Hammond’s Budget: 'Britain is open for business'

Standing for well over an hour at the despatch box this afternoon, Philip Hammond has announced a package of measures to “unleash investment and drive future prosperity” in the UK.Watch Mr Hammond's 2018 Budget announcement via Parliamentlive.tvThe Budget included Mr Hammond's much-trailed promises to improve mental health services announced by Theresa May earlier this year, as well as a number of reforms called for by business representatives.

Key points from Budget 2018

These included:

• A cut in rates for most small businesses of 30%
• An increase in businesses’ annual investment allowance to £1mn
• £1.6bn of new investments to support the Industrial Strategy, ranging from nuclear fusion to quantum computing
• A cut to 5% of the cost of apprenticeships for small businesses
• A narrowly focused review of tax regimes for profitable large digital service companies
• A rise in the minimum wage from 2019, and consultation with the TUC and employer representatives for future rises.

Education also received a boost to the tune of £10,000 for the average primary school and £50,000 for secondary schools.

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Delivering a “High-wage, High-skill economy”

Throughout his speech, the Chancellor referred constantly to the changing economy and the UK’s digital future. Harking back to the first Industrial Revolution, Mr Hammond said the UK is a nation of people whose ideas have changed the world. He added, “Britain can again lead the way and solve the productivity challenge if we are willing to embrace the future.”Acknowledging the risks of the digital economy as well its opportunities, he announced the first round of funding for reskilling and reduced apprenticeship levy for small employers. 

'Flexibility key to raising productivity'

Ian Brinkley, acting chief economist for the CIPD, the professional body for HR and people development, applauded the new investment in the UK's infrastructure, but said he doubted the change to the apprenticeship levy would increase the number of opportunities available to young people.“Investments in physical and digital infrastructure are welcome, but the battle for UK productivity will be won or lost in the workplace," he said. "The skills agenda is central to this and we need to see much greater ambition from the Government."It’s promising to see that the Government has halved the apprenticeship levy contribution for smaller businesses, but this is unlikely to greatly boost the number of apprenticeships offered by small firms, many of which lack the capacity to take on apprentices."The levy is still far too rigid to work in practice for many employers. We need a more flexible training levy that can help organisations fulfil a number of training and development needs rather than shoe-horning funds and efforts into the apprenticeships model alone." In the context of ONS data released last week and the Government's regional investment focus, Mr Brinkley added another big issue on skills "is the need to provide small businesses with much more locally provided support on developing people management capability to boost both job quality and firm performance." 

Tax changes for the self-employed

The CIPD also responded to Mr Hammond's announcement that private contractors and the self-employed will face higher National Insurance and personal tax bills.  “It is disappointing the Chancellor has decided to push ahead with extending the IR35 tax reforms from the public sector to the private sector as this will result in significant additional red tape for employers and runs contrary to his stated intention of boosting enterprise in the UK. "However, we are pleased that the government has taken on board the need to phase in these changes from April 2020. What is also crucial in the run-up to implementation of this tax reform will be the provision of good quality advice and guidance for employers from HMRC, with nine out of ten HR and payroll practitioners surveyed by CIPD saying they would need significant support to correctly determine employment status if these changes are introduced.” The Association of Independent Professionals and the Self-Employed (IPSE) also responded. Its chief executive, Chris Bryce, criticised the Government's "smash-and-grab mentality," which he believes will "punish the overwhelming majority of genuinely self-employed people, heap a massive administrative burden onto businesses at a time of Brexit uncertainty, and also undermine one of the UK's most dynamic and productive sectors."Of interest for international HR, immigration and global mobility expertise, the Treasury has also made £150mn available for fellowships “to attract the brightest talent to these shores from around the world so that our scientific research continues to lead the world."

A Budget for Brexit?

Citing the OBR’s figures, which showed falling government borrowing figures and growth revised upwards, Mr Hammond said that his plans were “a budget for Britain’s future” and that reflect the “hard work of ordinary people – the strivers, grafters and carers who are the backbone of our society.”Believing this budget to signal the era of austerity is finally coming to an end, he said it “opens a new chapter in our economic future.”

A Deal Dividend?

With Brexit on the horizon, Mr Hammond has to plan for battle on many fronts, including a No-deal scenario and an extended transition period.Before the Chancellor’s 3.30pm Budget Speech to the House of Commons, the Prime Minister Theresa May’s spokesperson said that the Budget will be funded "irrespective of a deal" on Brexit.Mr Hammond and the OBR said that they anticipated a "Deal Dividend" of further economic growth once there is clarity about the terms of the UK’s exit from the European Union.Head to the Enterprise section for more news and insight. 

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