Boris Johnson is prepared to turn on the spending taps by borrowing money to help the squeezed middle classes.
But how much will each of Boris' pre-election campaign promises cost? And what real impact will they have on you and your business? The former foreign secretary is in favour of a policy of “fiscal loosening” that would reverse the tight controls on public spending imposed by the Chancellor of the Exchequer Philip Hammond.
Johnson has stated that he is determined to honour promises which we have summarized below.
1. Raising the threshold at which income tax is paid at 40% from £50,000 to £80,000 - Cost: £9bn. 12% of people in the UK earn more than £50,000 a year. Some of this cost will be recouped through higher national insurance contributions but the net cost would still be £9bn a year, according to the Institute for Fiscal Studies (IFS).
2. Increasing the starting point for national insurance contributions to £12,500 - Cost: £11bn. Johnson wants to gradually align NIC Contributions with income tax by raising the NICs ceiling to an annual £12,500. Doing this would cost £11bn a year and take 2.4 million people out of paying NICs. Those earning the most will still see the most benefit.
3. Raise education spending to £5,000 for every secondary school pupil and £4,000 for each primary school pupil - Cost: £4.6bn. This includes an above inflation pay increase for teachers of 2.75% as confirmed by Phillip Hammond this week. Holding per-pupil funding steady until the projected end of the current parliament will cost a further £1.1bn.
4. Employing an additional 20,000 police officers - Cost: £1.1bn. Always a popular election pledge. Johnson wooed party members during the leadership race with a recruitment policy that will cost £1.1bn a year.
5. Free TV licences for the over-75s - Cost: £250m. In a deal struck in 2015, George Osborne handed financial responsibility for providing free TV licences to the BBC in return for extra funding. The BBC then confirmed that only those receiving pensioner credit will be entitled to a free TV licence. Johnson has said he will ensure the decision is reversed.
6. Raising the level at which stamp duty is levied - Cost: £3.8bn. Johnson has indicated that he would like all house sales under £500,000 in England, Wales and Northern Ireland to be exempt from stamp duty. The IFS says stamp duty on housing transactions below £500,000 was £3.8bn in 2017-18. The full cost is expected to be slightly higher because some properties above £500,000 would be lowered beneath the threshold to avoid the tax.
7. Nationwide full-fibre broadband coverage by 2025 (the previous Govt policy was to have full coverage by 2033)- Cost: unknown. The original plan suggested that the cost of this could be up to £5bn. Praised as a huge boost to the UK economy as more of us than ever work remotely and/or rely on the internet to conduct business. Johnson has said he wants the UK to have a complete full-fibre broadband network by 2025. Commercial operators could be expected to fund this work in densely populated areas, but in more remote areas it is likely that government subsidies will be required.
8. The creation of six “free ports” in the UK - Cost: unknown. Johnson said that he intended to create “about six” free ports – zones designated by the government to pay little or no tax in an attempt to boost economic activity. However no further or more detailed information has been forthcoming.
9. Review HS2 - Cost: unknown. So far £4bn has been spent on HS2 – the high-speed rail project designed to link London to cities in the Midlands and the north. Reports suggest that the final cost has now jumped to between £70bn and £85bn. One of Johnson’s big early decisions will be whether to scrap HS2 and spend the money on alternative rail infrastructure. A potential blow to Midlands businesses.
10. Raising the national living wage - Cost: unknown. Johnson has promised to raise the national living wage (currently £8.21 per hour for those aged 25 and over). However, the next prime minister has not put a figure on the increase he has in mind or even whether it should rise by more than inflation.
11. Increase NHS budget - Cost £1.6bn. In his most recent proposal, the new Prime Minister has announced an increase in budget to the NHS to the tune of £1.8bn. The majority of this is to be spent on a £850m upgrade project benefitting 20 hospitals, while the rest is to be spent on capital projects across the UK.