Spring Statement 2018
Chancellor Philip Hammond presented his first Spring Statement to the House of Commons on 13 March 2018, alongside the publication of the Office for Budget Responsibility’s updated forecasts for growth and borrowing. He went on to say: "Today’s statement will update the House on the economic and fiscal position; Report progress on announcements made at the two budgets last year; And launch further consultations ahead of Budget 2018, as set out today in my Written Ministerial Statement."
Below, are the key points he delivered in his speech. To view the full speech, please click the following link.
About this reportThis report was written immediately after Philip Hammond delivered his speech and has been prepared from press releases and other documents. It is not intended to cover every aspect of the Statement but, instead, is designed to act as overview only. No liability is accepted for any action taken or refrained from in consequence of its contents. Advice should always be sought from a professional.
- The UK economy has grown in every year since 2010.
- Manufacturing sector enjoying its longest unbroken run of growth for fifty years.
- 3 million jobs added.
- All regions within the UK, report higher employment and lower unemployment, than in 2010
- Wages of the lowest paid up by almost 7% above inflation since April 2015
- He went on to define our unique strengths;
- Our language is the global language of business.
- Our legal system is the jurisdiction of choice for commerce.
- We host the world’s most global city, and its international finance and professional services capital.
- Our companies are in the vanguard of the technological revolution.
- While our world-class universities are delivering the breakthrough discoveries and inventions that are powering it.
- British culture and talent reaches huge audiences across the globe.
- And our tech sector is attracting skills and capital from the four corners of the earth.
- The OBR delivers its second report for the fiscal year 2017-18 and confirmed;
- It forecasts more jobs.
- Rising real wages.
- Declining inflation.
- A falling deficit.
- And a shrinking debt.
- The economy grew by 1.7% in 2017, compared to 1.5% forecast at the Budget.
- They have revised up their forecast for 2018 from 1.4% to 1.5%.
- Forecast growth is then unchanged at 1.3% in 2019 and 20, before picking up to 1.4% in 21 and 1.5% in 22.
- They expect inflation, which is currently above target at 3%, to fall back to target over the next 12 months.
- Meaning that real wage growth is expected to be positive from the first quarter of 18-19, and to increase steadily thereafter.
- Debt to fall as a share of GDP from 2018-19 and further revises down debt and borrowing in every year.
- Borrowing is now forecast to be ¬£45.2 billion this year, ¬£4.7bn lower than forecast in November and ¬£108bn lower than in 2010.
- As a percentage of GDP, borrowing is forecast to be 2.2% in 17-18, falling to 1.8% in 18-19, 1.6% in 19-20, then 1.3%, 1.1% and finally 0.9% in ‘22-‘23, meaning that in 18-19, we will run a small current surplus, borrowing only for capital investment.
- We are forecast to meet our cyclically adjusted borrowing target in ‘20-21 with ¬£15.4bn headroom to spare.
- The more favourable outlook for borrowing means the debt forecast is nearly 1% lower than in November, peaking at 85.6% of GDP in 17-18 and then falling to 85.5% in 18-19, then 85.1%, 82.1%, 78.3%, and finally 77.9% in 2022-23. The first sustained fall in debt in 17 years.
- The Chancellor confirmed, at this year‚Äôs Budget, he will set an overall path for public spending for 2020 and beyond, with a detailed Spending Review to take place in 2019.
- Regarding Brexit, he confirmed the Chief Secretary is publishing the Departmental allocations of over ¬£1.5 billion of Brexit preparation funding for 2018-19 which was previously announced at the Autumn Budget.
Since Autumn Statement 2016, ¬£60 billion committed to new spending;
- With almost ¬£9 billion extra for our NHS and our social care system.
- ¬£4bn going into the NHS in 18/19 alone. More to come if, as hoped, management and Unions reach an agreement on a pay modernisation deal for our nation’s Nurses and Agenda for Change staff.
- ¬£2.2 billion more on education and skills.
- And ¬£31 billion going to fund infrastructure, R&D and housing through the National Productivity Investment Fund.
- Since becoming Chancellor, Hammond confirms he has provided an extra ¬£11 billion of funding for 2018/19, to help with short-term public spending pressures.
Taking public investment in schools, hospitals, and infrastructure in this parliament to its highest sustained level in 40 years.
- Taxes have been cut for 31 million working people by raising the personal allowance again in line with the Governments manifesto commitment.
- Taking more than 4 million people out of tax altogether since 2010.
- Freezing fuel duty for an eighth successive year, taking the saving for a typical car driver to ¬£850 [political content removed].
- And raising the National Living Wage to ¬£7.83 from next month, giving the lowest paid in our society a well-deserved pay rise of over ¬£2,000 for a full-time worker since 2016.
Since Autumn 2016, the Chancellor confirmed the Government have set out our plan to back the enterprise and ambition of British business and the hard work of the British people. This included;
- A plan to unleash our creators and our innovators. Our inventors and our discoverers.
