What you need to know - Spring Statement 2019
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Published 13 March 2019
The Chancellor has presented his
Spring Statement to Parliament – here's a summary of what he said.
The UK economy continues to grow, with wages increasing and
unemployment at historic lows, providing a solid foundation on which to
build Britain’s economic future, the Chancellor said today (13 March
2019) in his Spring Statement.
With borrowing and debt both forecast to be lower in every year than
at last year’s Budget, the Chancellor set out further investments in
infrastructure, technology, housing, skills, and clean growth, so that
the UK can capitalise on the post-EU exit opportunities that lie ahead.
The Chancellor also confirmed that the government will hold a
Spending Review which will conclude alongside the Budget. This will set
departmental budgets, including 3 year budgets for resource spending,
if an EU exit deal is agreed. Ahead of that the Chancellor announced
extra funding to tackle serious violence and knife crime, with £100
million available to police forces in the worst affected areas in
England and Wales
The Spring Statement is an opportunity for the Chancellor to update
on the overall health of the economy and the Office for Budget
Responsibility’s (OBR)
forecasts for the growth and the public finances. He also updates on
progress made since Budget
2018, and launches consultations on possible future changes for the
public and business to comment on. The Spring Statement doesn’t include
major tax or spending changes – these are made once a year at the
Budget.
What you need
to know about the Spring Statement
Economy
The government’s efforts to build a stronger, fairer economy are
paying off. The economy remains resilient, and is forecast to continue
growing:
-
there have been nine consecutive years of growth, and the OBR has forecast
further growth every year for the next 5 years
-
since 2010, the economy has grown faster than France, Italy and
Japan
-
the OBR
expects inflation to stay close to or on target for the duration of the
forecast
-
business investment is forecast to start growing again from next
year, once businesses have the certainty they need to invest
And employment
continues to break records
-
since 2010 there are over 3.5 million more people in work, and
the OBR forecast
employment will increase by a further 600,000 by 2023
-
the unemployment rate of 4.0% is the lowest rate since 1975. The
OBR forecast
it will remain near historic lows over the next five years
-
wages are increasing at their fastest pace in over a decade, and
are forecast to continue growing faster than inflation, which means
more money in people’s pockets
-
since 2010, there are a million fewer workless households and
every region and nation of the UK has higher employment and lower
unemployment.
Public finances
Thanks to the government’s fiscal responsibility, and the hard work
of the British public, the public finances have reached a turning point:
-
borrowing has already been reduced by four-fifths since 2009-10
and debt has begun its first sustained fall in a generation
-
debt fell last year, and is forecast to fall continuously, to
73.0% of GDP in 2023-24,
compared to the peak of 85.1% in 2016-17
-
the public finances have continued to improve since the autumn.
Borrowing and debt are lower in every year of the Spring Statement 2019
forecast than at Budget 2018
-
the government is focused on keeping debt falling so as to not
burden the next generation. The government is taking a balanced
approach, reducing borrowing and debt, while supporting public
services, investing in the economy and infrastructure, and keeping
taxes low
Tech and the new economy
Budget 2018 included significant additional support for cutting-edge
science and technologies that will transform the economy, create highly
skilled jobs, and boost living standards across the UK. Today the
Chancellor:
-
welcomed the Furman review, an
independent review of competition in the digital economy, which has
found that tech giants have become increasingly dominant. The
Chancellor announced that the government will respond later in the year
to the review’s calls to update competition rules for the digital age –
to open the market up and increase choice and innovation for consumers
-
has written
to the Competition and Markets Authority (CMA) asking them to
carry out a market study of the digital advertising market as soon as
is possible. This was a recommendation of the Furman Review
-
committed to funding the Joint European Torus programme in
Oxfordshire as a wholly UK asset in the event the Commission does not
renew the contract, giving the world-leading experts working at the
facility certainty to continue their ground-breaking fusion energy
research
-
invested £81 million in Extreme Photonics (state-of-the-art
laser technology) at the UK’s cutting-edge facility in Oxfordshire
-
boosted the UK’s genomics industry with £45 million for
Bioinformatics research in Cambridge
-
announced £79 million funding for a new supercomputer in
Edinburgh – five times faster than existing capabilities – whose
processing power will contribute to discoveries in medicine, climate
science and aerospace, and build on previous British breakthroughs
including targeted treatments for arthritis and HIV
Open and competitive UK
As the UK leaves the EU, it is vital that the world knows the UK is
open for business and attractive to international visitors. At the
Spring Statement is was announced that:
-
from June 2019, citizens of the US, Canada, New Zealand,
Australia, Japan, Singapore and South Korea will be permitted to use
e-gates at UK airports and at Eurostar terminals. This will
significantly reduce queues and improve the flow of passengers and the
overall experience at the UK border
-
landing cards will also begin to be abolished from June 2019.
