Chancellor Philip Hammond delivered both his first and last Spring Budget today (8 March) as he looked to add further clarity to what he announced in his Autumn Statement.
‘Spreadsheet Phil’ delivered what was a surprising jocular Spring Budget considering the last person to scrap the Spring Budget was subsequently sacked just 10 weeks later.
To lively responses from both benches, the Chancellor provided some clarity on several of the announcements he made in his largely broad-based Autumn Statement – principally around productivity, R&D, technical education and business rates.
Delivering what he referred to as the foundations for a stronger, fairer and more global Britain, Hammond noted that employment was at a record high and unemployment was at an 11-year low. Despite uncertainty both pre and post-referendum, last year saw the economy grow faster than the US, Japan and France – in fact, among the the major advanced economies, Britain’s growth was second only to Germany.
Reflecting the recent strength of the economy, the OBR has upgraded its forecast for growth in 2017 from 1.4% to 2% – a figure expected to dip to 1.6% in 2018 and 1.9% in 2019, before rising back to 2% in 2020.
The OBR has also revised its 2016-17 borrowing forecast, down £16.4bn to £51.7bn – a number it expects to continue to fall at a similar rate every year until 2021-22.
Employment may be up, but productivity remains stubbornly low, the Chancellor continued. Too many young people are leaving formal education without the skills they need for today’s labour market, a fact reflected in the findings of The Manufacturer’s latest Annual Manufacturing Report.
Productivity growth results in higher pay, i.e. better living standards. Yet, the country remains well behind Germany, by some 35%, and 18% behind the G7 average, and has done for some time.
According to the Chancellor, that gap will only be closed through investment in training and infrastructure. As such, he announced that investment in technical education for 16 to 19 year olds would rise to more than £500m.
He also unveiled the introduction of new “T Levels”, enabling students to choose from 15 different career routes, such as construction, digital or engineering, rather than the 13,000 different qualifications currently available. According to the Chancellor, the T Levels are designed and recognised by employers with clear routes into work, more time in the classroom, and good quality work placements.
As such, the number of hours of training for these students is also set to increase by more than 50%, and all students will undertake an industry work placement as standard.
Research & innovation
Of the £23bn worth of additional infrastructure and innovation investment announced in the Autumn Statement, it was revealed that £300m would be allocated to support 1,000 new PhD places, predominantly focused on STEM subjects, and fellowships in research areas including bioscience and biotechnology, quantum technologies, and satellite technology.
Some £270m would be used to keep the UK at the forefront of disruptive technologies, the likes of biotech, robotic systems and autonomous vehicles. £16m would be ring-fenced to develop a new 5G mobile technology hub, alongside £200m for local projects geared towards building fast and reliable full-fibre broadband networks.
Further details were given around the Chancellor’s Industrial Strategy Challenge Fund, including an initial £270m used to launch the fund, earmarked to support research and innovation in both universities and businesses. Topics of interest include artificial intelligence (AI) and robotics, electric vehicle batteries and pharmaceutical manufacturing technologies – all areas the UK already has world-class expertise in.
Considering the ongoing furore surrounding the recently announced introduction of new businesses rate – due to come into effect next month, the Chancellor announced £435m to help support those businesses most affected by the business rates relief revaluation.
Through which, it’s hoped that no small business that is coming out of small business rates relief will pay over £600 more in business rates this year than they did in 2016-17.
Additionally, local authorities will have funding in order to provide £300m worth of discretionary relief to help those businesses most affected by the revaluation.