Much we already knew, but there are some interesting nuggets of information. Here we take a look at the key themes.
1. Cuts to come - but tax breaks too.
The speech really tooted the government’s horn on the economy, flagging up that the UK was the fastest growing major advanced economy last year after growing at 2.8 per cent, the best perfomance since 2006.
But make no mistake: as was forewarned in the Tory election manifesto there is some way to go to fix finances which still include a 4.8 per cent deficit. There will be cuts to come, including a £23,000 welfare cap and restriction in jobseekers to under-21s, part of £12bn in welfare savings.
Departmental savings on top of this will be significant - and the government has tied its hands on taxation by locking income tax, VAT or national insurance to prevent further tax rises.
It also previously announced that the personal tax-free allowance will be increased to £12,500, with legislation set to be brought forward to ensure people working 30 hours a week on the national minimum wage do not pay income tax. It’s also going to put an extra £8bn into the NHS.
Squaring this circle will not be easy. Look out for new so-called ‘stealth’ taxes later - and departmental secretaries will already be sweating over the pain they will have to take on their budgets.
2. Scotland will have wide-ranging powers.
The government will bring forward legislation to secure a strong and lasting constitutional settlement, “devolving wide-ranging powers to Scotland”.
The accompanying document said the Scotland Bill will enable the Scottish parliament to set the thresholds and rates of income tax on earnings in Scotland and keep all the money raised in Scotland.
More power means more responsibility and the Scottish parliament will be more accountable to the Scottish public. The Scottish parliament will be responsible for raising around 40 per cent of Scotland’s taxes and for deciding around 60 per cent of its public spending.
Of course, for the nationalists this isn’t enough. They want something between this and full fiscal autonomy - and are already accusing the government of failing to respond to the will of people at the election.
3. Triple-lock renewed.
The previous government introduced the ‘triple lock’, which has seen pensioners received a 2.5 per cent increase in the basic state pension this April and the full rate increased to £115.95 a week. The state pension has now risen to the highest share of average earnings for over two decades.
The government confirmed the triple-lock will continue to apply to the state pension for the duration of this Parliament. However Kate Smith, Aegon’s regulatory strategy manager, questioned whether the triple-lock will apply to the new single tier pension from April 2016.
It is likely the minority of critics bemoaning the preferential treatment of pensioners will also find their voice afresh.
4. Brits have a EU choice to make.
Early legislation is set to be introduced for an ‘in-out’ referendum on European membership before the end of 2017, meaning Britons will finally have their say on whether we should stay part of the EU.
Key points include confirmation that the ‘franchise’ will be that used for the general election, which unlike the local election alternative will not include resident EU nationals. It also confirmed those campaining to stay in will be the party of ‘yes’ - a lesson from the Scottish referendum.
Attention will not be on when the vote is held, with widespread expectations that Mr Cameron will push for a vote earlier, perhaps this time next year.
5. Right to Buy extension.
The Housing Bill was a centre piece of the speech as its policies were of the election, but it has already been questioned by industry experts.
The bill extend Right to Buy levels of discount to 1.3m housing association tenants, with new houses built to replace them funded by disposal of high-value vacant council houses.
Stephen Smith, director at Legal and General Mortgage Club and Housing, said: “We hope that when more detail on the plans to help home ownership is announced it will include support for custom build in the UK.
“We know there is a real pent up demand for this sector and, if it gets the right support, it could make a real contribution to achieving the numbers for new house building that we need.”
6. Interest rate shake-up.
The Bank of England Bill will strengthen the governance and accountability of the Bank, however the main elements will be announced by the government in due course.
According to the FTAdviser sister publication, the Financial Times, the Bank will overhaul the way it sets interest rates and will trial a new meeting schedule for the Monetary Policy Committee to improve transparency and decision-making.
7. Strike action - and a hit to Labour funding.
Finally, the government is set to bring forward legislation to reform trade unions and to protection essential public services, such as transport, against strikes. It will introduce a 50 per cent voting threshold for union ballot turnouts, with a need for 40 per cent of the electorate to favour a walk-out.
More surprisingly, it will change the rules to require members to opt in to political funding rather than out, which will likely leave less money in the pot for Labour.
donia.o’loughlin@ft.com
