By Lyndsey Hall
This afternoon’s Spring Budget was predominantly positive, an “upbeat budget” as Hammond called it. He started with a joke, as all great public speeches do, reminding us that the last Chancellor to scrap the Spring Budget, Norman Lamont in 1993, was sacked ten weeks later. In case you’re not aware, Hammond has announced plans to swap the Budget and Statement around from this coming Autumn, so we will have a second Budget 2017 later in the year.
Amidst the announcements this lunchtime, there was no mention of housing, which has been a hot topic for the government in recent years due a shortage of housing and lack of house-building. Corbyn was quick to point this out in his response after Hammond’s speech.
So, what did Hammond say? Let’s look at the key points.
Economy
The good
- UK second-fastest growing economy in G7 in 2016
- Growth forecast for 2017 upgraded from 1.4% to 2%
- A further 650,000 people expected to be in employment in 2021
The bad
- GDP downgraded to 1.6% in 2017, 1.7%, 1.9%, then 2% in 2021-22
- Inflation forecast to rise to 2.4% in 2017-18 before falling to 2.3% and 2% in subsequent years
Public Borrowing
The good
- Annual borrowing £51.7bn in 2016-17, £16.4bn lower than expected
- Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, ten 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% by 2021-22
The bad
- Borrowing forecast to total £58.3bn in 2017, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21
- Borrowing still predicted to be £100bn higher by 2020 than forecast in March 2016
- Debt rose by 86.6% this year, but will fall to 79.8% in 2021-22
Personal Tax
The good
- Personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020
- No changes to income tax, VAT or NI categories other than self employed
The bad
- Main rate of Class 4 National Insurance contributions to increase from current rate of 9% to 10% in April and 11% in April 2019, raising £145m a year by 2021-22, at an average cost of 60p per week to self-employed
Alcohol, tobacco & fuel
The good
- No changes to planned increase of alcohol duties, rising in line with RPI inflation from March 13th
- Vehicle excise duty rates for hauliers and HGV Road User Levy frozen for another year
The bad
- New minimum excise duty on cigarettes based on packet price of £7.35
Pensions and savings
The bad
- Reduction in tax-free dividend allowance for shareholders and directors of small private firms from £5k to £2k, starting April 2018
Business
The good
- £435m for firms affected by increase in business rates, including £300m hardship fund for worst hit
- Increases for businesses losing existing business rate relief will be capped at £50 per month
- Pubs with rateable value less than £100k to get a £1k discount on rates
- A tax avoidance clampdown totalling £820m to include action to stop businesses converting capital losses into trading losses, tackle abuse of foreign pension schemes and introduce UK VAT on roaming telecoms services outside the EU
- Review of taxation of North Sea oil producers
Education
The good
- £300m to support 1,000 new PhD places and fellowships in STEM subjects
- Free school transport extended to all children on free school meals who attend a selective school
- Increased investment in schools of £216m
- New T-Levels introduced to give parity of esteem for technical education
- Number of hours of training for technical students aged 16-19 increased by more than 50%, including a high-quality, three-month work placement
Health & social care
The good
- £100m to place more GPs in A&E departments for next winter
- Extra £325m to allow first NHS Sustainability and Transformation plans to proceed
- Extra £2bn for social care over next three years, with £1bn available in the next year
- Long term funding to be considered, but so-called “death tax” on estates ruled out
Transport & infrastructure
The good
- Transport spending of £90m for north of England and £23m for Midlands to address pinch points on roads
- £270m for new technologies such as robots and driverless cars
- £16m for 5G mobile technology and £200m for local fibre broadband
- £250m in funding for Scottish Government, £200m for Welsh Government and £120m for Northern Ireland Executive
Women
The good
- New funding totalling £20m to support the campaign against violence against women and girls
- A further £5m committed to project to celebrate the centenary of women first getting the vote, and to educate young people about its significance
- Funding of £5m to support people returning to work after a career break
What are your thoughts on today’s announcements? If you have any questions about any of the changes and how they might affect you and your business, get in touch.
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