On March 13th 2018 Chancellor Philip Hammond delivered his Spring Statement 2018; following through on his promise to move away from two major fiscal announcements every year. Major tax or spending changes will now be made once a year in the Autumn Budget.
The Spring Statement – Helping businesses to plan for the future
The Spring Statement gives an update on the overall health of the economy and the OBR forecasts. Progress made since the Autumn Budget 2017 is also given along with an invitation to people and businesses to give their views on changes the government is considering.
This year there was no red briefcase, no red book, no spending increases and no tax changes as the chancellor announced updated economic forecasts in a speech lasting less than half the length of any of his previous statements. This didn’t come as a surprise seeing that Hammond moved this to a Tuesday, rather than keeping it in its usual slot straight after Prime Minister’s questions on a Wednesday.
Far from being a second financial statement of the tax year, the chancellor unveiled the latest economic forecasts alongside a raft of consultations.
The Office for Budget Responsibility (OBR) revised its forecast for growth up to 1.5% – up 0.1% on the previous forecast announced in Autumn Budget 2017. However, GDP is expected to fall back to 1.3% in 2019 and 2020 as the OBR left its November 2017 forecast unchanged.
OBR GDP Growth Forecast – gov.uk
Borrowing fell to £45.2 billion in 2017/18 – £4.7 billion lower than the OBR’s forecast in November 2017, while Hammond confirmed any further borrowing is expected to fund capital investment only. Debt is expected to start falling as a share of GDP in 2018/19, according to the OBR.
Progress since Autumn Budget 2017
An investment programme of at least £44 billion over the next five years was announced at Autumn Budget 2017, putting us on track to raise the supply of homes to 300,000 a year on average by the mid-2020s.
Cost of living
The tax-free personal allowance – the amount you earn before you start paying income tax – will rise to £11,850 from April 2018. This means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.
Spring Statement 2018 confirms that we are getting on with the job:
- we are working with 44 areas on their bids into the £4.1 billion Housing Infrastructure Fund to help build the homes that the country needs
- the Housing Growth Partnership, which provides financial support for small housebuilders, will be more than doubled to £220 million
- London will receive £1.67 billion to start building a further 27,000 affordable homes by the end of 2021-22
At Autumn Budget 2017 it was announced that business rates revaluations will take place every three years, rather than every five years, following the next revaluation. The Spring Statement 2018 announces that the next revaluation, currently due in 2022, will be brought forward to 2021. This will mean businesses can benefit from the change to three-year revaluations earlier, with the first taking place in 2024.
Aside from updated economic forecasts, the rest of the chancellor’s attention focused on policy consultations – some new, others previously announced. These consultations may feed into Autumn Budget 2018.