Chancellor Philip Hammond delivered his 2018 Autumn budget in the House of Commons today. There was little shared between the government and the media; although it was expected that there were going to be no new radical changes to the Conservative’s economic policy. Theresa May’s government has been skating on very thin ice over the past few months, due to the constant infighting regarding Brexit. However, this budget has shown that the Conservatives are always going to be the more economically reliable party. Phillip Hammond opened his speech by saying “this budget is for hard-working families…who live their lives far from this place…and care little for the twists and turns of Westminster politics.” Never before has a budget been so crucial for the country in terms of confidence-building and reassurance, and Chancellor Philip Hammond certainly rose to the challenge!
What was in the budget?
A clear message from the government is that “austerity is coming to an end”. Indeed, significant cuts have been appropriately made to ensure that our economy recovers from the appalling mess that 13 years of Labour government left the UK in. Nevertheless, whilst borrowing still continues to fall, there were some spending announcements. Here are the details of Chancellor Hammond’s budget speech….
- £2.2 billion has already been allocated to departments in preparation for Brexit. In last year’s statement he said he would allocate a further £1.5 billion, but this has now been increased to £2 billion…..totalling £4.2 billion.
- Growth going forward will be “resilient”, improving next year from the 1.3% forecast in the Spring Statement to 1.6%. In 2020, he expects 1.4%, 1.5% in 2021 and 22 and 1.6% in 2023.
- Expects government borrowing this year will be £11.6bn lower than forecast at the Spring Statement. It is then set to fall from £31.8bn in 2019/20 to £26.7bn in 2020-21, £23.8bn in 2021/22, £20.8bn in 2022/23 and £19.8bn in 2023-24 – its lowest level in more than 20 years.
- Thanks to the improved government finances, Philip Hammond says he will raise the personal allowance tax threshold a year early. From April next year, the personal allowance will be £12,500 and the Higher Rate Threshold will be £50,000. The personal allowance stands at £11,850, with the Higher Rate Threshold £46,350.
- The introduction of a UK Digital Services Tax. He stresses it is not an online sales tax on goods bought online and will only be paid by profitable firms that have at least £500m a year in global revenues. There will be a consultation first before the tax comes into effect in April 2020. It is expected to raise more than £400m a year, Mr Hammond says.
- Plans to help small shops by cutting business rates by a third for all retailers in England with a rateable value of £51,000 or less. That will mean an annual saving of “up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes”.
- Announcement of £675m of co-funding to create a “Future High Streets Fund” to support councils to draw up plans for the transformation of their High Streets.
- Chancellor refers to the already announced £20.5bn increase for the NHS over the next five years. Announces that the NHS 10 Year plan will include “a new mental health crisis service”, with “comprehensive mental health support available in every major A&E”, as well as “children and young peoples’ crisis teams in every part of the country”.
- The government plans to make e-passport gates at Heathrow and other airports available to visitors from the US, Canada, New Zealand, Australia and Japan as well as EEA citizens.
- He pledges another £1bn for the MoD this year and next “to boost our cyber capabilities and our anti-submarine warfare capacity”.
- Pledges £400m to schools as an “in-year bonus”.The money averages £10,000 per primary school and £50,000 per secondary school. It will help the schools “buy the little extras they need”, he says.
- He says there will be another £650m of grant funding for English councils for 2019-20 and an additional £45m for the disabled facilities grant in England in 2018-19.
- Extension on the cancellation of stamp duty for first time buyers on properties up to £300,00 to first-time buyers of shared ownership properties valued at up to £500,000.
This budget is undoubtedly cautious and to many may seem uneventful. Nevertheless, it demonstrates the hard work and tough decisions from the Conservatives over the last 8 years have paid off. Ending his speech, Chancellor Hammond said that “the Corbyn party will take us back to square 1”. There is a deep division in this country, and it is clear there is a choice between high taxes and overspending, or an end to austerity with progressive and careful spending whilst ensuring that the UK is ready to thrive in a post-Brexit world. The Conservatives are, and always will be, the best and most trustworthy party for the economy.