Last week, Philip Hammond, Chancellor of the Exchequer, delivered the Autumn Statement marking his first big speech since taking on his new role. In addition, he outlined the latest economic predictions from the Budget Responsibility Office since the Brexit vote – and with reports of consumer spending in decline, it was a significant moment for Britain.
Don’t worry if you missed out on all the fuss; we have summarised some key points for you:
As announced prior to the speech, from April 2017 there will be a rise in the National Living Wage from £7.20 to £7.50.
The capacity of UK Export Finance will also be doubled by the government. They are the body assisting exporters to win contracts and then fulfil them.
Investment in Start-ups
Concern was expressed by the Chancellor that larger competitors were buying UK start-ups before they had the opportunity to grow to scale. He announced as a means of combating this, a new investment in the British Business Bank of £400 million. The eventual intention here is to unlock a £1 billion total investment.
A series of pledges were made by the Chancellor on infrastructure spending which includes:
- In local transport networks in England, a £1.1 billion investment.
- On digital infrastructure including fibre broadband and 5G, at least £1 billion.
- For the English regions, £1.8 billion.
- To the Oxford to Cambridge Expressway research and development, a commitment to building.
Pointing out that it lags behind major competitors in the EU, the Chancellor emphasized concerns regarding UK productivity. To help to deal with this, an announcement was made by Hammond of the establishment of a 23 billion pound “productivity investment fund”; focusing on projects in infrastructure and innovation. .
Still another announcement he made was that by 2020, there will be a rise in research and development of £2 billion.
The Economy’s Current State
The Budget Responsibility Office expects growth of two percent over the next five years. To be more precise, 2.1% is predicted for 2016, 1.4% for 2017 and 1.7% for 2018.
The OBR reports that the uncertainty caused by Brexit is the reason behind the worse than previously expected forecasts. Notwithstanding, the Chancellor did emphasize that forecasts over the medium term still predict a rate of growth over IMF expectations for countries like Germany and France.
Once parliament ends, the personal tax free allowance will be £12,500, and the top rate threshold will increase to £50,000. After this, the allowance will increase at least relative to inflation.
People who receive benefits were given a boost, with the announcement of cuts to the taper rate for Universal Credit.
Furthermore, Hammond indicated a crackdown on people who use VAT flat rates ‘inappropriately’. What this actually means though, is not yet entirely clear.
Lastly, Hammond said that tax on insurance will increase from 10% to 12% during June 2017. This is an increases insurance premium tax (IPT) by 2%.
If you want to find out how the Autumn Statement will affect tradesman, please click here.
Fees for Letting Agents
As far as landlords go, the most publicized headline of the statement was the ending of fees charged by letting agents, to be implemented ‘in the near future’.
Hammond said: “Landlords hire letting agents, so landlords ought to pay these fees”.
Nonetheless, straight after this announcement, groups representing landlords said that this policy might cause rents to go up. Richard Lambert, the National Landlord Association chief executive, said: “Increasing landlords’ overheads, as well as limiting their ability to take their business expenses off their taxable income, is bound to result in rents rising”.
The Right to Purchase
Hammond announced a “big regional pilot scheme” of a Right to Purchase venture for council house tenants. This will be offered to over 3000 people.
Experts estimate that the bill for this venture will be £250 million over a five year period, with housing associations receiving reimbursements for the price reductions tenants will get on the properties.
Hammond’s speech included a pledge to provide £2.3 billion for ‘housing infrastructure’. Reportedly, this will allow as many as 100,000 new houses to be built in areas of high demand. This could signal hope for the construction industry after official data showed house building stalled after growing economic uncertainty by builders following the vote to leave the EU.
Also, Hammond pledged an extra £1.4 billion to construct 40,000 more affordable properties.
How do you view the Autumn Statement? Is it helpful or detrimental to small businesses and landlords? Tell us in the comments below.