A Chairman's view – Autumn Budget 2017
This Budget, as Philip Hammond made sure to remind us several times, was themed around a Britain “Fit for the Future”.
However, he couldn’t hide an Office of Budget Responsibility forecast that paints a background of uncertainty around what that future holds. And for all the Chancellor’s talk of a forward-looking budget – what else could it be? – the spectre of Brexit loomed large over this speech.
The new figure of £3bn set aside for Brexit contingency planning – added to £700m previously allocated for this purpose – is probably the clearest sign of the scale of the preparations we will need to make to leave the EU with, let alone without, a deal. The sum dwarfs most of the other announcements today, and will provoke questions about the likely real costs of leaving the EU.
Despite the Chancellor emphasising that the Budget is about “more than Brexit”, uncertainty over Brexit is, inescapably, the most likely reason for the OBR’s forecast productivity growth falling from 2% to 1.5% - the first time it has been revised downwards in 15 Budget speeches. Productivity remains one of the biggest challenges to our future economic success inside or outside the EU.
A prediction that 600,000 more people in work by the 2020s is welcome but feels ambitious.
The extra support for Universal Credit will also help many but whether it is a cure or just a crutch to allow it to limp along only time will tell.
There was better news on borrowing – forecast at £49.9bn for the year, £8.4bn lower than the prediction in the Spring Budget and continuing to fall.
As to investment, there was a pledge of more infrastructure spending which will certainly give a boost in some regions and sectors.
Investment was also announced in computer science teaching, including a national training scheme, and more maths teaching are welcome in a digital future but perhaps won’t add up to much in the overall struggle to improve our skills and knowledge base to the world leading level we need.
A £400m investment in charging points for electric cars is welcome, but speculation of an announcement around investment in driverless car technology did not lead to anything except a jibe from the benches about nobody being at the wheel of Brexit, and a weak Jeremy Clarkson joke comparing the Chancellor and Prime Minister to their Top Gear TV namesakes, Hammond and May..
The extra £2.8bn promised to the NHS falls short of the £4bn demanded by the NHS England. Health spending will not be solved by this injection however welcome and necessary.
Apart from the Brexit £3bn, it was in residential housing that the biggest announcement came – including a headline-grabbing abolition of Stamp Duty for first time buyers on properties under £300,000. Levels of housebuilding are a good indicator of the health of the economy, and the prediction of 300,000 more homes a year being constructed by the mid-2020s is encouraging if it holds true. Preserving and improving consumer confidence has always been vital , but it is even more important as we head towards Brexit.
Overall, this wasn’t a disastrous speech and at first glance it didn’t contain any howlers to add to the pressures on Mrs May (as well as her Chancellor). However, it will be very difficult for even the most forward-looking Chancellor (or his budget) to have a real positive impact on the UK economy until the future of a UK outside Europe is much clearer.
Cathy Bryant, a lawyer specialising in business tax said: “It is interesting to see the number of measures in the Budget which use the tax system to incentivise and promote the agendas of the day: increase in the EIS thresholds for investments into tech businesses; no benefit in kind tax charges on workplace electrical vehicle charging and a consideration of a tax on single use plastics. The environment featured heavily in the tax measures.
“The Chancellor was looking to ease the burden on small businesses and I believe today’s announcements have given them some headroom to consolidate.
“It is also good news for individuals with the lifting of the personal allowance to £11,850 and the higher rate threshold to £46,350.
“But the greatest beneficiaries of the budget must be first time house buyers with the scrapping in England of stamp duty for purchases of homes up to £300,000.
“It is a balanced budget which has sought to provide some incentives to drive policy but at the same time addressing some inequalities."
On Philip Hammond's announcement to abolish Stamp Duty for first time buyers on properties under £300,000, Mark Scott, a specialist in residential property said: “This really is positive news and should make a real difference to young people hoping to step on to the housing ladder for the first time and hopefully in turn boost the current flagging housing market.
“We need to continuously find new ways to help our future generations own their own homes and this is a big leap in the right direction.”
On the employment front, expert and partner Tim Forer said: “Apart from the increase in the National Living Wage and National Minimum Wage, and the threat of off-payroll working in the private sector, this was a relatively neutral budget for employers.
“All eyes are likely to be far more focussed on Brexit talks to enable businesses to plan properly for the future.”
On planning, the Chancellor announced £44 billion would be made available to support the housing market over the next five years, pledging that we would see on average 300,000 homes built every year until the mid-2020s. The Chancellor further committed to one million homes on the Cambridge – Milton Keynes- Oxford corridor; providing a real opportunity for stakeholders to get involved in these areas.
Sara Hanrahan, planning partner said: "He acknowledged that "there's no single magic bullet" to solve the housing crisis, stating that it would take money, planning reform and intervention. He also confirmed the Government's stance of continuing to protect Green Belt land and to concentrate on the construction of "high density homes" within city centres and transport hubs. Communities Secretary, Sajid Javid, is expected to make a separate statement to provide more clarification on the Government's plans."
Elysa Jacobs, Solicitor said "without question, today's Budget had a clear emphasis on assisting private individuals and business owners.
"One major point that seemed to be at the forefront of the Chancellor's mind was Brexit – how will any deal affect the average person? As the Chancellor noted, the UK is currently at a critical phase of the Brexit negotiations and has allocated £3 billion over the next two years for "Brexit preparations". Although this commitment is encouraging, there still remains a vast amount of ambiguity. How each individual will be affected will certainly be felt on a case-by-case basis."