Budget Summary

Amy Owens

On Monday, Philip Hammond took to the dispatch box in the House of Commons to deliver the last budget before Brexit. Offering a more optimistic view of the UK’s finances when compared to his last statement in Autumn 2017, the Chancellor heralded this budget as one “that paves the way for a brighter future”.

Following the Prime Minister’s assertion in her Conference speech that ‘austerity is now over’, Mr Hammond pledged that “austerity is coming to an end by in a disciplined way”. Despite this, evidence of austerity coming to an end in this Budget was mixed. 

Whilst the Chancellor announced a series of funding increases, including an extra £2.7bn for the Universal Credit roll-out, £1bn for the Ministry of Defence, £650 million for social care, £400m extra for schools and £420m to fix potholes, none of the figures announced were particularly extravagant. 
Other announcements included planned income tax cuts a year early in 2019, although these were promised within the 2015 and 2017 Conservative manifestos. 

In the first Monday Budget statement since 1962, Mr Hammond’s speech was marred with warnings of the potential constraints of a post-Brexit landscape. The message to MPs today seemed clear: vote through a deal and there is more fiscal loosening to come if the public finances stay on track. 

On several occasions, the words the Chancellor delivered from the despatch box sounded like a warm up to backing our campaign to #AxeTheReadingTax 

“as our economy evolves in the digital age…so too must our tax system” 

“updating our tax system for the digital age… is how we will deliver the high-wage high-skill economy of the future..”

Yet his words were not matched by action, as he made no mention of extending zero-rate VAT to e-publications. The campaign continues.

He did make a significant change to tax in the digital economy, with a much-trailed decision to introduce a UK Digital Services Tax. This tax aimed at tech platforms that benefit from UK content without paying a ‘fair share’ of tax in the UK is expected to raise around £400m per year. The Chancellor would prefer to get international consensus on this new tax, but complained that “progress has been slow”.

Of note to publishers retargeted the Employment Allowance (£3,000 discount on Employers NICs) to restrict benefits to SMEs; among other measures the Chancellor cut business rates to help independent high street retailers, including newsagents; introduced a new tax on plastics with <30% recycled material; made further adjustments to the Apprentice Levy and increased government support for training.

With little to no mention of the Creative Industries, the detail of the Red Book suggests the government will take heed of recommendations from both the Cairncross Review into press sustainability and the Furman Review into competition on digital platforms, leaving the door open for further changes in the Spring Statement, acting on the recommendations of those reports.

As the budget debate continues throughout the week, the PPA continues to raise the inequity of the digital reading tax, and encourages members to support the campaign by emailing your MP


Other Key Issues:

Newspapers

The Chancellor extended the £1,500 Business Rate discount for local newspapers for a further year, with continued disappointment with the failure to include magazine publishers within scope. 

Brexit

A further £500 million has been earmarked for Brexit preparations. 

Growth

The OBR raised growth forecasts slightly to 1.3% in 2018/19; rising to 1.6% in 2019; 1.4% in 2020; 1.4% in 2021; 1.5% in 2022; and 1.6% in 2023.

Debt

Debt is forecast to be 83.7% as a share of GDP in 2018-2019.

As a share of GDP, debt peaked at 85.2% in 2017/18.

Debt as a share of GDP is forecast to fall to 82.8% in 2019-20, 79.7% in 2020-21, 75.7% in 2021-22, 75.0% in 2022-23, and 74.1% in 2023-24.

 

Get in touch