The Spring Statement
The Spring Statement from the British Government, also known as the "mini-budget", is one of the two statements HM Treasury makes each year to Parliament upon publication of economic forecasts. Uncertainty around Brexit overshadows all the Chancellor plans and he made a plea “to exit the EU in an orderly way, and create a relationship that allows Britain to flourish”.
Despite cutting growth forecasts, growth in 2019 has been cut significantly, to just 1.2% from 1.6% in the last budget, Philip Hammond says he will “slay once and for all the twin demons of low productivity and low wages and build an economy that works for everyone”. But, of course, tax cuts and spending rises depend on a smooth Brexit. Mr Hammond told Parliament that leaving the EU with an agreement would give the UK real choices on how much of a “deal dividend” could be spent on public services or tax cuts.
Investing for the future
The plan is to invest in infrastructure, technology, housing, skills, and green energy, to capitalise on the post-Brexit opportunities ahead and there is optimism in evidence:
- A £700 million package of reforms which will help small businesses take on more apprentices, announced in the autumn Budget, is to be brought forward to the start of the new financial year in April.
- The Office for Budget Responsibility in its March forecast predicted 600k new jobs and continuous growth over the next five years. Mr Hammond said the economy had "defied expectations" as wages were expected to keep growing at rates of above 3% over the next five years.
The Daily Telegraph was not impressed: It puts the economy on course for its weakest year since 2009. Trade will drag on growth. Employment will rise, but by around 100,000 less than hoped in the years ahead, despite the Chancellor hailing the forecasts.
Planned measures to make the UK more productive and keep Britain at the “forefront of technological revolution” are welcome but no policy or tax changes were announced in the Spring Statement. There are changes in the offing:
- Millions of Britons will receive a boost to their take-home pay from April, when the personal tax allowance increases to £12,500 and the higher-rate tax threshold rises to £50,000.
- In the coming months, the government will issue draft legislation for Enterprise Investment Schemes (EIS) giving HMRC the power to set “appropriate conditions and approve funds”. There will also be a call for evidence on the use of social investment tax relief (SITR) to probe “why it has been used less than anticipated, and what impact it has had on access to finance for social enterprises”.
- Businesses will benefit from a £700 million package of reforms to enable them to take on more apprentices.
- For small businesses the Chancellor announced a crackdown on late payments from big companies to small suppliers. The practice is estimated to put 50,000 small- and medium-sized firms out of business a year.
- Large companies will see a consultation on plans to force the audit committees to publish their payment practices in their annual report and accounts.
- There are also plans for a new digital reporting system for tax assessment and research into how HMRC can make it easier to amend tax returns.
Posted: Friday 15 March 2019