Welcome to Hitachi Capital Vehicle Solutions’ live blog of Philip Hammond’s Spring Budget.
Here we will be adding commentary throughout the day to give insight into the topics that the Chancellor will be covering in this final Spring Budget.
Hammond rises to deliver what will be his first and last Spring Budget. His opening remarks are defiant, citing strong economic growth. It's striking, though, how much he's already mentioning Brexit. This Budget, he says, will provide a "strong and stable platform" for the Brexit negotiations.
The Chancellor celebrates the fact that the UK had the second fastest growth of major advanced economy in 2016, but it's not all happy tidings. He also lists the challenges facing our country's economy: debt, productivity, the skills gaps, and the squeeze on families.
Now Hammond is getting into what he jokes is the "spreadsheet" bit. The Office for Budget Responsibility has upgraded its growth forecast for 2017 quite significantly, from 1.4% to 2%. But the forecast for 2018 has been downgraded from 1.7% to 1.6%.
He's rattling through the forecasts for employment and inflation, but really only one fact stands out from them: wages are forecast to rise faster than prices. This relieves the squeeze on family budgets that has persisted since the financial crisis.
This year's higher growth forecast has positive ramifications for the public finances: the OBR's forecast for borrowing in this financial year has dipped from £68.2 billion to £51.7 billion. But it actually rises next year to £58.3 billion.
That's the fiscal forecasts done with; now Hammond is turning to his actual policies. He starts this section by claiming that the UK is the "best place in the world to start and grow a business" - a possible clue to the theme of this Budget.
Support for Small Business
SMEs were one of the major talking points ahead of this Budget, particularly with the planned revaluation of properties for the purposes of business rates. Hammond is trying to alleviate any of these fears. He begins by announcing a delay to quarterly reporting for small businesses, before getting into the business rates themselves. There will be three measures to address businesses' concerns:
- Small businesses losing rate relief will get an additional cap
- £1,000 Business Rates discount this year for 90% of pubs
- Give Local Authorities a £300m fund for discretionary relief for "hard cases"
Taken together, there will be a £435 million cut in business rates for those businesses facing the biggest rises when the revaluation takes effect in April.
Now we're on to what will likely be one of the most controversial parts of the Budget: its treatment of self-employed people. The Chancellor observes the number of these people has risen greatly, and that the Government wants to support them. But he also highlights the significant difference in National Insurance Contributions made by employed and self-employed people on the same incomes - and says that this difference is "no longer justified". From April 2018, the main rate of Class 4 NICs for self-employed people will rise by 1 percentage point to 10%, and by another 1 percentage point in April 2019. This amounts to an average tax increase of 60p per week for self-employed people.
Vehicle Excise Duty
Hammond announces some changes around VED, although there may be more in the Red Book itself. He's freezing the VED rates for hauliers for another year, as well as the HGV Road User Levy.
Hammond spends a fair amount of time talking about the increase in Income Tax thresholds, but don't be fooled - these were previously announced last March.
"This Government recognises that sometimes markets fail people." It's a simple - and honest - sentiment, but one that previous Conservative chancellors might have shied away from. Not so Hammond. He follows it up by announcing new measures to protect consumers, including simplifying terms & conditions. A Green Paper will soon set out more comprehensive plans.
The Productivity Gap
Much as he did in his Autumn Statement, Hammond is making a connection between the UK's productivity problem and its infrastructure - improving the latter should help with the former. In that spirit, he's making more money available for various infrastructure projects, including £270m for the research and development of new technologies such as robotics and driverless cars, and a £690m competition fund for Local Authorities to tackle urban congestion. We'll look out for the details in the Red Book.
We're familiar with George Osborne's Northern Powerhouse. Will we get used to Philip Hammond's Midlands Engine? A strategy document will be published tomorrow, with ideas for improving infrastructure and productivity in the centre of England. On a similar front, the Chancellor has also allocated £90 million to the North and £23 million to the Midlands to address transport pinch points.
Training and Apprenticeships
On to training and apprenticeships. Hammond says that, through previously announced policies, the Government will be supporting 3 million apprenticeships by 2020. But he also has something new: T-Levels, a clearer system of qualifications recognised by employers. 16-19 year-old technical students will get 50% more hours of training, so that "when they qualify, they are genuinely work-ready".
There will also be maintenance loans for those on technical courses, much like the ones that are available to university students.
After dwelling a while on the NHS, Hammond goes into his peroration. Its general theme is the "continued resilience of the British economy," as well as the Government's commitment to getting on with its economic plan. In truth, and as we expected, this was a fairly slim Budget speech from the Chancellor - although there are still some significant policies to discuss. We're going to take a look at them now in the Red Book itself. Stay tuned for more coverage on this blog.