The final Spring Budget is on 8 March. From next year the Budget is moving to Autumn, with a Spring Statement. This change gives time for tax changes to be made in advance of the tax year, and provides businesses with more time to plan, if necessary.
Forecasts are showing sharp growth with borrowing lower than anticipated, and a £45 billion tax windfall for the Treasury in the next five years. January’s tax receipts are at the highest level since 1999, but Chancellor Philip Hammond is quoted as saying: “There is no pot of money under my desk.”
In this article, we’ve compiled some of the main predictions that will impact you and your business, and look forward to hearing what is announced on Wednesday.
According to reports, some firms face increases of up to 400% in the April business rates hike.
The Chancellor has recently indicated that he is “alive” to the impact this have on some High Street shops, and “open” about finding ways to help.
Business rates are a property tax that doesn’t apply in the digital economy, and the Government is trying to ensure that online retailers such as Amazon don’t benefit to the detriment of traditional High Street retailers.
We expect he will announce some immediate measures that will mitigate the worst effects on SMEs (such as transitional relief), with more fundamental reforms to come in the future. No additional help is expected for supermarkets and corporations.
Companies that mislead or rip off consumers are to be targeted, because Ministers want to force firms to use plain English and make key terms more obvious. If not, they face a fine.
The Citizens’ Advice service estimates that 2 million consumers per year have problems cancelling subscriptions, and research shows that 42% of people are paying for at least one subscription they don’t use, such as gym membership.
Consumer watchdog Which? found that 90% of people ticked to agree with online T&Cs in the past year but only 16% always read them. For one thing, T&Cs are often very long, for example, contracts for mobile phones can run up to 40,000 words. They also contain acronyms and legal or financial jargon that mean people don’t fully understand what they are signing.
Plans will be therefore be unveiled to fine companies that tie people into long contracts or unexpected fees in their terms and conditions.
There may also be a crackdown on rolling subscriptions that renew automatically after a free trial, with new rules to ensure consumers are offered the chance to cancel the agreement.
Science and innovation boost
The Chancellor is expected to announce a £500 million boost from the National Productivity Investment Fund, to support science and technology.
Around £270 million will be made available for pioneering projects such as:
- Technology that operates in extreme and hazardous environments
- Cutting-edge artificial intelligence
- Robots for off-shore and nuclear energy, space and mining
- Batteries for the next generation of electric cars
- Accelerating patient access to new drugs, by developing speedy new ways to manufacture medicine
£200 million will go towards new fellowships for researchers in areas aligned to the government’s industrial strategy.
A further £90 million will fund 1,000 PhD research projects in STEM subjects (Science, Technology, Engineering and Mathematics), with extra cash for investment in 5G communications.
British businesses are calling for economic stability during the Brexit negotiations. The Confederation of British Industry says that uncertainty dampens investment and higher inflation erodes the growth in consumer spending.
Carolyn Fairbairn, Director-General of the CBI, said: “By supporting businesses to invest, the government can promote growth at a critical time.”
Rain Newton-Smith, CBI chief economist, said: “Prioritising stability will inject further confidence in the economy now, and help boost the country’s productivity and prosperity for the future.”
Anything is possible after Article 50 is triggered at the end of March. Bigger measures are likely to be reserved until the Autumn Budget, so the Chancellor can see how the economy reacts. Meanwhile, we know he is aiming to keep a pot of money as a safety net, to ensure the country negotiates Brexit with stability.
As always, Akoni will keep you posted.