Budget 2017: Tinker, Tailor…08 March 2017
Chancellor Philip Hammond delivered his first and last spring Budget in the Commons this afternoon boosted by revised economic growth forecasts from the OBR.
Appearances can be deceiving, as a slim Budget laced with a touch of self-deprecating humour began to unravel at the edges for the tinkering Chancellor in the days following his speech. Forced into his first ‘u-turn’ over National Insurance Contributions in order to fulfil a manifesto promise made before his tenure, the government has been on the back foot. Despite passionate campaigning however there was limited action on business rates.
Greater funds were created for education, apprenticeships and the NHS and confirmation given that thresholds for personal income tax will rise once again.
We expect a less vanilla autumn Budget and we will continue to advocate on your behalf for a sustainable business environment in which our sector can thrive and prosper.
Toplines for members include
- Businesses coming out of business rate relief as a result of this revaluation will have the increase in their bills capped at £50pcm
- £300m for local authorities to allocate “discretionary relief” for the hardest cases in their areas allocated by formula to be announced
- 90% of pubs will receive a £1,000 discount in their rates bill (RV <£100,000)
- In the medium term, government must address taxation of the digital economy versus bricks and mortar, with further details to be announced
- Confirmed devolution of rates to fund local government by 2020
- The revaluation process will be reviewed (including proposals for revaluations at least every 3 years) with the preferred approach announced in the autumn Budget with a consultation ahead of the next revaluation
Business and Taxation
- Corporation Tax will fall to 19% from April this year and fall to 17% in 2020
- Personal income tax allowance will increase to £11,500 from April, the higher rate tax threshold will rise to £40,000
- Introduced reforms to self-employed National Insurance Contributions (NIC) to seek parity with employees
- Announced a Green Paper on protecting the interests of consumers, to include new measures to clarify terms and conditions for subscription services and to give enforcement bodies more powers
Digital Economy & Infrastructure
- £16m announced for a 5G mobile broadband hub and £200m announced for local projects to leverage private sector investment for full fibre networks
- £90m for the North and £23m for the Midlands announced to address "pinch points" in the road network
- £690m competition announced for local authorities to tackle urban congestion and improve local transport networks
- £270m announced to keep the UK at the forefront of disruptive technologies
Employment, Apprenticeships & Skills
- The national living wage rises in April to £7.50 and £5m was pledged to promote 'returnships' to the public & private sector, helping people back into employment after a career break
- T-levels will be introduced, with 15 clear routes into employment
- £300m fund for brightest and best research talent, including for 1,000 new PhD places and fellowships focused on STEM subjects and funding for a further 110 new free schools
- Up to £40m investment in pilots to test the effectiveness of different approaches to lifelong learning
- A deal has been made with the Mayor of London on further devolution for London, the Midlands Engine Strategy will be published tomorrow and further funds were announced for devolved administrations; Scotland (£350m), Wales (£200m) and NI (£120m)
Giulia Bunting, Revo President, GL Hearn, Planning Director said
“Whilst some of the announcements on digital infrastructure investment should be welcomed, and will add to the UK's reputation as an advanced digital economy, the announcements on business rates will leave many underwhelmed. The message that the tax is no longer fit for purpose for a modern retail market has been well made, but the Chancellor has once again re-affirmed his predecessor's opinion that this is now for local councils to deal with post 2020.”
Edward Cooke, Chief Executive said
“In his speech the Chancellor seemed to reference the importance of creating a tax system that takes into account the changing nature of the retail market. But there is scant evidence that his or his advisors' thinking has moved beyond this basic fact. Indeed, in the Budget Red Book business rates are forecast to increase by £4.2 billion over the next four years, which doesn’t feel like they have understood the impact this punitive tax is having on investment in our towns and cities. As evidenced in our recent research, this failure to act is an enormous disincentive to inward investment and indigenous business growth.
According to his own figures the discretionary fund of £300m is over a 4-year period, with only £180m available for this coming year, offering only limited relief to those businesses that successfully apply.”