A Nottingham tax partner thinks that there were ‘no big announcements’ in today’s budget and that it marks the ‘calm before the storm’.
Chancellor of the Exchequer Philip Hammond faced MPs and delivered the budget today (Wednesday March 8) in the House of Commons.
He announced revised growth domestic product is up this year, but will fall in years to follow, that there would be investments into social care and businesses hit by increased rates.
He received a boost on Tuesday night after the Organisation for Economic Co-operation and Development raised its forecast for UK growth this year by more than any other major economy.
The growth forecast for this year was raised to two per cent after a 1.4 per cent predicted increase in November.
Hammond told MPs he was presenting his budget against the backdrop of an ‘economy that continues to confound the commentators with robust growth’.
The keys points of the 2017 Budget:
- £2 billion for social care
- £435 million extra help on business rates – including 90% of pubs getting a £1,000 discount
- National Insurance up 2% for self-employed workers by 2019
- National Living Wage up to £7.50 in April
- £350 million for Scottish government, £200 million for Welsh government, £120 million for Northern Ireland
- Funding for 110 new free schools – and free transport for pupils going to selective schools who are on free school meals
- T-Levels introduced – for students doing technical qualifications
- A fund for women who suffer domestic violence
- £2,000 tax break for childcare
- £500m support for electric vehicles, robotics and artificial intelligence
Simon Browning, tax partner at UHY Hacker Young in Nottingham, thinks that some questions were left unanswered.
He said: “The Spring Budget saw a lot of tinkering on Philip Hammond’s part.
“Although there were many announcements on education, care and transport, it will be interesting to see what the focused spending actually is.
“For example, £23 million has been allocated to transport in the Midlands, but how will this be distributed and how will it feed into tomorrow’s announcement on the Midlands Engine Strategy?”
Mr Browning says that Mr Hammond was ‘under pressure to announce business rate changes’.
He said: “In reality however, he has only eased the impact on those coming out of small business rates with a cap, which was a minor gesture; this is another instance of how the budget made tiny tweaks, with no real substance.
“Finally, throughout the budget there was a continued attack on the self-employed and owner managed businesses, with Class Four National Insurance rates increasing and the tax-free dividend allowance reducing from £5,000 to £2,000 in April 2018.
“Overall, there were no big announcements that will make anybody significantly better or worse off.
“Interestingly, there was no mention of Brexit or its economic effects; was there a reason for this, is Brexit the reason this budget made small changes alone?
“I am wondering if this budget is the calm before the storm.”
The Office for Budget Responsibility (OBR), set up to provide independent forecasts for the government, predicts after expanding two per cent this year, economic growth will rise by 1.6% in 2018, before rising slowly in the proceeding three years.
On the public finances, the OBR now forecasts borrowing will be £51.7 billion in 2016-17, down significantly from £68.2 billion forecast in November.
Borrowing will continue to fall in the proceeding four years.
A £2 billion fund has been granted to relieve pressure on the social care system over three years, with £1 billion available in 2017/18.
110 new free schools will be developed and free transport will be extended to all children on free school meals who attend selective schools.
There was a National Insurance increase, of two per cent, for people who are self-employed – and a raft of new education commitments, including technical qualifications to compete with A-Levels.
The National Living Wage will also increase to £7.50 an hour from £7.20.
Funding is to also be given to improve roads – specifically, £90 million will go to roads in the north and £23 million for those in the Midlands – and £690 million will be handed to local authorities to combat urban congestion.
£435 million in extra help will be given to businesses hit by rates increases.
The UK economy has grown faster than expected since the Brexit vote, leading to estimates that borrowing will probably be £12 billion less than forecasts in the Autumn Statement, last November.
