Autumn Budget 2017
The Chancellor of the Exchequer Philip Hammond delivered his budget speech today at its new place in the calendar. The budget was, as many predicted, low on surprises, with perhaps the biggest headline grabber coming at the very end of his speech; an announcement that stamp duty will be abolished for first time buyers totally on house purchases up to £300,000. This was Mr Hammond's clear attempt to woo young voters, many of whom declared their support for Labour at this year's general election. The decision will allow buyers to save up to £5,000 on a house purchase and was met with cheers in the House of Commons. However, critics claim that the actual benefit for first time buyers will be limited, given that almost a third of purchases last year fell below the stamp duty threshold anyway and three quarters of purchases cost less than £250,000. Still, Mr Hammond's commitment to tackle the problem of young people struggling to get onto the housing ladder did not end there; amongst other initiatives he pledged £44bn of capital funding to build 300,000 homes by the mid 2020's, £8bn of financial guarantees to support private housebuilding, a £2.7bn housing infrastructure fund and £1.1bn for urban regeneration. In addition to this, £34m has been set aside to train new construction workers.
The theme of 'investing in the future' was evident in other parts of Mr Hammond's speech, with £500m promised for spending on technological initiatives like artificial intelligence, 5G and full fibre broadband; all areas seen as essential in order to remain at the forefront of science and technological advancement.
He built further on this by allocating funding to the development of electric cars, with a £400m infrastructure fund and £100m plug-in car grant, while also confirming that charging cars at work would not be classed as a benefit in kind for employees. In a further statement of intent, Mr Hammond announced plans to move diesel powered cars that don't meet the latest standards up by one tax band, and increase company car tax on diesel vehicles by 1%. This will finance a £220m 'Clean Air Fund' to help local authorities reduce air pollution.
The commitment to create a 'Northern Powerhouse' and 'Midland Engine' was given a boost with the announcement of a £1.7bn 'Transforming Cities Fund', dedicated to improving infrastructure and distributing wealth and investment more evenly across the UK. Half of this will be granted to the six elected Metro Mayors, with the other half up for grabs. On top of this, The Chancellor promised £100bn of discount lending to local authorities to support high value infrastructure projects.
As has become common in budget speeches, a further £2.8bn has been promised to the NHS over the next three years, although this falls some way short of the £350m a week pledged by Brexit campaigners!
There was little in this budget for financial planners, with no significant taxation changes (save a freeze on indexation allowance for businesses from January 2018) or mention of pensions. Many will breathe a sigh of relief at that however!
Some positive news was delivered on business rates and Mr Hammond announced that the VAT threshold will remain at £85,000. It was suspected that this threshold, which is high compared to other major European countries, could be reduced, but the Chancellor shied away from making any changes that could be seen as a tax on small businesses or tradesman following his Self Employed National Insurance fiasco in the Spring. Instead he decided to 'launch a consultation' into the issue.
A budget without too many shocks it would seem then, and while encouraging news was delivered about the continued reduction of our deficit versus GDP and the national debt finally levelling off, growth and productivity have been revised downwards over the next five years. This was warned of though ahead of the independence referendum and should come as surprise to no one, including Jeremy Corbyn, who firmly backed the Remain campaign. The irony therefore of him maligning the Conservative government for these downward reductions in his response speech will not be lost on many!
Article written by Chris Bourne