Spring Statement heralds the ‘light at the end of the tunnel’

Spring Statement heralds the ‘light at the end of the tunnel’

Chancellor Philip Hammond has presented his first Spring Statement, with something of a spring in his step.

Responding to the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the economy is expected to grow at the slightly faster rate of 1.5% in 2018.

Debt and borrowing have been revised downwards, and inflation is also predicted to fall back down to the Bank of England’s 2% target over the coming 12 months. The Chancellor suggested that the UK’s public finances have reached a ‘turning point’.

While openly challenging his own reputation as a pessimist, the Chancellor rejected calls to ease the squeeze on spending, asserting that UK debt remains ‘too high’ and heralding the government’s ‘balanced approach’. However, he did pave the way for potential increases in public spending from 2020 onwards, revealing plans for a detailed Spending Review in 2019.

Mr Hammond also used the Spring Statement to report on the progress made on a number of the measures previously announced at the Autumn Budget.

Having previously announced that business rates revaluations will take place more frequently, the Chancellor has now brought forward the next revaluation by a year, to 2021. He also revealed that an estimated 60,000 people have so far benefitted from the stamp duty land tax exemption introduced for first-time buyers in the Autumn Budget.

With Brexit negotiations ongoing, the Chancellor confirmed that over £1.5bn has been allocated to departments and devolved administrations in preparation for the UK’s exit from the EU. He also announced the first allocation of funding from the Challenge Fund, which will provide money to support the roll out of full-fibre broadband to 13 areas of the UK.

The Chancellor also committed more than £500m a year to support the new post-16 T-Levels, with £50m a month being made available to help employers prepare for T-Level work placements.

Turning to future changes to the tax system, the Chancellor launched consultations on a number of key areas, including the impact of the VAT registration threshold on small businesses, tackling single-use plastic waste, and new incentives to encourage the ‘great British white van driver’ to go green.

2018 Spring Statement – the economic picture

2018 Spring Statement – the economic picture

In his Spring Statement speech, Chancellor Philip Hammond responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).

The OBR forecasts that the UK economy will grow at a faster pace than previously predicted, anticipating that GDP growth will be 1.5% in 2018 – a rise from the figure of 1.4% that was previously predicted.

However, the OBR predicts that growth will slow in 2019, subsequently picking up over the following three years. It also revealed that the average growth rate over the forecast remains unchanged from November, at 1.4% a year.

Borrowing is set to fall over the coming years, with last year’s figure of 2.2% of GDP predicted to fall to 0.9% in 2022, with debt as a percentage of GDP also set to fall each year, within the same time frame.

In regard to the UK’s budget deficit, the OBR expects a figure of £45.2 billion this year – £4.7 billion less than previously predicted.

The OBR stated that the government’s headroom against its fiscal targets is ‘virtually unchanged’.

2018 Spring Statement – the political reaction

2018 Spring Statement – the political reaction

Chancellor Philip Hammond delivered the 2018 Spring Statement to the House of Commons, stating that the government has ‘made solid progress towards building an economy that works for everyone’.

The Office for Budget Responsibility (OBR), which produced the latest UK economic forecasts, stated: ‘The economy has slightly more momentum in the near term, thanks to the unexpected strength of the world economy, but there seems little reason to change our view of its medium-term growth potential.’

The Shadow Chancellor, John McDonnell, lambasted the Chancellor’s Statement, saying: ‘Today we have the indefensible spectacle of a Chancellor congratulating himself on marginally improved economic forecasts, while refusing to lift a finger as councils go bust, the NHS and social care are in crisis, school budgets are cut, homelessness has doubled and wages are falling.’

Mr McDonnell labelled the Chancellor’s so-called complacency as ‘astounding’, stating that the UK faces a ‘crisis’ in every public service.

He called for Mr Hammond to ‘act now’ in order to help public service workers, such as doctors and nurses, who are ‘struggling and being asked to do more’ while 100,000 NHS posts go unfilled.

Meanwhile, Vince Cable, leader of the Liberal Democrats, said that the OBR’s latest forecast is ‘a long way behind’ the figures estimated in March 2016, before the EU referendum.

He also called for the government to ‘be honest with the public’ in regard to the tax rises that will be necessary to fund the NHS and Britain’s social care, police and school systems.

2018 Spring Statement – the business reaction

2018 Spring Statement – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Spring Statement speech.

The Federation of Small Businesses (FSB) gave a broadly positive response, and welcomed the Chancellor’s commitment to tackling the issue of late payments to small firms. Mike Cherry, FSB National Chairman, stated: ‘The Chancellor is absolutely right to commit the government to eliminate the scourge of late payments, which place cruel financial pressure on more than eight out of ten small businesses.

