Chancellor Philip Hammond has announced that his first Spring Statement will be delivered on Tuesday 13 March 2018.
In the 2016 Autumn Statement, the Chancellor announced a major shake-up of the government’s fiscal timetable. This saw the abolition of the Autumn Statement, in favour of an Autumn Budget and a Spring Statement.
Commenting on the change, the government said: ‘A single Autumn Budget will mean tax changes are announced well in advance of the start of the tax year in which they will take effect.
‘There will be more time available to scrutinise draft tax legislation ahead of its introduction and commencement. Businesses and individual taxpayers should face less frequent changes to the tax system, helping to promote certainty and stability.’
In order to implement the changes, 2017 has seen two annual Budgets, with the ‘last ever’ Spring Budget having been delivered in March and the Chancellor’s first Autumn Budget having taken place a matter of weeks ago, on 22 November.
Mr Hammond had previously stated that he wished to ‘simplify’ the business of setting taxes and government spending, which had become ‘overcomplicated’.
The new Spring Statement will be used by the Chancellor as a way of responding to new economic forecasts produced by the Office for Budget Responsibility (OBR), and to discuss long-term issues ahead of the 2018 Autumn Budget.
The government has stated that it will retain the right to ‘make changes to fiscal policy at the Spring Statement, should the economic circumstances require it’. However, it also stated that ‘the norm will be that the Chancellor will only make significant tax or spending changes at the Autumn Budget’.
The government has launched a new savings bond, offering a ‘market-leading’ rate of 2.2%.
First announced in the 2016 Autumn Statement, the Investment Guaranteed Growth Bond (IGGB) is available to those aged 16 and over, and permits savers to invest between £100 and £3,000 at any time during the next 12 months.
The product is only available online: the government hopes that this will provide customers with a ‘simple way to apply for the bond and to manage their investment’.
Additionally, offering the bond online ‘reflects the changing nature of customer behaviour,’ the government stated. The IGGB can be purchased from the National Savings and Investments (NS&I) website.
Commenting on the launch of the IGGB, Simon Kirby, Economic Secretary to the Treasury, said: ‘From raising the ISA threshold to introducing the new Lifetime ISA, this government is committed to creating a nation of savers.
‘With its market-leading rate of 2.2%, the investment bond will provide a valuable boost for savers who have been affected by low interest rates.’
More information on the new savings bond can be found here.
The government has launched a new digital strategy intended to make Britain ‘the best place in the world to start and grow a digital business’ and to create an unrivalled digital economy that ‘works for everyone’.
A new Digital Skills Partnership will see the government, business, charities and voluntary organisations combine to provide digital skills and training opportunities for individuals and businesses.
The strategy includes a plan by Lloyds Banking Group to give face-to-face digital skills training to 2.5 million individuals, charities and small and medium-sized businesses by 2020, and plans by Barclays to teach basic coding to 45,000 more children and assist up to one million people with general digital skills and cyber awareness.
Tech giant Google has also pledged to help boost digital skills in seaside towns as part of their commitment to provide ‘five hours of free digital skills for everyone’.
There will also be various business-facing forums, competitions to incentivise innovation, and the creation of five international ‘tech hubs’ in emerging markets to develop partnerships between UK companies and local tech firms.
Karen Bradley, Secretary of State for Culture, Media and Sport, said: ‘We will work closely with businesses and others to make sure the benefits and opportunities are spread across the country so nobody is left behind. There should be no digital divide – every individual and every business should have the skills and confidence to make the most of digital technology and have easy access to high-quality internet wherever they live, work, travel or learn.’
The launch follows the announcement in the 2016 Autumn Statement of a £1 billion programme to accelerate the development and uptake of next generation digital infrastructure – including full fibre broadband plans and 5G.
Figures published by the Office for National Statistics (ONS) show that government borrowing totalled £6.9 billion in December 2016. Although this figure is slightly higher than many economists had predicted, it represents a drop of £0.4 billion compared to the previous year, and could see Chancellor Philip Hammond meet the deficit target set in his Autumn Statement.
