This afternoon, the Chancellor of the Exchequer gave his first Spring Statement speech to the House of Commons, providing an update on the health of the national economy.
Chancellor, Philip Hammond confirmed that the UK economy was growing at a somewhat faster rate than forecast in the Autumn Budget 2017. According to the independent Office for Budget Responsibility (OBR), economic growth will be 1.4% in 2018, which represents a 0.1% rise on November’s forecast.
Mr Hammond also revealed that Government borrowing would decline in every year of the forecast, with debt falling as a share of GDP from 2018-19. This led the Chancellor to confirming there is “light at the end of the tunnel” for the economy.
As promised by the Chancellor, there were no tax changes in today’s Spring Statement. Instead, Mr Hammond used the opportunity to set out the outlook for the UK economy and to list a series of tax consultations. The information gained from these consultations will no doubt pave the way for changes in the Autumn Budget, expected later in the year.
The Chancellor reiterated in his speech that the Government is the “champion of small business”. Subsequently, much of his statement touched upon aspects relevant to small business owners and entrepreneurs throughout the UK.
Business rates revaluation brought forward to 2021
At the Autumn Budget 2017 it was announced that business rate revaluations will now take place every three years, as opposed to five years. The move will ensure rates better reflect the market rental value of commercial properties.
Mr Hammond confirmed in his Spring Statement that the next revaluation will be brought forward from 2022 to 2021. The move will help businesses to benefit from the change to three-year revaluations sooner.
Consultation on new VAT mechanism for digital sales in the UK
The Chancellor also unveiled a new consultation on a prospective VAT collection mechanism for all UK-based digital sales, ensuring the VAT that online consumers pay “actually reaches the Treasury”. The ‘Cash and Digital Payments in the Digital Economy’ consultation paper will be open until early June to investigate the transition between traditional cash and digital payments and the impact on specific sectors, regions and demographics.
Mr Hammond also confirmed there will be a review into how to help the least productive businesses catch up with their competitors and how to eradicate late payments to the UK’s small businesses.
A commitment to apprenticeships and training
The Government remains committed to delivering three million apprenticeships throughout all sectors by the turn of the next decade.
The Chancellor acknowledged the concerns among the small business community about employing apprentices and announced the Education Secretary “will release up to £80 million of funding to support small businesses in engaging apprentices”.
New technical qualifications are being designed to simplify the process of vocational training in England. The first T-levels were announced in Digital, Construction and Education and Childcare, as part of a “skills revolution” in the UK. The Chancellor revealed in his Spring Statement an additional £500m for T-levels and a further £50m to assist employers in rolling out placements for T-level students.
In terms of connectivity, the Government’s initial wave of funding from the Local Full Fibre Challenge fund has been allocated, with £95m distributed to 13 local areas across the country. An additional £25m has been set aside for the nation’s first 5G test beds as the government strives to futureproof the nation’s connectivity, ready for initiatives such as Making Tax Digital and a 21st century UK tax system.