Brexit may hang heavy over Chancellor Philip Hammond, but here’s PQ magazine's Graham Hambly’s summary of the Spring Statement
The UK economy continues to grow, with wages increasing and unemployment at historic lows, providing a solid foundation on which to build Britain’s economic future, the Chancellor said today (13 March 2019) in his Spring Statement.
With borrowing and debt both forecast to be lower in every year than at last year’s Budget, the Chancellor set out further investments in infrastructure, technology, housing, skills, and clean growth, so that the UK can capitalise on the post-EU exit opportunities that lie ahead.
The Chancellor also confirmed that the government will hold a Spending Review which will conclude alongside the Budget. This will set departmental budgets, including 3-year budgets for resource spending, if an EU exit deal is agreed. Ahead of that, the Chancellor announced extra funding to tackle serious violence and knife crime, with £100 million available to police forces in the worst affected areas in England and Wales
The Spring Statement is an opportunity for the Chancellor to update on the overall health of the economy and the Office for Budget Responsibility’s (OBR) forecasts for the growth and the public finances. He also updates on progress made since Budget 2018, and launches consultations on possible future changes for the public and business to comment on. The Spring Statement doesn’t include major tax or spending changes – these are made once a year at the Budget.
What you need to know about the Spring Statement
- On late payment, company audit committees will be required to review and report on their late payment practices. That means coming clean on their record in their annual accounts. A review of payment practices will also take place.
- The Treasury will fund the provision of free sanitary products in schools and colleges from next year. This will, says the Chancellor, help to tackle “period poverty at school”.
- To help small businesses cut their carbon emissions and their energy bills, there has been a call for evidence on the Business Energy Efficiency Scheme.
- Update to the apprenticeship deal announced at Budget: From 1 April employers will see the co-investment rate they pay cut by half from 10% to 5%. At the same time as levy-paying employers are able to share more levy funds across their supply chains, with the maximum amount rising from 10% to 25%.
- It was confirmed that Making Tax digital (MTD) will not be mandated for any other taxes or businesses in 2020. From 1 April 2019 VAT registered businesses with a turnover over the VAT threshold (£85,000) will be required to maintain digital accounting records and file their VAT returns directly from MTD compliant software. The government also confirmed a light touch approach to penalties in the first year. There is no soft landing for late payment penalties (default surcharge).
- The government has appointed Professor Arindajit Dube to undertake a review of the latest international evidence on minimum wage, to inform future National Wage policy after 2020.
- From June 2019 citizens of the US, Canada, New Zealand, Australia, Japan, Singapore and South Korea will be permitted to use e-gates at UK airports and at Eurostar terminals. Landing cards will also begin to be abolished from June 2019.
- Research institutes and innovating businesses will benefit from an exemption for PhD-level occupations from the cap on high-skilled visas from this autumn.
- The government has written to the CMA asking them to carry out a market study of the digital advertising market. This was a recommendation of the Furman Review.
- A new £3bn affordable homes guarantee scheme, to support delivery of around 30,000 affordable homes.
- To help maintain our tech edge he announced a £79m investment in ARCHER2, a supercomputer to be hosted at Edinburgh University.
- UK growth is forecast to grow by 1.2% this year and 1.4% next year 2020. Then its 1.6% in 2021, 2022 and 2023.
- Borrowing this year will be £3bn lower than forecast. Public debt will fall to 73% of GDP by 2023/24.
- The unemployment rate of 4% is the lowest since 1975. Since 2010 there are over 3.5m more people in work, and the OBR forecasts employment will increase by a further 600,000 by 2023.