Going into the Budget, the chancellor has seen government borrowing increase, totalling £9.4bn in September, compared to £8.8bn at the same point last year. This has been attributed to a general increase in spending across all Whitehall departments as well as funding the winter fuel allowance. This unexpected spending flurry could scupper Javid’s plans to inject billions of pounds into public services and infrastructure projects
According to figures from the ONS, in the six months since the start of the current tax year borrowing has been £40.3bn, a 21.6% rise when compared to the same period in 2018, when it was just £33.2bn - and this is even before the costs of Brexit have taken their toll.
While Javid has maintained his desire to increase borrowing in order to inject extra money into hospitals, schools, transport and the nation’s infrastructure, this additional borrowing has seen the Treasury set to fall short of its 2% annual public spending deficit limit. Javid may be feeling the pressure to lessen his planned spending spree in order to prevent him from flouting this rule further.
So, what measures could Javid introduce?
While the details of what the 2019 Budget holds are currently unknown, based on previous comments and promises made by the Chancellor, we can speculate what may form part of his plans on November 6.
As a self-proclaimed "low tax guy" Javid has hinted that reforming elements of the tax system is high up on his list of priorities. In fact at a Conservative Party event earlier this year he categorically stated that his first Budget “will include tax changes”.
Whether these potential changes will serve to benefit higher or lower tax payers is to be seen, however, Boris Johnson has made no secret of his desire to raise the threshold for the higher rate of income tax. Speaking in June this year he confirmed he was keen to raise the threshold from its current level of £50,000 up to £80,000.