Set against the backdrop of Brexit uncertainty, last week Chancellor Phillip Hammond outlined his vision for the future of spending in the Spring Statement. Hammond alluded to the fact that there could be another statement before the end of the summer, no doubt dependent on the progress of a Brexit deal. Hammond urged MP’s to support Theresa May’s Brexit deal so that the government could build “a Britain fit for the future”. However, eager to shift the spotlight away from Brexit, the Chancellor focused on positive headlines with plans to invest in technology, housing, skills and infrastructure. This is hoped to provide an economic boost that will prepare the UK for post Brexit opportunities and investment. ContractingWISE take a look a closer look at some of the key announcements.
Economy and Jobs
Hammond was quick to point out that despite the Brexit “cloud of uncertainty”, the UK’s economic performance has defied expectations. The Office for Budget Responsibility (OBR) forecast continued growth for the next five years, which follows on from nine consecutive years of sustained growth. Hammond also stated that since 2020 there are over 3.5 million more people in work, with the OBR forecasting a further 600,000 new jobs by 2023. The unemployment of 4.0% remains at its lowest level since 1975.
Tech and the new economy
The Chancellor stated: “this government will lead the world in delivering a digital economy that works for everyone”. With the aim of protecting consumer choice and record spending the government intends to make technology companies “pay their fair share”. This follows a Treasury review that found dominance of large digital players was impacting on innovation and market diversity.
It was also announced that a number of new measures would be put in place to ensure that the UK remains attractive to international visitors. These will see paper landing cards abolished for many countries, which is hoped to significantly reduce queue times and improve the overall experience of those entering the UK. PhD students will also be completely exempt from visa caps from this autumn. In addition to this, overseas research activity will count as residence in the UK for the purpose of applying for settlement.
With the imminent implementation of Making Tax Digital (MTD), this was a focus point for the government. It had been expected that MTD for income tax would begin in 2020, but it appears that HMRC understands that it is best to introduce it on a voluntary basis until the system has been thoroughly tested. Meanwhile, a comment on certain non-compliance regulation had been expected, however there was little reference to this in the statement. A separate consultation document on the off-payroll working reforms was released earlier this month. The proposed rules place responsibility for IR35 determination with the end client and also recommend a client-led process for status disputes.
The statement built on the government’s commitment to accelerate the shift to a clean economy with proposed plans to help smaller businesses reduce their energy bills and carbon emissions. There were also targets for biodiversity and climate change, with plans to support a major marine reserve, the decarbonisation of gas supplies and the option for zero carbon travel. As part of the government’s commitment to providing world-leading levels of energy efficiency, a Future Homes Standard will help to ensure that consumer energy bills are lowered.
Investing in the future
Phillip Hammond reaffirmed that the National Infrastructure Strategy, the first of its kind, would be published. The Chancellor also announced that £717 million from the £5.5 billion Housing Infrastructure Fund would unlock up to 37,000 homes. In addition to this, the Affordable Homes Guarantee Scheme will see the government guaranteeing up to £3 billion of borrowing by housing associations in England. This will support delivery of around 30,000 affordable homes.