BudgetOct 29 2018

What Budget 2018 will contain

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What Budget 2018 will contain

People on low incomes struggling to repay their debts or access affordable credit will be offered a helping hand in today's Budget.

A study looking at a new no-interest loan scheme, the next steps for a 'breathing space' from problem debt, and a £2m innovation fund to help affordable lenders compete with the payday loan providers, will be outlined in the Budget at 3.30pm. 

According to an announcement from HM Treasury, a no-interest loans scheme would see the government explore ways to partner with debt charities and the banking industry to provide interest-free loans to those on low incomes, helping them pay for life’s unexpected costs.

The government claimed a similar scheme in Australia has had widespread success, helping four out of five of those who took a no-interest loan to stop using payday loans.

The government added a scheme like this could offer the UK’s three million high-cost credit users a more affordable alternative, and help prevent people from falling into problem debt, or in extreme cases, turning to loan sharks.

A feasibility study will be undertaken in 2019 looking at how a pilot could work in the UK.

It is also expected that chancellor Philip Hammond will publish detailed proposals on a 'breathing space', which would give people in problem debt legal protections from creditor action.

Having listened to charities, campaigners and the financial services industry during a call for evidence earlier this year, it’s expected that the proposed breathing space period will be increased from six weeks to 60 days, giving people in problem debt more time to get their finances back on track.

The chancellor is also expected to announce a £2m challenge fund for budding tech entrepreneurs to invent solutions to make it easier and more attractive for people to borrow from more affordable lenders.

The challenge will open to pitches early in the new year.  

According to HM Treasury, these actions are part of the government’s long-term plan to tackle problem debt and ensure all families have access to the financial services they need.

In September, the government launched Help-to-Save, a unique savings account offering hardworking people a bonus of 50p for every £1 they save which can be spent on whatever they like.

Also, the government announced in August that a new independent body will be established to promote financial inclusion.

As well as a shake-up of payday lending. the chancellor is expected to announce in the Budget the NHS will increase mental health investment by at least £2bn a year in real terms by 2023 to 2024.

Mr Hammond will confirm that the first stage of the NHS long-term plan will be to help achieve parity of esteem between mental and physical health services.

According to HM Treasury, the NHS will invest in new crisis services, so that anyone experiencing a mental health crisis can call NHS 111 24 hours a day, seven days a week and be directed to the right support.

Comprehensive mental health support available 24/7 in every major A&E department so that those experiencing a mental health crisis get a specialist and rapid response is also promised along with more mental health specialist ambulances.

More people should be able to access services in the community, for example crisis cafes (a community space for people to access support without going to A&E) with the extra cash injection, according to HM Treasury.

Specialist crisis teams for children and younger people will be set up in every part of the country to build vital links between schools, social services and local young people’s mental health services, according to the announcement from HM Treasury.

Schools will also have new dedicated teams supporting pupils with mild and moderate mental health problems.

More than 55,000 adults with severe mental illness will be helped by the NHS to find employment through a work placement and support scheme, the government also claimed.

The announcement follows the government’s five-year NHS funding settlement made in June 2018.

The NHS has now committed to increasing mental health funding as a share of the overall budget over the next 5 years. Further work is underway on mental health as part of the NHS long-term plan.

Plans to plant millions more trees will be also be boosted thanks to £60m of fresh cash to be announced by the Chancellor in today’s (29 October) Budget.

A £1.5bn plan to support Britain's high streets will also be unveiled, including £900m of immediate business rates relief for 496,000 small retailers.

In the biggest-ever cash injection for England’s largest roads, Mr Hammond is also expected to reveal a new £28.8bn fund for strategically important roads, such as Highways England motorways and major local routes.

The funding could pay for motorway improvements, upgrading key routes in local areas with congestion problems or poor links, and major new roads.

This funding boost for 2020 to 2025 far exceeds the £17.6bn during the previous five-years, and will amount to a 40 per cent increase to Highways England’s budget.

Funded by revenue from Vehicle Excise Duty, according to HM Treasury this will be the first time ever that ‘road tax’ will only be spent on roads.

Matthew Fell, chief UK policy director of the Confederation of British Industry, said: "A well-functioning road network is the lifeblood of day-to-day business and the UK has much work to do on this front.

"Investing so significantly in our roads could help ease the all too real delays that people face just getting to work and firms transporting goods to final destinations, let alone travel for any other reason.

"It is not just about providing the funds to create new networks, but to expand existing routes and simply fill the pot-holes that plague far too many roads in this country."

Click here and join us at 3pm today for our live coverage of Budget 2018 - you can read all the big announcements here first and put your questions to our panel of experts.

Marcus Brookes, head of multi-manager at Schroders, David Inglesfield, head of wealth at KW Wealth, and Andrew Gilbert, head of retirement at LV, will be on hand to answer questions and make sense of Mr Hammond's announcements for financial advisers.

emma.hughes@ft.com