Summer Policy Announcements: A Mixed Bag for Businesses and Families

Mark Morton reviews the chancellor's pre-bank holiday announcements, covering free children's bus travel, reduced VAT on family activities and meals, fuel duty, mileage allowance changes and what they mean in practice for businesses and families. Mark offers a candid take on whether these measures are likely to make a material difference and who they really benefit.

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Transcript

Hello, it's Mark Morton here and welcome to this more, most recent of the Mercy of Podcasts. Just reflecting on the chancellor's announcements prior to the bank holiday week, which was obviously beautiful. Now we're past that week. I'm just standing here watching torrential rain beat down on us. 

So that was the end of the our brief snap of summer. No doubt. I think quite interesting in many respects. Watching sort of the stated policy of the government over the last couple of years, they've been adamant more than once in saying that they only wanted one, essentially tax event budget per annum. 

And they plump for an autumn budget followed by a spring forecast, which, and then, to be fair to them both spring forecasts have had virtually no tax policy within them. And what they wanted to avoid was getting into a situation that certainly the conservatives did towards the end of their tenure, where there were multiple announcements. 

And I think avoiding being taught a little bit with the Liz Trust brush that emergency budget, well, of course if anybody reads back Liz Trust did not have an emergency budget. But anyway but, being dictated to by events. But I think what the government's found out very quickly is events control them not either way round and having been very clear on, we only want one set of tax announcements per annum. 

We then get a second announcement for this year driven by what's gone on Iran to some extent. But also, of course, what's gone on economically in this country, partly as a consequence of that, partly not. So a series of announcements. We'll see if there are any more in my mind, a bit of a strange mix of announcements. 

Clearly there are people struggling with increased costs, whether that be just filling up the car or the knock on consequences of increase in oil price and so on and so forth. So what were the announcements? Well, there were a series and there are little fragmented unsurprisingly various ones floating around. 

I think the first one that came out was about free bus travel in England for children only. And I think if you read the announcement by the government, they are talking that this about, this will be in August. Well, of course the summer holidays certainly an England start before August, which seemed a little bit of a strange starting point. 

It then talks about children between the ages, I believe, of five and 16. Now this seems to suggest that you can let five year olds run riot on free bus travel. But of course, if their parent wanted to accompany and there would be a cost to that, which. Seems a little bit of an odd sort of what are they trying to encourage here? 

It talks about only local bus travel. So presumably if you live in sort of Derbyshire, it would only be in Darbyshire rather than you go on your summer holidays down to Cornwall. But again, who, who would police that? There's a rather strange comment about participating local bus services, whatever that means. 

It isn't unlimited bus travel for all kids everywhere. Throughout the summer holidays. It's bus travel for some kids in some places for the month of August. But again, quite what the stated policy is. And I can fully understand, as a kid, life was a lot simpler. We might have gone down to the local park. 

It would've been me, my sister, and my mom 'cause my dad was at work. Me and my sister would've got free bus travel according to this policy, but mum wouldn't. And of course for those families that are really struggling, it just strikes me that it may be that the parents can't afford, to do it that way either. 

I dunno, a little bit of an odd policy in my own mind, particularly when you then sort of look at the second set of announcements which was to do with reduced rate of VAT. So 5% rather than 20% on a series of supplies, it was badged as at children. Now the timeframe for this is subtly different. This is from sort of 25th of June to the 1st of September. 

So slightly different to the bus travel issue for whatever reason. What does it cover? Well, the revenue have produced, so if you're interested in it, the revenue have produced a business brief, which goes through it in some detail, but broadly children's meals. So a meal for children, which doesn't include alcohol. 

Anyway, just made me chuckle. But a children's meal will be 5% rather than 20%. Children's tickets suit cinema theatres, shows, concerts, exhibitions not the adult ticket, of course, again, here. So child's tickets or children's tickets, I should say will have a reduced rate of VAT on but not for the accompanying parents. 

I know, you wonder about a family ticket. How does that it says it is interesting where a ticket is held out for a sale as a right of admission for a family, which includes one or more children. The reduced rate applies to the whole ticket, including any adult admissions. 

So again, and a quite, I don't, anyway, you get my idea. There's some rather confused, maybe messages within this attractions and soft play. So the reduced rate applies to charges made for a right of admission for any customers, regardless of age to qualifying attractions, which would include include amusement parks, circuses, adventure parks, et cetera, et cetera, including soft play areas. 

So even within this policy some seem aimed specifically at children, either meals. Some seem aimed at children in terms of theatres, unless you get a family ticket, in which case the whole family ticket is covered. And then anybody into soft play. Which is, good, it's giving maybe availability for families maybe a cheaper price. 