‘The Chancellor explicitly put himself on the side of the UK’s millions of small businesses and self-employed.’

The response from the British Chambers of Commerce (BCC), however, was decidedly lukewarm. Commenting on the speech, Dr Adam Marshall, Director General of the BCC, said: ‘As deficit and debt levels improve, the Chancellor must resist calls to pour money into politically-attractive, short-term spending priorities.

‘A far stronger push is needed to fund and fix the fundamentals here in the UK over the coming months, and business wants the Chancellor to use his Autumn Budget to double down and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK’s energy security and build more houses.’

Meanwhile, the Confederation of British Industry (CBI) praised the Chancellor for backing British businesses to ‘secure the UK’s future prosperity in a new economy’.

Rain Newton-Smith, Chief Economist at the CBI, said: ‘It’s great to see an upgrade in the state of our public finances, and rightly sensible to set more aside for a rainy day with Brexit uncertainty still weighing on the economy.

‘The CBI has long called for just one Budget in a year, creating more room for the government and business to get to work. But the Spring Statement is still important, and this one has proved more than welcome in setting the tone and vision for the country’s economic future.’

2018 Spring Statement – what to expect

2018 Spring Statement – what to expect

Chancellor Philip Hammond will deliver his first Spring Statement today at 12.30pm. We will keep you up to date on the latest forecasts, and a full summary will appear on our site tomorrow morning.

The Chancellor will respond to the latest economic and public finance forecasts from the Office for Budget Responsibility (OBR), and announce some areas for consultation on the longer-term tax challenges.

Business groups, including the Trades Union Congress (TUC), have called on the Chancellor to take necessary action to help to boost UK growth, raise wages and invest in public services. TUC General Secretary, Frances O’Grady, said: ‘The government is paying too little attention to major problems in the economy.

‘The Chancellor should not wait until the Autumn Budget to act. We need urgent action to strengthen the economy and get wages rising.’

Meanwhile, the Federation of Small Businesses (FSB) has urged Mr Hammond to reinforce his commitment to give business rates refunds to those firms adversely affected by the so-called staircase tax, and retain his promise to abolish Class 2 national insurance contributions (NICs).

Research suggests average UK small business owed £63,000 in late payments

Research carried out by commercial data provider Dun & Bradstreet has suggested that the average UK small business is owed £63,881 in late payments.

A further 11% of small firms are owed between £100,000 and £250,000 in such payments, Dun & Bradstreet found.

A lack of payment has created cashflow issues for 35% of firms, whilst 29% of businesses have to delay paying other suppliers as a result of late payments. A worryingly high 58% of businesses stated that late payments put their business at risk of failure, Dun & Bradstreet found.

In addition, 36% of firms don’t perform thorough credit checks on their clients. Dun & Bradstreet urged businesses to make sure that they have detailed knowledge of a client’s payment behaviour prior to entering into a contract with them.

Commenting on the matter, Edward Thorne, UKI Managing Director at Dun & Bradstreet, said: ‘Although initiatives like the Prompt Payment Code are helping to highlight the issue, late payments pose a very real risk and can have a significant impact on the financial success of smaller businesses.’

TUC analysis of gender pay gap suggests women ‘work for free for two months’

TUC analysis of gender pay gap suggests women ‘work for free for two months’

A Trades Union Congress (TUC) analysis of gender pay inequality has suggested that, on average, women have to wait 67 days before they get paid, when compared to the average man.

The TUC data was published on Women’s Pay Day – the day when the average female worker ‘starts to be paid the same rate’ as the average male employee, said the organisation.

The analysis found that, in some industries, large pay discrepancies exist: in education, the current gender pay gap is 26.5%; in health and social work, the gender pay gap is 18.9%; and in finance and insurance, the gender pay gap is 35.6% – constituting one of the biggest differences.

The current average gender pay gap for full-time and part-time employees in the UK stands at 18.4%, the TUC stated.

New rules introduced from 6 April 2017 mean that large businesses are required by law to publish their gender pay gap figures on their website. Voluntary and private sector employers with 250 employees or more must publish their figures by 4 April 2018. Public sector employers must publish their figures by 30 March 2018.

TUC General Secretary, Frances O’Grady, said: ‘Companies publishing information on their gender pay gaps is a small step in the right direction, but it’s nowhere near enough. Women in the UK will only start to get paid properly when we have better-paid part-time and flexible jobs. And higher wages in key sectors like social care.’