Chancellor Philip Hammond delivered the 2019 Spring Statement yesterday, responding to the latest economic forecasts published by the Office for Budget Responsibility (OBR).
The OBR revised down its previous UK growth forecast from 1.6% to 1.2%. Borrowing has also been revised down from £25.5 billion to £22.8 billion as a result of rising wages and a ‘strong employment market’.
Mr Hammond outlined a handful of measures in the Spring Statement, such as the bringing forward of the £700 million reforms for business apprenticeships, and appointing an expert to review the latest international evidence on the impact of minimum wages, in order to inform future National Living Wage (NLW) policy after 2020.
The Chancellor also announced consultations and publications on possible future changes. These include restricting the Employment Allowance to businesses with an employer national insurance contributions (NICs) bill below £100,000, and reducing the capital gains tax (CGT) private residence relief on the final period exemption from 18 months to nine months.
For a detailed overview of the latest information, read our 2019 Spring Statement summary.
Prime Minister Theresa May has announced that fuel duty will be frozen for the ninth consecutive year.
Speaking at the Conservative party conference, the Prime Minister stated that the government is ‘on the side of hard-working families’.
She continued: ‘It’s for them that we cut income tax, introduced a National Living Wage (NLW) and extended free childcare. And froze fuel duty every year.
‘Because for millions of people, their car is not a luxury. It’s a necessity.’
The fuel duty freeze has been criticised by the Green Party. Commenting on the matter, Caroline Lucas MP said: ‘Dirty air is killing thousands of people every year, and the government is breaking the law with its negligent failure to cut pollution. The last thing we need is another subsidy to encourage more cars onto our roads.’
Over the past year, petrol prices have risen by 11.5p per litre, and diesel prices have increased by 14p per litre. Currently, the average petrol price in the UK is 130.6p per litre, whilst the average price for diesel is 134.5p.
Fuel duty will officially be frozen by Chancellor Philip Hammond in the upcoming Autumn Budget, which is set to be delivered on 29 October.
We will be covering all of the key Budget announcements on our website, so please visit regularly.
Think tank the Institute for Public Policy Research (IPPR) has called for a radical overhaul of the UK economy, stating that it ‘does not work well’ for most people.
A poll conducted by Sky Data on behalf of the IPPR revealed that 49% of respondents would describe the way that Britain’s economy operates as ‘unfair to some degree’. Just 22% believe that the way the economy works is fair.
The poll also revealed that 80% of those surveyed support ‘greater regulation’ of major digital companies; would welcome the introduction of a new corporation tax on multinational companies; and would like to see the National Living Wage (NLW) rise from its current level of £7.83 per hour to £8.75 an hour, to bring the NLW in line with the current Real Living Wage.
An additional 50% of individuals would support asking the Bank of England to ‘control house price inflation’, and advocate raising taxes on income from wealth to match taxes on income from work.
Commenting on the findings, Frances O’Grady, General Secretary of the Trades Union Congress (TUC), said: ‘It’s time for a once-in-a-generation rethink of our approach to the economy. Working people have had enough of stagnating living standards and massive inequality.
‘A better deal for working people is possible, and will allow us to build a stronger, fairer economy.’
In a new report, the Institute for Fiscal Studies (IFS) has warned that future increases in the National Living Wage (NLW) could lead to more UK jobs becoming automated.
Under current plans, by 2020, the NLW will have risen significantly, as part of the government’s commitment to ‘support working families with the cost of living’. The IFS predicts that, by this time, the NLW will rise to over £8.50 an hour.
The NLW is currently £7.50 per hour. It is set to rise from 1 April 2018, reaching £7.83 an hour.
The Institute’s report warned that a higher NLW will eventually begin to ‘affect jobs that appear to be more automatable’, such as retail cashiers and receptionists, which could be replaced by computerised systems.
Individuals who work in the wholesale and retail sector are most likely to be affected by automation, the IFS said. Those working in the manufacturing industry are also highly likely to lose their jobs to automation, according to the report.
The IFS also found that, currently, the NLW is rising faster than workers’ average earnings, meaning that more individuals are being paid at the minimum level.
Commenting on the findings, Agnes Norris Keiller, Research Economist at the IFS, said: ‘The fact that the higher minimum will increasingly affect jobs that appear to be more automatable is an additional reason why extremely careful monitoring is required.
‘Even higher rates… would bring even more employees in more automatable jobs into the minimum wage net.’
A survey carried out by the Confederation of British Industry (CBI) has suggested that business owners in the UK will seek to increase their employees’ pay in 2018.
The CBI found that 52% of survey respondents will aim to raise pay for their employees in line with, or above, inflation in the coming year.
51% of businesses are also seeking to grow their workforce in 2018, the data revealed.
However, a significant number of firms reported that they have been affected by rises in the National Living Wage (NLW): 55% stated that they have felt the effects of the NLW on their business, which is a slight rise when compared to last year’s figure of 50%.
Commenting on the findings, Matthew Percival, Head of Employment Policy at the CBI, said: ‘Living standards have been squeezed in 2017 because of higher inflation.
‘The good news is that despite this, more than half of companies will offer real pay rises next year – despite a slowing economy.
‘Higher productivity is the only sustainable way to increase pay, so it is rightly the focus of business and the government through the Industrial Strategy.’
The Trades Union Congress (TUC) has urged the Low Pay Commission (LPC) to raise the National Minimum Wage (NMW) rates for younger workers.
Young employees are ‘at risk of being left behind’ by the NMW, the TUC warned as it gave evidence to the LPC.
Currently, workers aged between 21 and 24 are entitled to at least £7.05 an hour. The NMW for those aged between 18 and 20 is £5.60, and the minimum wage for employees aged under 18 is £4.05 an hour. Apprentices are currently entitled to at least £3.50 per hour.
The National Living Wage (NLW) applies for workers aged 25 and over, and currently stands at £7.50 an hour. NMW and NLW rates change every April.
The TUC is calling for the LPC to extend the NLW to workers aged 21 and above, and increase the NMW rates for workers aged between 16 and 20.
It has also called for a rise in the apprentice NMW rate.
Commenting on the issue, Frances O’Grady, General Secretary of the TUC, said: ‘Minimum wage rates aren’t increasing fast enough and the government’s target of £9 an hour by 2020 now seems a fantasy.
‘The minimum wage needs a serious boost in the coming years, especially for younger workers.
‘With employment, the economy and earnings set to grow next year, employers will be able to afford a decent rise.’
A survey carried out by the British Chambers of Commerce (BCC) has revealed that four in five businesses in the UK have been affected by rising costs generated as a result of changes to employment legislation.
In its Annual Workforce Survey, which garnered the opinions of more than 1,400 UK businesses, the BCC found that the Apprenticeship Levy, the National Living Wage (NLW) and pensions auto-enrolment have led to an ‘increase in the cost base of businesses’.
50% of respondents surveyed revealed that the NLW has helped to increase their employment costs, whilst 75% of firms reported a rise in costs as a result of compliance with pensions auto-enrolment.
Meanwhile, 20% of businesses have experienced rising costs as a direct result of the introduction of the Apprenticeship Levy.
Rising costs could lead to reduced investment and wage growth opportunities, the BCC warned.
Commenting on the findings, Jane Gratton, Head of Business Environment and Skills at the BCC, said: ‘Businesses are under increasing pressure from the burden of employment costs, and this will influence the choices they make and outcomes for employees.
‘Higher employment costs impact on the bottom line and reduce the resources available to invest in the business and its people.
‘At a time when employers across the country are facing acute skills shortages, it is vital that they have the resources and flexibility to invest in their workforce and the future needs of the business.’