This will reduce bureaucracy for travellers and speed up the processing
of passengers on arrival in the UK
-
research institutes and innovating businesses will benefit from
an exemption for PhD-level occupations from the cap on high-skilled
visas from this autumn. Overseas research activity will also count as
residence in the UK for the purpose of applying for settlement, meaning
researchers will no longer be unfairly penalised for time spent
overseas conducting vital fieldwork
Clean growth
The Budget 2018 set out how the government is accelerating the shift
to a clean economy, building on the Industrial Strategy, Clean Growth
Strategy, and 25 Year Environment Plan. The Spring Statement builds on
this commitment:
-
to help smaller businesses reduce their energy bills and carbon
emissions, the government is launching a call
for evidence on a Business energy efficiency scheme to explore how
it can support investment in energy efficiency measures
-
to ensure that wildlife isn’t compromised in delivering
necessary infrastructure and housing, the government will Mandate net
gains for biodiversity on new developments in England to deliver an
overall increase in biodiversity
-
to help meet climate targets, the government will advance the
decarbonisation of gas supplies by increasing the proportion of green
gas in the grid, helping to reduce dependence on burning natural gas in
homes and businesses
-
to help ensure consumer energy bills are low and homes are
better for the environment, the government will introduce a Future
Homes Standard by 2025, so that new build homes are future-proofed with
low carbon heating and world-leading levels of energy efficiency
-
to explore ways to enhance the natural environment and deliver
prosperity, the government will launch a global review into the
Economics of Biodiversity
-
to give people the option to travel ‘zero carbon’, the
government will launch a call for evidence on Offsetting Transport
Emissions to explore consumer understanding of the emissions from their
journeys and their options to offset them. This will also look into
whether travel providers should be required to offer carbon offsets to
their customers
-
to help protect critical habitats, the government will support
the call from the Ascension Island Council to designate 443,000 square
kilometres of its waters as a Marine Protected Area
Education and skills
Ensuring people have the skills that employers need is vital to
creating the workforce of the future. The Budget set out steps to equip
people with the skills to succeed in the modern economy, and today the
Chancellor announced:
-
updates to apprenticeship reforms announced at Budget that mean
from April 1st employers will see the co-investment rate they pay cut
by a half from 10% to 5%, at the same time as levy-paying employers are
able to share more levy funds across their supply chains, with the
maximum amount rising from 10% to 25%
-
to tackle period poverty in schools, the Department for
Education will lead work to develop a national scheme in England to
provide free sanitary products to girls in secondary schools
-
the government has appointed Professor Arindrajit Dube to
undertake a review
of the latest international evidence on the impact of minimum wages,
to inform future National Living Wage policy after 2020
Investing
in the future – housing and infrastructure
The government is determined to fix the broken housing market.
Building more homes in the right places is critical to unlocking
productivity growth and makes housing more affordable. At Autumn
Budget 2017, the government set out a comprehensive package of new
policies to raise housing supply by the end of this Parliament to its
highest level since 1970, on track to reach 300,000 a year on average.
The Spring Statement set out further steps to deliver this ambition:
-
published a consultation
on Infrastructure Finance, seeking views on how the government can
best support private infrastructure investment in the context of the
UK’s changing relationship with the European Investment Bank
-
reiterated the government’s commitment to publishing a
comprehensive National Infrastructure Strategy – the first of its kind
– setting out the government’s priorities for economic infrastructure
and responding to recommendations in the National Infrastructure
Commission’s National Infrastructure Assessment
-
£717 million from the £5.5 billion Housing Infrastructure Fund
to unlock up to 37,000 homes at sites including Old Oak Common in
London, the Oxford-Cambridge Arc and Cheshire.
-
through the Affordable Homes Guarantee Scheme, the government
will guarantee up to £3 billion of borrowing by housing associations in
England to support delivery of around 30,000 affordable homes
-
further progress on delivering growth in the Oxford-Cambridge
Arc including £445 million from the Housing Infrastructure Fund to
unlock over 22,000 homes, and a joint
declaration with local partners, affirming our shared vision for
the Arc
-
up to £260 million for the Borderlands Growth Deal, which on top
of the £102 million announced recently for Carlisle from the Housing
Infrastructure Fund means up to £362 million UK Government funding into
the Borderlands area
Spending Review
The Chancellor also confirmed that the government will hold a
Spending Review which will conclude alongside the Budget. This will set
departmental budgets, including 3 year budgets for resource spending,
if an EU exit deal is agreed. As at the past three Spending Reviews,
the government will run a Zero-Based Review of capital spending where
each programme or project will be scrutinised from the bottom up,
ensuring the maximum return for the country. The Spending Review will
also have a renewed focus on the outcomes achieved for the money
invested – supporting a high-growth economy with public services that
work for everyone.
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Article Published/Sorted/Amended on Scopulus 2019-03-13 21:00:00 in Tax Articles
