Catch up with Dan Jones – Managing Director of Focus On Media as he shares his thoughts on the budget below.
Budget 2018 was as much about Phillip Hammond and co. trying to build bridges with the electorate, business and opposition as much as it was about long term fiscal policy. The uncertainty surrounding the Brexit negotiations coupled with the spectre of a general election (yes, another one!) means this Budget conveniently doubled up as a bit of an all-round revised manifesto.
Spreadsheet Phil certainly knew Halloween was just around the corner, offering all treats and few tricks. His claim that the end of austerity is nigh, is undoubtedly tenuous, but it was a broadly positive speech with the key economic data painting an improving picture, and a few headline ready give-aways.
There was good news for working men and women across the UK with the announcement that wages are increasing and that the income tax personal allowance will rise to £12,500, and the higher rate threshold will increase to £50,000. This effectively means working people will have at least an additional £130 a year in their pocket. With consumer confidence falling over recent months (UK consumers are nearly as pessimistic about their own finances and national finances as Russian consumers!) this give-away will certainly help to build more confidence, and this will be welcome news to the struggling motors and property industries.
Universal Credit continues to limp on with a cash injection of £1 billion over the next 5 years, but will this be enough to stave off the broader criticism that the scheme is a lost cause?
Small businesses breathed a sigh of relief when the Chancellor announced further business rate relief. This relief is for businesses with a rateable value of £51,000 or below, and will see business rate bills fall by a third over the next two years. While the rise of online shopping remains the chief reason why the high street is enduring a slow, tortuous death, this announcement will help to stem the flow and give smaller businesses a chance of adapt to changing consumer habits.
An important announcement for First Time Buyers was the abolition of Stamp Duty on all homes purchased on a shared ownership scheme (valued up to £500K). Indeed, generous Phil went further, back dating this to the date of the last Budget.
Housing was clearly a government priority in this year’s budget, with the Chancellor extending the Help to Buy scheme to the 2023 (with no ‘tweaks’ to the criteria as some were anticipating) and £500 million ear marked for housing infrastructure projects. This investment should enable 650K more homes to be built, and with the Chancellor keen to be ahead of the curve on the debate surrounding the future of retail and the High Street, he was keen to talk up the possibility of using this money to turn empty shops into new homes.
Of course, all of the Chancellor’s goodwill hinges on the UK securing a deal with the EU and there being an ‘orderly Brexit’ next March. On the premise that this happens (and factoring in no curve ball elections too, not forgetting that the DUP could and has threatened to vote down the budget if it doesn’t get the Brexit it wants), it’s a positive outlook, and this should go some way to helping consumers regain some of the confidence that has been in visible decline in recent months.
It’s worth us caveating here that as in previous years, the success (or not, as the case has often been) of any budget comes to light in the days and weeks following the budget announcement itself. The pasty tax and spare room tax are two zingers that immediately spring to mind here! The lack of funding for schools and that rather clumsy cash injection to prop up the Universal Credit scheme may come back to haunt Mr. Hammond in the coming days and weeks!