SPRING IN HIS STEP
He said he didn’t want it to be the main event - that the substantive annual Budget for the UK should be held in the Autumn. He didn’t disappoint.
No rabbits out of hats today. No headline-grabbing new policies. Instead, there was comedy. The jokes and jibes against Labour flowed as the Chancellor confirmed the different commitments that had already been briefed to the media: social care, business rates, T-levels, free schools and industrial strategy funding.
The Tory backbenches will no doubt claim betrayal with the rise in National Insurance contributions for the self-employed but the Chancellor should be able to ride out that political squall.
But business would do well to dig a little deeper into the Budget bundle of documents. For there, hidden between the lines, was confirmation of changes afoot; new taxes are seemingly on the way.
Time and again in the Red Book, the Treasury says it will be issuing a “call for evidence” to review the effectiveness of a series of taxes – and we all know what that is a precursor to. A possible new tax on the digital economy should set alarm bells ringing. So too should a green paper on consumer markets.
Today’s NHS giveaways were funded by-and-large on a technicality: changes to the personal injury discount rate mean higher insurance premiums and thus a significant revenue-raising measure.
But don’t be seduced by the gags. Next time, it looks like business will be in the firing line.
Growth: Last year, UK GDP growth was second only to Germany. The OBR has now upgraded its forecast for growth this year from 1.4% to 2%, but stuck to its lower projections for post-Brexit.
Employment: The number of people in employment is set to grow, with a further two-thirds of a million people in work by 2021.
Inflation: The OBR has forecast inflation at 2.4% this year, falling to 2.3% in 2018 and 2% in 2019.
Public sector borrowing: The OBR has substantially revised down its short term borrowing forecast to £16.4bn; lower than was forecast in the Autumn Statement at £51.7bn.
Debt: The OBR has now forecast debt will rise to 86.8% this year, and further to 88.8% next year - 1.4% lower than forecast in the Autumn.
Corporation tax: The Chancellor reiterated that this will fall to 17% in 2020, “sending the clearest possible signal Britain is open for business”.
Making Tax Digital: He announced that a one year deferral on quarterly reporting for businesses with a turnover below the VAT threshold, at a cost of £280m.
National Insurance Contributions (NIC): There will be a consultation in the summer on the level of National Insurance (NI) paid by the self-employed. The main rate of Class 4 NICs for the self-employed will increase by 1% to 10% in April 2018; with a further 1% increase the following year.
Director/Shareholders’ tax: Tax-free dividend allowance will be reduced from £5,000 to £2,000 with effect from April 2018.
National Living Wage: In line with what was expected, the National Living Wage will rise to £7.50 in April.
Personal allowance: As expected, this will rise for the seventh year in a row to £11,500, and the higher rate threshold to £45,000.
NS&I bond: As announced in the Autumn Statement, this will be available from Autumn and it will pay 2.2% on deposits up to £3,000.
Universal Credit taper rate: This will be reduced in April from 65% to 63%.
Small businesses: Any business coming out of small business relief will see an additional cap, so that their rates will not increase by more than £50 a month. Subsequent increases will be capped at either the transitional relief cap or £50 a month.
Local pubs: There will be a £1,000 discount on business rate bills for all pubs with a rateable value of less than £100,000 - 90% of all pubs! However, this will be subject to state aid limits for businesses with multiple properties.
Fund for local authorities: A £300m fund will be made available to councils to allow them to offer discretionary relief to individual local cases.
Consumer interests: A green paper will be issued on protecting the interests of consumers. Ahead of that, government will take action on tackling unexpected fees and unfair clauses, simplifying terms and conditions, and giving consumer bodies greater enforcement powers.
R&D / SCIENCE
The Industrial Strategy Challenge Fund: the first wave of projects the fund will back include batteries for electric cars; AI and robotics for extreme environments (including energy, space and mining); and medicine manufacturing technologies.
R&D Tax Review: Following on from the Government’s review of the R&D tax regime (as part of the Industrial Strategy), it has accepted industry calls for a reduction in administrative burdens around the R&D tax credit scheme and will bring forward measures “shortly”.
Return to work support: £5m has been set aside for promoting “returnships” to the private and public sector – helping people back into employment after a career break.
Lifelong learning pilots: The Education Department will invest up to £40m in pilots to help people retrain and upskill throughout their working lives.
T Levels: Following on from Lord Sainsbury’s review of technical education, “T-Levels” will be introduced with programme hours increased by over 50% for 16-19 year olds in 2019/20. Maintenance loans will also be offered to those undertaking high level technical qualifications at the new Institutes of Technology.
Transport: £690m more will be allocated to local authorities, with £490m made available by early autumn 2017. The Budget also announced regional allocations of the £220m National Productivity Investment Fund (NPIF) investment for pinch points on the strategic road network, with details of individual schemes to be announced shortly.
Digital infrastructure: The NPIF will invest £740m in digital infrastructure by 2020-21, to support the next generation of mobile and broadband.
5G: The government’s 5G Strategy, published today, includes a new National 5G Innovation Network to trial new technologies. A new centre of 5G expertise within government will oversee this programme, working with public and private sector partners. We can also expect to see the government’s response to the National Infrastructure Commission’s Connected Future report and recommendations on 5G.
Full-fibre broadband: Starting in 2017, the government will invest £200m to fund a programme of local projects and leverage private sector investment in full-fibre broadband.
Offshore property developers: The Government will amend legislation to ensure that all profits realised by offshore property developers developing land in the UK, including those on pre-existing contracts, are subject to tax, with effect from 8 March 2017.
Strategies: The Government will shortly be announcing the Midlands Engine Strategy, and is continuing to build the Northern Powerhouse.
Agreement with cities: Government has committed to explore options for devolving greater powers to the GLA. The government is also in discussions with Greater Manchester, Edinburgh, and Swansea on deals.