Key points: Autumn Budget 201722 November 2017 - by Anna
The Chancellor has released his spending plans. We look at what's on the horizon.
Chancellor of the Exchequer Philip Hammond introduced the government’s 2017 Autumn Budget to the House of Commons today. The British economy, he said, “continues to confound those who talk it down.”
Addressing Brexit almost immediately, Mr Hammond confirmed that, with talks approaching a critical stage, £3 billion will be allotted over the next two years to cater for “all eventualities.” This sum follows the £700 million already spent as the UK negotiates its withdrawal from the European Union.
Mr Hammond pointed out, however, that the statement focused on more than just Brexit. The “world is on the brink of a technological revolution,” he said, and the UK aims to “embrace the future” and "seize opportunities”.
Beyond investment in rail and other infrastructure, £2.3 billion has been allocated for research and development, along with an increase in the R&D tax credit to 12 per cent, underlines the government’s renewed focused on innovation in this sector. Other initiatives, including 5G, full fibre broadband and artificial intelligence, will receive additional funding to the tune of £500 million.
The Chancellor also revealed plans to work with the Environment Secretary, Michael Gove, to counter pollution and reduce waste by investigating methods of taxing single-use plastic items.
North Sea energy is to benefit from a tax break, an expected move intended to spur "new entrants” and “bring fresh investment to a basin that still holds up to 20 billion barrels of oil".
Workers will see the national living wage go up, from £7.50 per hour to £7.83 per hour (a 4.4 per cent increase), at the beginning of April. In addition, the basic and higher thresholds of income tax are to rise to £11,850 and £46,350, respectively.
For those not in employment, Mr Hammond detailed changes to Universal Credit, which has attracted a great deal of criticism from some quarters. While calling it a “long overdue and necessary reform”, amendments have been made to its implementation.
Claimants will not be required to wait seven days before receiving money and advances will be available within five days of making an application. The repayment period for those advances will be extended from six months to one year. Overall, a further £1.5 billion is being diverted into the Universal Credit programme.
In seeking to expand development and renovation beyond London, Mr Hammond outlined a £1.7 billion Transforming Cities Fund, as well as a number of other devolution deals, for England. Scotland will be afforded £2 billion in extra spending power, Wales £1.2 billion. A figure of £660 million has been earmarked for a functioning Northern Ireland Executive.
The Chancellor announced his intention to open talks on a Belfast City Deal, one that should lead to similar arrangements in other parts of Northern Ireland.
Beyond that, he committed to reviewing the effect of APD and VAT on tourism in the region.
In seeking to curb the effects of inflation, Mr Hammond will freeze duties on alcoholic drinks, aside from those incurred by high-strength, low-quality beverages from 2019. The fuel duty increase has also been cancelled.
In spite of speculation to the contrary, the Chancellor did not elect to lower the level at which businesses become liable for VAT. This will remain at £85,000 for another two years.
Other measures of note include local authorities in England and Wales being empowered to charge a 100 per cent premium on council tax for empty properties; the establishment of a homelessness task force, with the aim of eliminating rough sleeping by 2027; and the abolition of stamp duty payable by first-time buyers – in England, Northern Ireland and Wales – for homes valued up to £300,000.
In responding to the Budget statement, UUP MLA Dr Steve Aiken said: “The announcement of £650m additional spending for Northern Ireland is of course welcome, especially as the Chancellor's previous Spring Budget set out a major real-terms reduction in 2018-19. Further clarity is urgently needed on it in order for the real impact to be properly assessed.”
SDLP leader Colum Eastwood MLA focused his criticism on the lack of a specific City Deal for Derry-Londonderry, and called for all parties to come together to demand this. “It is a disgrace that the British Chancellor today has failed to commit to a Derry City Deal,” he said. “While the SDLP is supportive of City Deals elsewhere, Derry was the first city under the SDLP leadership to push for a City Deal and we have been side-lined again. It’s not good enough.”
The Alliance Party’s economy spokesperson, Dr Stephen Farry MLA, has said any new money for Northern Ireland must be used to drive transformation.
“While any fiscal relaxation and increased spending UK-wide is welcome, we should also take note of the downward movement on many economic indicators such as the forecast of growth. In this Brexit era, the UK economy is increasingly underperforming,” he said.
Praising Mr Hammond’s speech, Sammy Wilson MP referenced the DUP-Conservative ‘confidence and supply’ agreement: “This budget reinforces the relationship which we now have with the government. We are pleased that our influence has not just delivered for Northern Ireland but also good policies for the whole United Kingdom.”
Meanwhile, Sinn Féin’s Máirtín Ó Muilleoir MLA stated that the “Tory budget represents a real term cut of between £100m and £200m in the money available for day-today spending in the North’s block grant next year.”
There is “no good news in this budget for our public services and for public sector workers who have already borne the brunt of years of Tory austerity cuts to the block grant,” he said.
The economy in numbers