Spring Statement 2018

Chancellor Philip Hammond has presented his first Spring Statement, with something of a spring in his step.

First Spring Statement Heralds the ‘Light at the End of the Tunnel’

Chancellor Philip Hammond has presented his first Spring Statement, with something of a spring in his step.

Responding to the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the economy is expected to grow at the slightly faster rate of 1.5% in 2018, compared with the 1.4% forecast in the Autumn Budget.

Debt and borrowing have been revised downwards, with the budget deficit now set to reach £45.2bn this year and debt expected to start falling as a share of GDP from next year. Inflation is also predicted to fall back down to the Bank of England’s 2% target over the coming 12 months. The Chancellor suggested that the UK’s public finances have reached a ‘turning point’.

While openly challenging his own reputation as a pessimist, the Chancellor rejected calls to ease the squeeze on spending, asserting that UK debt remains ‘too high’ and heralding the government’s ‘balanced approach’. However, he did pave the way for potential increases in public spending from 2020 onwards, revealing plans for a detailed Spending Review in 2019.

Mr Hammond also used the Spring Statement to report on the progress made on a number of the measures previously announced at the Autumn Budget.

Having previously announced that business rates revaluations will take place more frequently, the Chancellor has now brought forward the next revaluation by a year, to 2021. He also revealed that an estimated 60,000 people have so far benefitted from the stamp duty land tax exemption introduced for first-time buyers in the Autumn Budget.

With Brexit negotiations ongoing, the Chancellor confirmed that over £1.5bn has been allocated to departments and devolved administrations in preparation for the UK’s exit from the EU. He also announced the first allocation of funding from the Challenge Fund, which will provide money to support the roll out of full-fibre broadband to 13 areas of the UK.

The Chancellor also committed more than £500m a year to support the new post-16 T-Levels, with £50m a month being made available to help employers prepare for T-Level work placements.

Turning to future changes to the tax system, the Chancellor launched consultations on a number of key areas, including the impact of the VAT registration threshold on small businesses, tackling single-use plastic waste, and new incentives to encourage the ‘great British white van driver’ to go green.

Measures announced

Although the Spring Statement is not intended to be a major fiscal event, the Chancellor did announce some business and investment measures.

  • Business rates

    At the Autumn Budget 2017 it was announced that business rates revaluations will take place every three years, rather than every five years, following the next revaluation. At the Spring Statement the Chancellor announced that the next revaluation will be brought forward from 2022 to 2021, meaning that the first change to three-year revaluations will take place in 2024

  • Full-fibre

    Following the launch at the Autumn Budget of the £190m Challenge Fund to help roll out full-fibre broadband to local areas, the Spring Statement allocates the first wave of funding, providing over £95m for 13 areas across the UK. 

  • House building

    The government has a target of raising the supply of homes to 300,000 a year on average by the mid-2020s. In the Spring Statement it was announced that the Housing Growth Partnership, which provides financial support for small housebuilders, will be more than doubled to £220m. London will receive £1.67bn to start building a further 27,000 affordable homes by the end of 2021/22.