Despite the current political and economic uncertainty tying his hands, there’s a lot to pick over in the Chancellor’s statement. It’s certainly a difficult time for Philip Hammond to lay out his plans for our economy, and that showed in today’s speech – lots of ‘ifs’ and caveats. Despite that, here’s what you need to know:
First of all, what is it?
In the past, Chancellors have essentially given two budgets a year: Spring and Autumn. But Hammond decided to return to a Spring Statement and an Autumn Budget instead.
He even described today’s statement as a “fiscal non-event”, but in the end, there were quite a few interesting announcements that could affect you and your finances.
Economic ups and downs
£21bn was collected in income and corporation tax in January, giving the Chancellor some unexpected cash to play with.
But economic growth remains low. Official figures show that the money made by the UK (GDP) grew by just 0.2% in the three months to the end of January. That meant he wasn’t keen to rock the boat with too much change.
So here are the headlines:
£3bn guarantee scheme to fund 30,000 affordable homes
The housing shortage continues to push up prices and make it harder for buyers to get a foot on the ladder. In today’s statement, Hammond pledged a new £3bn homes guarantee scheme to ensure around 30,000 new affordable homes.
He also revealed that by 2025, new homes will no longer be built with fossil fuel heating systems, so they will have smaller carbon output and smaller bills.
£100m for a knife crime clampdown
A rise in the issue of knife crime may not affect most people’s finances but it’s certainly a priority. Hammond announced there would be £100m extra for policing budgets, ring-fenced to deal specifically with police overtime and work to combat the “epidemic”.
Free sanitary products for schools
There’s been growing concern about ‘period poverty’, where girls whose families cannot afford tampons and towels end up missing school when they have their periods. From the next school year, pupils at secondary schools and colleges will receive free sanitary products to combat this.
Sped-up apprentice scheme
In the last Autumn Budget, a £700m package of reforms was announced, designed to help small businesses take on more apprentices. Today it was revealed that this will be brought forward to the start of the new financial year, which is next month.
Greener economy plans
As well as the new standards for greener homes by 2025, there were a range of new measures announced that should steer the economy towards a more carbon-neutral footing.
The Chancellor’s announcements included increasing the sources of greener gas used by the national grid, launching a study into carbon offsetting for travellers and more help for small businesses to cut emissions.
Social care… soon
There were no big announcements for social care funding in this statement, just a promise that it will form part of a comprehensive summer spending review.
Here comes the economic data (yay!)
Macro-economics affect everything from business investment and jobs to the value of the pound in your pocket, so it’s worth taking a quick look at what the Chancellor revealed. Don’t worry, we’ll keep it short and painless:
- The Office for Budget Responsibility has forecast GDP growth of 1.2% this year, 1.4% next year and 1.6% a year for the three years after that.
- The Office predicts 600,000 new jobs by 2023 and wage growth at 3% or more each year.
- Borrowing this year will be £3bn lower than forecast in last year’s Autumn Budget.
Of course, all that relies on Parliament agreeing an orderly EU withdrawal rather than a no-deal break with Europe. Hammond was keen to stress that a disorderly exit would put the country’s economic recovery at risk.
The Chancellor pledged that if the UK leaves the EU with a deal then he would decide before the Autumn Budget how to spend any extra cash, whether that would be on increased spending on services or keeping taxes low.
Of course, that’s a prediction based upon an uncertain outcome. The work of unpicking the details is likely to take a couple more weeks, and with this continued uncertainty, who knows if the announcements in today’s statement will still be standing by then?