- To embrace the new technologies of the future and to deliver the skills needed, to benefit from them.
- To tackle long-standing productivity challenges.
- And to say more loudly than ever, the economy will remain open and outward-looking, confident to compete with the best in the world.
- Championing those who create the jobs and the wealth on which our prosperity and our public services both depend.
He went on to say;
- The Government are reducing business rates by over ¬£10 billion.
- And committed at Autumn Budget 2017, to move to triennial revaluations from 2022.
- He was pleased to announce that the Government will bring forward the next business rates revaluation to 2021 and make the triennial reviews from that date.
- The Government will launch a Call for Evidence to understand how best they can help the UK‚Äôs least productive businesses to learn from, and catch-up with, the most productive.
- How the Government can eliminate the continuing scourge of late payments ‚Äď a key ask from small business.
- In the Autumn, the Government published a paper on taxing large digital businesses in the global economy, and, today, have followed up with a publication that explores potential solutions. These will be discussed with G20 Finance Ministers.
- The Government have also published a call for evidence on how online platforms can help their users to pay the right amount of tax and will consult on a new VAT collection mechanism for online sales, to ensure that the VAT consumers pay actually reaches the Treasury.
- And the Government will also call for evidence, on how to encourage cashless and digital payments, while ensuring cash remains available to those who need it.
He confirmed the Government's modern Industrial Strategy sets out their plan to keep Britain at the forefront of new technologies;
- With the biggest increase in public R&D spending for four decades.
- Much of this new technology depends on high-speed broadband.
- Confirms, the Government will make the first allocations of the ¬£190 million local full fibre challenge fund, announced at Autumn Budget, and also confirms ¬£25 million for the first 5G testbeds.
- As the economy changes, the Government must ensure people have the skills they need to seize the opportunities ahead.
- So the Government have committed over ¬£500 million a year to T-Levels, the most ambitious post-16 reforms in 70 years.
- And from next month, ¬£50 million will be available to help employers prepare for the rollout of T-Level work placements.
- And again next month, the ¬£29 million construction skills fund will open for bids to fund up to 20 construction skills villages around the country.
- As a government, they are committed to delivering 3 million apprenticeship starts by 2020 with the support of business through the apprenticeship levy.
- The Government will release up to ¬£80 million of funding to support those small businesses in engaging an apprentice.
- The Government are undertaking the largest road building programme since the ‚Äė70s.
- The Chancellor gave the green light to fund the new bridge across the River Mersey in 2011, which opened late last year
- The largest infrastructure project in Europe, Crossrail, is due to open in just 9 months‚Äô time.
- Progress is being made on plans to deliver the Cambridge-Milton Keynes-Oxford Corridor.
- Devolving powers and budgets to elected mayors across the Northern Powerhouse and Midlands Engine.
- Negotiating city deals with Stirling and Clackmannanshire, Tay Cities, Borderlands, North Wales, Mid Wales, and Belfast.
- The Government are Inviting proposals from cities across England for the ¬£840 million fund, announced at the Budget to deliver on local transport priorities.
At the heart of the Government's plan for building an economy that works for everyone, is their commitment to tackling the challenges in the housing market;
- With an investment programme of ¬£44 billion to raise housing supply to 300,000 a year by the mid-2020s.
- Working with 44 authorities who have bid into the ¬£4.1 billion Housing Infrastructure Fund, to unlock homes in areas of high demand.
- Concluding housing deals with ambitious authorities who have agreed to deliver above their Local Housing Need.
- The Government have just agreed a deal with the West Midlands, committing to deliver 215,000 homes by 2030-31, facilitated by a ¬£100 million grant from the Land Remediation Fund.
- Double the size of the Housing Growth Partnership with Lloyds Banking Group to ¬£220 million, to help providing additional finance for small builders.
- London will receive an additional ¬£1.7 billion to deliver a further 26,000 affordable homes, including homes for social rent, taking total affordable housing delivery in London to over 116,000 by the end of 2021-22.
- Reviewing the gap between planning permissions granted and housing completions.
- An estimated 60,000 First Time Buyers have already benefited from the Stamp Duty relief, announced at the Autumn Budget.
This Government is determined that our generation should leave the natural environment in a better state than we found it;
- To improve the quality of the air we breathe, the Government will publish a call for evidence on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas.
- And following the Governments successful intervention to incentivise green taxis, they will help the Great British White Van driver go green with a consultation on reduced VED rates for the cleanest vans.
- Follow up on the vital issue of plastic littering and the threat to our oceans, with a call for evidence to support the Government on delivering their vow to tackle this complex issue.
- It will look at the whole supply chain for single use plastics. At alternative materials. Reusable options and recycling opportunities.
- And it will look at how the tax system can help drive the technological progress and behavioural change the country needs.
