Monday saw the return of one of the key set pieces in the UK political calendar – the much anticipated Autumn Budget. As ever, reaction to Philip Hammond’s speech has been a mixed affair, however the overall tone was aimed at bringing a sense of positivity in these times of uncertainty –with Hammond outlining that the era of austerity is ‘finally coming to an end’.
Nevertheless, there was disappointment among some circles over the cautious approach taken, with very few rabbits being pulled out of the Chancellor’s hat. Rather tellingly, there was also noticeably very little mention of Brexit during the speech, despite the issue dominating the national agenda for the last couple of years.
After letting the dust settle on what’s likely to be that last Budget before Brexit (on the basis we avoid a no-deal), we take a look at the key takeaways from Fiscal Phil’s speech, while also exploring some of the announcements which may look good on the surface but perhaps don’t go far enough in addressing the crux of the problems faced.
Many of the positives from this week’s Budget were very much aimed at SMEs, much to the delight of the Federation of Small Businesses. Specifically looking at the retail sector, business rates will be cut for UK retailers with a rateable value of £51,000 or less, equating to roughly a third of all businesses operating in the industry – a welcome boost for the UK’s high street.
Meanwhile, the Chancellor confirmed that apprenticeship fees will be halved to 5% for UK small businesses. Although it’s unclear when the fee reduction will come into effect, the move has been designed to encourage more employers to take advantage of the benefits apprenticeship schemes offer.
The Chancellor also surprised many when announcing a new UK Digital Services Tax, aimed at global tech giants with global revenues of at least £500m. The move is expected to raise in the region of £400m for the government coffers every year, a small first step to help level the playing field between the tech behemoths and start-ups. The VAT threshold has also been frozen at £85,000, not amended as previously expected.
Looking away from SMEs, a further £1bn has been pledged for the MoD, specifically targeted at boosting defence cyber capabilities and anti-submarine warfare, a win for the UK’s fast-growing and dynamic defence tech sector.
In other positive news, mental health services will also receive £2bn in additional budget, after a huge amount of focus and attention has been made on the need to deliver more services and support around healthcare in this area.
Additionally, duty on beer, cider and spirits will continue to be frozen, much to the delight of the great British pub. A nice twist in the lead up to Christmas.
The taxpayer also stands to benefit from the Budget, with the Personal Allowance threshold set to be raised a year early to £12,500 from April 2019, while the Higher Rate threshold has been lifted to £51,000.
Some came away disappointed from the level of extra funding set aside for schools, with a £400m one-off bonus announced to purchase the “little extras” students and teachers need – hardly a game-changing proposal for the UK’s educational system.
Following the collapse the Carillion, some contractors will be disappointed in the plans to abolish Private Finance Initiative (PFI) deals, although it’s expected the government will introduce a new model to replace it soon enough.
Turning to the environment, a new tax will also be introduced on the manufacture and import of plastic packaging containing less than 30% recycled plastic. However, there are no plans to introduce a levy on disposable plastic cups, nor was there any mention of proposals to tackle climate change, weeks after the UN Panel on Climate Change said we had 12 years to avoid a ‘climate catastrophe’.
All in all, no huge surprises then, with very little in the way of rabbits being removed from hats. Although Hammond’s jokes fell to even greater lows, he has tried to offer a sense of prosperity despite a lack of detail and key measures in preparing for whatever Brexit fallout we’re left to deal with.
Once the dust is truly settled no doubt the political and media agenda will swiftly turn its head back towards the dominant issue of the last two years and the main event that faces us as we head fast towards B-day.