Chancellor Philip Hammond’s Autumn Statement was marked by an attempt to counteract the UK’s expected deficit of £100bn caused by the Brexit vote. Yes, Brexit again.
This is the first budget since the vote to leave Europe, so all eyes were on Hammond to comfort and reassure businesses.
In a way, he did. The budget heralded: a cut in corporation tax from 20 per cent to 17 per cent by 2020 to benefit one million businesses; an “unlocking” of investment in new and growing firms; and a National Productivity Investment Fund is to support spending in key infrastructure areas such as transport, communications, research and development. The budget also brought a continued freeze on fuel duty, the promise of large scale road repair and £390m investment in future transport technology. The message was loud and clear: improving the UK’s transport and digital networks and supporting research and development will give the UK a fighting chance on the world stage, creating and exporting products and information.
In the wake of Brexit, helping the UK to remain an attractive place for businesses to invest in research and production is vital. While the economy is still the fastest growing in the G20, the Office for Budget Responsibility conservatively predicts the growth will only be 1.7 per cent in 2018, 2.1 per cent in 2019-2020 and 2 per cent in 2021. This Chancellor is looking to right the public finances rather than achieve the former Chancellor’s aim of a budget surplus.
In light of this, Hammond has made a revision of the Universal Credits cuts that marked the former Chancellor’s budgets and divided the last cabinet. Currently three million households have 65p in every pound earned, after tax, taken off their benefit award. From April 2017, they will have 63p taken from their benefit for every pound earned, after tax. With the £100bn ‘Brexit black hole’ looming, Hammond has stopped short of making any major changes.
One surprising announcement however, was the ban on letting agency fees. More than 4.3 million people in the UK rent a property and will be used to paying an average up-front fee of £337. The Chancellor hopes that by abolishing this fee, tenants’ money will go further. The National Landlords Association has warned that agencies will simply recoup their losses from higher rents. In respect of this likely outcome, the Chancellor has also pledged an extra £1.4bn on building 40,000 affordable homes to help renters to buy their own property. He’s earmarked £2.3bn for a new Housing Infrastructure Fund to support the building of 100,000 new homes in high-demand areas and a further £1.7bn has been earmarked for the construction of new properties on public land. Clearly this government has a property-ownership agenda and it will be interesting to see how the housing market reacts in due course.
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