The Chancellor George Osborne delivered his first full budget today, but what does it mean for students?
Growth and Jobs: If you are graduating this year and looking for work the most important part of the budget, in terms of future job prospects, was the chancellor’s admission that the economy will be smaller that he previously predicted. George Osborne told a packed house of commons that the budget "is about the reforming the economy so we can have enduring growth for the future".
The Office for Budget Responsibility (OBR) the independent economic forecasters, said: growth would be of 1.7% for 2011 rising to 2.9% in 2014".
Prices: The OBR also predicted the cost of living to rise by between 4 and 5% this year with prices moving up more slowly (2% per annum) by 2013.
The consequence of falling growth and rising prices was reiterated by the chancellor who predicted unemployment peaking during 2011 (currently around 2.5 million)
Debt: With slower growth forecast, government net debt will remain at around 70% of one year’s economic activity (GDP) until at least 2015. This is like a graduate getting paid £21,000 a year and having a student debt of £14,700.
Tax: There is good news for students working their way through university, as the the amount you have to earn before you have to pay income tax (known as the personal allowance) will go up to £8,105 in April 2012.
The Chancellor also plans to make tax simpler by abolishing tax reliefs and merging of national contributions and income tax.
For high earners there is no immediate relief from the 50% tax, however, the Chancellor gave a big hint that the rate may be reduced in the future. The Chancellor thinks, as Nigel Lawson and Margaret Thatcher thought in the 1980's & 90's, that very high taxes are a disincentive to work and that if you tax people too much government revenue from income tax actually falls.
Business: The big budget winners, by far this year, are British business who will have their tax bill cut by 2% from April to 23% which will give UK businesses the lowest corporation tax in the industrialized world.
Together with a raft of new enterprise schemes, including 40,000 new apprenticeships and the creation of 21 regional enterprise zones, small businesses will also get more government money to help pay the rates until 2012.
Fags & Booze: There are no immediate changes to alcohol and tobacco prices, which will be limited to a 2% rise above inflation (currently 4.4%). Though there is likely to be more tax on rolling tobacco in the future.
Cheap Housing: Students expecting to graduate with large debts may benefit from more government cash to help them get on the property ladder. The government is providing £250m to help first-time buyers purchase newly-built homes.
Environment: Many students will be pleased to see more help for environmental projects, which include a new Green Deal to reduce energy bills, the introduction of a carbon price floor for the power sector and the creation of a new "green investment bank" from 2012 which will have access to a £3bn fund.
Fuel: For those students able to afford to run a car from 6pm tonight, fuel duty will be cut by 1p per litre. More importantly, however, there is also a U-Turn on the 8p hike threatened by the Chancellor in the autumn.
Summary: Overall, this is a budget for big business designed by a government that believes that, by reducing public spending and business taxes, the private sector will be better able to deliver the economic growth and new jobs the country so desperately needs. We will have to wait and see, but the downside of this approach is less jobs in the short-term.