The Government’s first – and last – Autumn Statement will be remembered for its sensibleness.
When faced with a crisis, Ronald Reagan had a catchphrase: “Don’t just do something. Stand there.”
May’s Chancellor is cut from the same cloth. Philip Hammond is not about fancy initiatives, meddling too much or tweaking things for the sake of a good headline. He does something only when it is required.
At a time when Brexit is going to change everything, we needed a sensible Autumn Statement from a government that lets businesses just get on with it.
There was confirmation that the ‘triple lock’ policy on the state pension would remain – for now.
The budget notes describe this as unsustainable and we expect this to be removed next year. It’s going to have an impact on higher rate taxpayers so we would recommend those hit by it to increase their pension contributions as soon as possible to get tax relief.
A consultation will be launched on how best to prevent people with retirement savings from being cold-called by pension scams – which is very welcome news.
New savings bond
The Autumn Statement announced a new 2.2% fixed savings bond which will go on offer next year – but don’t crack open the champagne just yet.
The full details of the bond will be unveiled in the Spring Budget.
Savers looking to invest more, should check out the 123 bank account from Santander which pays a monthly interest of 1.5% but allows you to invest up to £20,000.
Personal Income and employee perks
From April 2017, the Personal Savings Allowance for income tax will raise from £11,000 to £11,500 and the National Living Wage will increase from £7.20 an hour to £7.50.
In 2010, the Personal Savings Allowance was £6,750 so this has gone up massively in a very short space of time, particularly when you consider our low inflation rate in that time.
On the other hand, perks for employees are set to cost more. Known as ‘salary sacrifice’ schemes, employees have traditionally been able to give up part of their salary for a non-cash benefit allowing them to buy gym memberships, mobile phone deals and take car allowances.
From April, the scheme will only be beneficial for people using it for childcare vouchers, cycle-to-work schemes and pension contributions – with the exception of ultra-low emission ‘green’ cars.
Clampdown on letting agents
Letting agent fees on people who rent private accommodation will be banned as soon as possible with landlords expected to pick up the costs of preparing tenancy agreements, checking references and credit checks instead.
For too long, abusive agents have been charging their tenants far too much for straightforward checks and paperwork. We will have to wait and see whether this leads to an increase in rental costs.
There was some good news for the North West, which shows that Theresa May seems to be standing by her first pledge as PM for a ‘one-nation Britain’.
The government has committed to raising productivity across the UK – and not just in the south. With the Northern Powerhouse Strategy, there will be £1.8bn funding for regions through the Local Growth Fund.
It will be interesting to see what this means for the North West as the new mayors are elected – I expect they will have the power to spend regionally which will allow them to invest in economically productive infrastructure.
The new £400m Digital Infrastructure Investment Fund and the commitment to rolling out fibre to more homes and businesses will also be good for our region.
No more Autumn Statements
A new Spring Statement is to be introduced in its place which will react to OBR forecasts.
This makes sense as the Autumn Statement has become a second budget in recent times. A return to one fiscal event should make life simpler for taxpayers.
It’s not the first time the UK has seen a Budget held in the Autumn. In 1993, former Chancellor of the Exchequer Kenneth Clarke merged tax and spending announcements into an Autumn Budget.
The Government recommitted to cutting the rate of Corporation Tax to 17% by 2020 and reducing the burden of business rates by £6.7bn over the next five years.
There was 100% Rural Rate Relief announced for businesses in rural areas, a cancellation of the planned fuel duty rise for the seventh year in a row (saving an average of £130 a year for car drivers and £350 for van drivers) and over £1bn pledged for improving the country’s digital infrastructure.
Under a simplification of national insurance contributions, businesses face an extra cost of £7.18 per employee from April 2017. Severance payments over £30,000 will also be subject to National Insurance. Previously, only income tax was charged.