- Not as a way of raising revenue but as a way of changing behaviour and encouraging innovation.
- The Government will commit to investing to develop new, greener, products and processes, funded from the revenues that are raised.
- And as a downpayment, the Government will award ¬£20m, now, from existing departmental budgets, to businesses and universities, to stimulate new thinking and rapid solutions in this area during the call for evidence.
Philip Hammond | Chancellor of the Exchequer
"We are delivering on our plan with a balanced approach. Restoring the public finances. Investing in our economy and our public services. Raising productivity through our modern industrial strategy. Building the homes our people need. Tackling the environmental challenges that threaten our future. Embracing technological change, seizing the opportunities ahead, as we build our vision of a country that works for everyone. An economy where prosperity and opportunity are in reach of all, wherever they live, whatever their gender, colour, creed or background. Where talent and hard work alone determine success. A beacon of enterprise and innovation. An outward looking, free-trading nation. One that is confident that our best days lie ahead of us. A force for good in the world. A country we can all be proud to pass on to our children."
John McDonnell | Shadow Chancellor
"Let me thank the Chancellor for providing me with an earlier sight of his statement. I say to the Chancellor; his complacency today is astounding. We face, in every public service, a crisis on a scale we‚Äôve never seen before. Hasn‚Äôt he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors? They are telling him they can‚Äôt wait for the next Budget. They‚Äôre telling him to act now. For eight years they‚Äôve been ignored by this government. And today, they‚Äôve been ignored again. The Chancellor has proclaimed that there is light at the end of the tunnel. But this shows just how cut off from the real world he is. Last year growth in our economy was among the lowest in the G7 and the slowest since 2012. Wages are lower now ‚Äď in real terms ‚Äď than they were in 2010, and they‚Äôre still falling. And there are 3 million people in insecure work."
Adam Marshall | Director-General of the British Chambers of Commerce
"Businesses will be encouraged by the Chancellor‚Äôs report on the UK‚Äôs fiscal health, with lower projections for the deficit and falling national debt, as well as his full-throated defence of the market economy and the role of the private sector in delivering prosperity. Yet as deficit and debt levels improve, the Chancellor must resist calls to pour money into politically-attractive, short-term spending priorities. Any headroom the Chancellor has must be used to leave a lasting mark on the UK‚Äôs infrastructure and to attract investment ‚Äď particularly with the challenges and changes of Brexit ahead. A far stronger push is needed to fund and fix the fundamentals here in the UK over the coming months, and business wants the Chancellor to use his Autumn Budget to double down and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK‚Äôs energy security and build more houses. Existing plans alone are not enough. Given that businesses across the UK have long complained about constant tinkering with tax rates, the Statement‚Äôs lack of tax and spending changes is welcome ‚Äď and not before time. A clear annual cycle will mean fewer rushed policies and give firms the time they need to plan for any changes that come their way.‚ÄĚ
Rain Newton-Smith | CBI Chief Economist
“The Chancellor is rightly backing British business to secure the UK‚Äôs future prosperity in a new economy. It‚Äôs great to see an upgrade in the state of our public finances and rightly sensible to set more aside for a rainy day with Brexit uncertainty still weighing on the economy. The global economy is going from strength-to-strength, but at the same time economic growth here at home remains lukewarm. This underlines just how vital it is to secure a Brexit that delivers for jobs and an industrial strategy that helps transform UK productivity in all corners of the country. Businesses and workers must move now to adapt their skill-sets to the modern economy. Upskilling existing workers and preparing young people properly for the world of work is fundamental to the technology revolution. The CBI has long-called for just one Budget in a year, creating more room for Government and business to get to work. But the Spring Statement is still important, and this one has proved more than welcome in setting the tone and vision for the country‚Äôs economic future.‚ÄĚ
“In the ten years since the global recession, workers have endured seven years of falling real wages and eight years of public service cuts (with more to come). Today we are asked to celebrate almost non-existent improvements in the public budget, and yet more inaction in the face of years of severe hardship and a still dismal outlook for working people.”
Tej Parikh | Senior Economist of the Institute of Directors
“The Chancellor was right to stick to his guns and avoid too much tinkering today. Businesses have had to deal with plenty of new costs over the last few years, including the apprenticeship levy, immigration skills charge and pensions auto-enrolment, so they will be relieved to see a no-frills statement. This was an upbeat and pro-business speech. IoD members will be pleased to see that growth is currently beating the forecasts and the deficit is falling. Better short-term economic figures will reassure business leaders that there is underlying resilience in the UK economy, but the Chancellor was also right to point to the long-term productivity challenge. The OBR continued to be downbeat on productivity growth, with recent increases largely driven by a fall in hours worked, rather than a pick-up in output. As such, the Government must continue to push forward with its proposals in November‚Äôs Industrial Strategy and make clearer to businesses how it will bolster skills, infrastructure, and innovation."