The Chancellor, Philip Hammond, prepared Britain for “a brighter future” in his first Budget speech. Read our account of this speech.
The Chancellor acknowledged UK productivity remains “stubbornly low” and that young people continue to leave education without the skills needed for today’s labour market, before arguing the Budget was “building the foundations of a stronger, fairer, more global Britain” and providing “a strong and stable platform” for Brexit negotiations.
After setting out the economic context and summarising its policy decisions, the Budget had three sections:
- productivity; and
- public services and markets
"The best place to start and grow a business"
In his speech the Chancellor set out his ambition for the UK “to be the best place in the world to start and grow a business”, highlighting the downward path of corporation tax to 17 per cent in 2020, as well as committing to reducing the administration required to secure research and development expenditure credits and increase awareness of the scheme (paragraph 3.12). On business rates, support is to be given to small businesses losing Small Business Rate Relief, while local authorities are to share £300m to allow them to support “individual hard cases” in their areas (paragraph 3.16) and pubs with a rateable value below £100,000 will benefit from a £1,000 business rate discount (paragraph 3.17).
Rising taxes for the self employed
However, the most striking change was to taxation of the self-employed, with Class 4 National Insurance Contributions (NICs) rising one per cent in April 2018 and again the following year to reach 11 per cent in 2019 (paragraph 3.5). As previously announced, Class 2 NICs will be abolished from April 2018, so that NICs will now be paid by all self-employed workers with profits above £16,250 (paragraph 3.6). Consultations are to be launched in two different forms of remuneration, including benefits in kind, accommodation benefits and employee expenses (paragraph 3.7).
From April, the VAT registration threshold will rise to £85,000, with the deregistration threshold rising to £83,000 (paragraph 3.36).
Skills & re-training
The Budget restates that “it is essential that the UK overcomes the persistent challenge of weak productivity” and set out new actions to be taken in addition to those set out in the Industrial Strategy Green Paper. To address the skills aspects of low productivity the Budget will introduce T levels from 2019 to “increase the number of programme hours of training for 16-19 year olds on technical routes” to an average of over 900 hours a year, including “high quality industry work placements” (paragraph 4.11).
Lifelong learning pilots and return to work support are to be funded “because changing labour markets will mean that re-training is vital”, with part-time and maintenance and doctoral loans also to be made available (paragraph 4.12).
The Government will spend £100m over four years “to attract the brightest minds to the UK” and £250m from the National Productivity Investment Fund (NPIF) to continue to build the pipeline of high-skilled research talent “necessary for a growing and innovative economy” (paragraph 4.25).
The Budget also provided details of how the NPIF is to be used, including a £740m investment in digital infrastructure, with £200m to be invested from this year in “a programme of local projects to test ways to accelerate market delivery of full-fibre broadband networks” (paragraphs 4.18 and 4.20). The Government’s 5G Strategy was launched alongside the Budget to help the UK become “a leader in the next wave of mobile technology and services” (paragraph 4.19).
The first wave of challenges funded by the Industrial Strategy Challenge Fund will be in the development, design and manufacture of batteries for electric vehicles; artificial intelligence and robotics; and accelerating patient access to new drugs and treatments (paragraph 4.24).
The Chancellor announced the publication of the Midlands Engine report, following the launch of the Northern Powerhouse Strategy at last year’s Autumn Statement. The Budget also announced a new Memorandum of Understanding on further devolution to London (paragraphs 4.27 and 4.28).
Legislation will be brought forward to reduce the regulatory burden on small co-operatives by aligning the full audit threshold with companies (paragraph 5.10).
The Chancellor’s speech can be found here: https://www.gov.uk/government/speeches/spring-budget-2017-philip-hammonds-speech
The Budget and associated documents can be found here: https://www.gov.uk/government/publications/spring-budget-2017-documents
Haines Watts give post Spring Budget overview
Buckinghamshire Business First Ambassador's Haines Watts will deliver an overview of the economy, post Spring Budget, at our Focus on Funding event on Wednesday 22nd March.
This event is sold out, but if you'd like to be placed on the waiting list we will get in touch with you if a place becomes available.
To get onto the waiting list, visit the event page, scroll to the bottom, and click on the pink 'Waiting List' button.