But of course with VAT the real thing that strike me here, there is no guarantee that suppliers are gonna reduce their face price to the buyer. So it may be that ticket still costs you a hundred quid before and after this change, and that the supplier is merely making a bit more margin on that, which from their perspective, they probably need to cover the, all the increased costs that they are facing. 

Again, I just think this is a bit odd, and for those families that really can't afford to go out reducing a hundred quid ticket by 10, 15 quid, is that gonna make any difference to the fact that family still can't afford the 85 or 90 quid? So again, I just find it a bit odd, and you look at the, particularly this government have been pretty critical of the previous government's attempts to help with energy bills. 

You were funding millionaires and helping them. Well, isn't that exactly the same? I could have taken my kids out on, according this as a family that wouldn't have been necessarily quite struggling in the same way, and we would've benefited in the same way assuming that the venue passed that cost on. 

Again I just, I dunno I'm struggling to see that these are. Material in the scheme of the economy. And actually if you can't afford the ticket, you can't afford the ticket. So anyway, the next set of little announcements are in a a business brief sorry, an agent update. 

So these have been detailed. The first one was to do with petrol. Now, what I've not understood with petrol and diesel costs is why the government just doesn't increase a kind of slide or create a sliding scale to maintain their back take at what it was on the price of petrol. Because fuel duty is, 53 PA litre before you start with any margin of the supplier. 

And of course, VA is due on the whole price paid. So when prices go up, okay, fuel duty doesn't go up, but the VAT does. So why hasn't the government created a little escalator to say, we will keep our vat take as it was. And, we will try and reduce the price at the pump a little bit for the consumer, which would help people going to work, people running businesses, people haulier haulers, hauling goods, and hence maybe flow into a slightly reduced rate of inflation. 

But now the announcement on fuel duty is it will not go up in, this year. Well, it not going up is not reducing the price for anybody, is it? So again, I find it a bit of an odd statement, a good a, a good statement in respect of those particularly farmers that use red diesel, that actually, that price will be cut for the remainder of this year. 

So there is, for one industry, let's say in particular, there is a bit of, material saving for six months. H gvs interestingly, nothing to do with the price of fuel, but a comment that GV vehicle excise duty will only be one pound for the next 12 months, which again. Okay, but vehicle exercise duties are one off cost. 

So okay, I accept that as a saving for a 12 month period. But compared to the extra diesel prices that are being paid, you would suggest that's a bit of a drop in the ocean. Then the rather strange thing about approved mileage payments, IE the U 45 p and 25 p as it has been for 15 years, and as it should have done, 45 p has gone up. 

And I, when I say as it should have done, I mean it should have gone up over the years rather more quickly, than 15 years later. Because we all know that the cost of insurance, et cetera, for people who drive their own vehicles for business have gone up materially in that period. But in principle a good change, the idea of course, that employers are obliged to pay, that seems to have gone missing. 

It just seems to be say, well actually, employees can pay their staff more. There's no guarantee that employers will pay, because that's, if you're doing 10,000 miles, that's an extra thousand quid potentially that's being paid out. How many employees are gonna want to increase their costs at the moment because of other policies that have been taken in the last 12, 18 months? 

If you want to claim tax relief on the distance, of course you're gonna have to a wait until at least April, 2026 before you can even attempt that. And of course, then the revenue are gonna make it extremely difficult one way or the other for you to actually get a physical repayment because of the nature of doing with the revenue. 

So I, again, the idea that this is gonna help masses of employees right now with their cost of living, I just find a little bit odd in my own mind, and this is not to say that the government should be jumping in and paying everybody for everything, that's not what I'm getting at. But when you look at. 

What we seem to really need at the moment is help for businesses and some sort of targeted policy to keep an eye on inflation. And this just seems a little bit piecemeal, so I suppose the proof will be in the pudding. We shall see in six months where we are I would imagine the government are gonna have to make some sort of policy statement on household electricity bills for certainly some people because we've just seen those go up in due live by two or from due, live by over 200 pounds on average, bill. 

That pretty much negates any of the things we've just talked about. Yeah, strange times and I just thought a little parting shot I was reading at the weekend west Streeting starting to talk about helping businesses, which again seems to have gone missing in the last 12, 18 months. 

The idea of growth. West Streeting thinks that to help businesses, we should reduce the cost of national insurance. I will let you mull that over as a gentleman who was a member of the government for the last two years. But anyway I just thought that would've again you could, life is stranger than fiction. 

You can't make these things up. So anyway a little run through of the changes. Yeah, hopefully some people will benefit to some extent, but it'd be very interesting to see sort of at the end of the summer what real effect this has had and how many businesses have offered to pass some of these savings on to their customers. 

That's not necessarily what businesses do. Anyway, take care everybody, and I'll catch up with you again soon. Cheers. Bye.