In December, the Chancellor scrapped his predecessor George Osborne’s target of eliminating the budget deficit by 2020 and instead announced an updated Charter for Budget Responsibility which sets out new fiscal rules to bring the public finances into balance. Under the new plans, the government would borrow £68 billion over the full financial year to the end of April 2017.
The ONS revised the borrowing figure for November down from £12.6 billion to £11.3 billion, and the latest figures mean that borrowing for the year is £63.8 billion, which is £10.6 billion lower than for the same period in 2015. This should help Mr Hammond meet his deficit target.
A Treasury spokesman said the government had made ‘significant progress in repairing the public finances’, reducing the deficit from 10% of Gross Domestic Product (GDP) six years ago to 4%.
However, even if the Chancellor’s Autumn Statement target is met, Britain would still have one of the largest deficits among the world’s industrialised nations at around 3.3% of economic output.
Growth in the UK’s private sector remained steady in the three months to November, according to the latest Growth Indicator from the Confederation of British Industry (CBI).
The survey of 715 respondents across the distribution, manufacturing and services sectors showed the pace of growth rose to a balance of +9%, compared with +8% in the three months to October.
In addition, businesses across most sectors expect to see a slightly higher rate of growth over the next quarter (+11%).
Rain Newton-Smith, Chief Economist at the CBI, said: ‘The High Street has had a good month, even before we see the impact of Black Friday and Christmas shopping, whilst our manufacturers and services sector are seeing subdued growth.
‘Businesses will be pleased by the welcome measures in the Autumn Statement to unlock research and development spending, spur innovation and upgrade crucial infrastructure. By further prioritising spending, the government can seize the opportunities to deliver growth and prosperity across the UK’s regions and nations.’
Meanwhile, the IHS Markit/CIPS Purchasing Managers’ Index – an important indicator for the services sector – rose to 55.2, up from 54.5 the previous month. This represented the highest figure since January.
However, Chris Williamson, Chief Business Economist at IHS Markit, sounded a note of caution: ‘Rising prices – often linked to the weaker pound – are a big concern and suggest that inflation is set to lift higher. The past two months have seen the steepest rise in businesses’ costs for over five-and-a-half years. These higher costs will inevitably feed through to consumers in the form of higher prices.
The National Living Wage (NLW) has not adversely affected employment, the Low Pay Commission (LPC) has stated.
The LPC, the body that monitors low pay on behalf of the government, revealed that it has found ‘no clear evidence’ of changes in employment or working hours since the NLW was introduced in April of this year.
It revealed that employment has risen in sectors that have been most affected by the NLW, such as the hospitality, retail and horticulture industries.
The LPC’s findings come in response to a warning issued by the Organisation for Economic Co-operation and Development (OECD), in which the think tank urged the UK to be ‘cautious’ with its plans to raise the NLW rate, given the wage’s potential impact on employment.
The OECD said: ‘The effects on employment need to be carefully assessed before any further increases are adopted, especially as growth slows and labour markets weaken.’
In the 2016 Autumn Statement, Chancellor Philip Hammond announced that, from April 2017, the NLW will rise from £7.20 to £7.50 an hour for workers aged 25 and over.
The government aims to increase the NLW to £9 an hour by 2020.
In his Autumn Statement speech, Chancellor Philip Hammond announced plans to significantly tighten the rules that currently govern benefits-in-kind (BiK) and salary sacrifice.
Under the government’s plans, frivolous uses of the salary sacrifice loophole will undergo a major crackdown, with the government stating that they will ‘look specifically at how the taxation of BiK and expenses could be made fairer and more coherent’.
The Chancellor revealed that, from April 2017, the tax and employer national insurance advantages associated with salary sacrifice schemes will be removed.
Benefits such as gym memberships, school fees, accommodation fees and mobile phones will be affected under the government’s new rules.
However, BiK arrangements relating to pensions, childcare, ultra-low emission cars and the Cycle to Work scheme will be excluded. Arrangements in place before April 2017 will be protected until April 2018. Specific long-term arrangements will also be protected until 2021.
Commenting on the issue, the Chancellor said: ‘The majority of employees pay tax in a cash salary. But some are able to sacrifice salary and pay much lower tax on BiK.
‘This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.’