Chris Bourne's Budget Press Write-up 2018PIA News Article
Chancellor Philip Hammond struck an upbeat tone with his Autumn Budget speech today, which was delivered at the rather unusual time of 3.30pm on a Monday afternoon. Keen to avoid the inauspicious regular Wednesday slot as it would have made for easy Halloween related headlines, he perhaps needn't have worried, with good news being delivered early in his speech around improved growth forecasts. The OBR revised their forecast of 1.3% GDP growth in 2019 upwards to 1.6%, then 1.4%, 1.4%, 1.5% and 1.6% over the following four years.
Mr Hammond reinforced the fact that 3.3m more people are now in work than at the start of the Conservative government in 2010, and a further 800,000 jobs are expected to be created by 2023. Day to day government spending will increase at an average rate of 1.2% over the next five years, with further increases planned if the UK negotiates a good exit deal with the EU.
With the wind of larger than expected tax revenues in his sails, Mr Hammond was able to announce a significant increase in NHS spending of £20.5bn over the next five years; a key manifesto pledge of the Prime Minister in her ill-fated general election campaign.
A £1bn spending package for the Ministry of Defence was announced to help maintain the pace of the Dreadnought programme, as well as £160m in counter terrorism police funding and £10m to be donated to the Armed Forces Covenant Trust.
There was good news for education too, with an immediate 'in year' £400m bonus to be granted to schools for spending on equipment - an average of £10,000 per primary school and £50,000 per secondary school.
In addition to this, £420m will immediately be made available to Highways Authorities to fix pot-holes and carry out other road and bridge repairs.
The Chancellor announced further plans for spending on productivity and innovation, with £1.6bn of investment into areas such as nuclear fusion and quantum computing, and £150m to be spent on attracting the brightest scientific and technological talent to these shores.
Business spending was given a boost with the announcement that the Annual Investment Allowance will be upped from £200,000 to £1m for two years until the end of 2020 in order to 'stimulate business investment', and a permanent tax relief for new non-residential structures and buildings was also announced.
Smaller businesses benefitted from a reduction to the contribution necessary towards the apprenticeship levy, from 10% to 5%, as well as a freeze on the VAT registration threshold amongst other welcome measures.
A new digital services tax was announced to target the unfair avoidance of tax by large digital platforms on their UK based revenues. This will be geared towards larger companies generating £500m+ in global income and is projected to raise £400m a year in tax to the exchequer.
A large support package for the ailing high street sector was announced, with a total of £675m to be made available to local governments in order to regenerate under-used retail space and to convert some of this for residential use. Further to this, Mr Hammond announced plans for business premises with rateable values of less than £51,000 to have their rates reduced by a third.
Next in the spotlight was the housing sector, where the Chancellor announced that stamp duty is to be abolished on all shared ownership properties valued up to £500,000 and will be applied retrospectively to the date of the last Budget. An additional £500m was also pledged to the Housing Infrastructure Fund, with the aim of unlocking a further 650,000 homes.
After announcing further boosts to the Transforming Cities Fund (£2.46bn) and capital injections for the Scottish Government (£950m), Welsh Government (£550m) and Northern Ireland Executive (£320m), Mr Hammond moved onto environmental matters with a new tax on imported plastic announced (where less than 30% is re-usable). £10m was also pledged to dealing with abandoned waste sites.
Good news for motorists as the fuel duty was frozen for the ninth consecutive year, with further freezes also granted on beer, cider and spirits. Wine duty will increase by RPI and tobacco will increase by the now standard inflation plus 2%.
Another headline grabber was the announcement of a £1.7bn uplift to the controversial Universal Credit scheme, which will see the annual work allowance increased by £1,000 per qualifying claimant. The National Living Wage is also to increase by 4.9% from £7.83 an hour to £8.21 an hour.
Mr Hammond left it late in his speech to announce possibly the widest ranging tax boost - an increase in the Personal Allowance to £12,500 and the higher rate tax threshold to £50,000 from April 2019; a year earlier than planned. This results in an income boost of £130 for each basic rate taxpayer and a tax cut for 32m people. 1.7m people have been lifted out of paying tax altogether since 2010, and 1m out of paying higher rate tax.
The Chancellor made no announcements on pension taxation during this Budget, despite the anticipation that he may look to raise revenue by reducing the Annual Allowance.
A Budget marked by lots of giveaways it would seem, no doubt with the aim of appeasing the masses ahead of what will no doubt be a tumultuous period. It remains to be seen however whether this giveaway spirit can be carried forward to the next Budget.
Following Chris Bourne's budget day summary we have now created the attached budget guide