The Government’s Spring Statement 2018: what you need to know
It was always going to be the Spring Statement that wasn’t really much of a statement.
Last year, we had two Budgets: one in March, the next in November. The traditional Autumn Statement was replaced by the annual Budget and we now have a Spring Statement instead.
We get the feeling that the Chancellor would rather not have to make a Spring Statement in addition to the Budget. But thanks to the Industry Act of 1975, he has no option but to make two financial statements per year.
Unlike the Autumn Statement, which grew to be a mini-Budget, the first Spring Statement was a much more low-key affair. It was not a platform for announcing new spending commitments or changes to tax rates. Instead it was used principally to outline the latest forecasts from the Office for Budget Responsibility (OBR).
So, what did the Chancellor say and what implications do his announcements have for you?
Frankly, there were lean pickings for businesses and individuals alike. Working to the theme of ‘an economy that works for everyone’, the beginning of the Chancellor’s speech was a flurry of statistics. He outlined how the GDP forecast for 2018 will rise from 1.4% to 1.5%, before dipping to 1.3% in 2019 and bouncing up to 1.5% in 2022.
He spoke about how the OBR forecast that 500,000 more people will be in work by 2022 and how inflation is expected soon to drop back to 2% from 3%. Next he told Parliament that by 2019 Britain will be running a surplus on its current account and that borrowing will dropfrom 2.2% to 0.9% in 2018-19.
Then, just when all the numbers were leaving listeners reeling, he outlined a number of measures that seemed rather more tangible. They included:
- More pay for NHS staff, if managers and workers reach a deal
- Increased public spending to be announced in the autumn Budget if the public finances continue to reflect the improvements in the OBR report
- The next business rates valuation being brought forward to 2021
- A review of how late payments to small businesses can be avoided
- The construction skills fund opening for bids from April 2018
- An investment programme of £44bn to raise housing supply to 300,000 per year by the mid 2020s
- A consultation on a new VAT collection mechanism for online payments
- A consultation on tax cuts for low emissions vans
- A consultation on using tax increases to reduce plastic use.
In short, this was a Spring Statement that was more about financial forecasting, consultation and aspiration. It was not a platform for outlining new spending or policies.
So, it looks like both businesses and individuals will need to wait until the Autumn Budget to learn of any major changes that will affect them. Let’s just hope that the OBR’s positive forecasts are borne out by the economy’s future performance.