The Spring 2018 Annual Budget Summary Statement from Chancellor Philip Hammond on 13 March 2018 delivered a “steady as you go” approach.
As you would expect, it was peppered with party political jibes which were no doubt intended to lift the spirits of his own party and dismay the opposition.
There was very little “promised” in terms of new tax or other strategic items that we are used to in a Budget speech; we will need to wait until autumn 2018 for news of changes to government spending and changes to the tax code.
The new-style spring statements are intended to deliver:
• An update on the health of the UK economy and Office for Budgetary Responsibility (OBR) forecasts,
• An update on progress made since Autumn Budget 2017, and
• Invitations for interested parties to give their views on proposed policy changes.
Summary of Spring 2018 Annual Budget Summary:
1. Economy and fiscal forecasts
- Indicators for GDP growth, manufacturing output, and employment are forecast to rise.
- The indicators for inflation and government borrowing are forecast to fall.
The Chancellor’s message in this part of his presentation was upbeat but cautious. He would consider relaxing his expenditure criteria, but only if the positive indicators continued. His consistent message was “there is a light at the end of the tunnel, but caution is still required”.
2. Progress since Autumn Budget 2017 items cited included:
- Housing challenges: progress is being made to meet housing needs by working with local authorities and other parties. Mention was made of the 60,000 first time buyers who have benefitted from the stamp duty concessions announced last year.
- Helping households: cited increases in basic tax allowances at the last budget and increases in the National Living Wage to £7.83 per hour.
- The Chancellor also announced that the next business rates revaluation will take place a year earlier than planned, in 2021, with further reviews every three years starting 2024.
- Improving transport in English cities; plans to allocate the £1.7bn of funding announced in the Autumn Budget 2017. Half the funding has been allocated to Combined Authorities with mayors, the balance to cities across the UK via an invitation to bid.
- Improving the UK’s digital connectivity. The aim is to roll out full-fibre to local areas.
3. Inviting views on future changes to the tax system.
These will include:
- Reducing single-use plastic waste through the tax system. This will look at ways to reduce the impact of plastic waste in our environment such as disposable plastic cups, cutlery and foam trays. Some of the tax revenue raised will be used to fund research into new ways to encourage a more responsible use of plastic.
- Making sure multinational digital businesses pay a fair share of tax. This is an ongoing attempt to ensure that the larger digital players pay tax in the UK on sales they make in the UK.
- Seeking views on the role of cash in the new economy. Will cash become less relevant as digital payment processes become more widely used? This and the prevention of the use of cash to avoid tax and to launder the proceeds of criminal activity will be opened to a wider debate.
- Supporting people to get the skills they need. Improving skills to benefit growth in the economy by investing in upskilling and retraining, especially by the self-employed.
As mentioned in our introduction today, there was much “padding” to the Chancellor’s presentation, but the overall impression was a “steady as you go” approach. It will be interesting to see how wider political issues, such as the forthcoming Brexit negotiations, will play their part in the shaping of future fiscal policy. Only time will tell.
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