Given Brexit and the general economic uncertainty, Mr Hammond has come in giving gloomy underlying economic conditions, with downgraded growth next year and a low benchmark with vague targets in balancing debt. He is effectively getting the worst out now so when it comes down to it.
We have long term deeply entrenched problems such as the housing crisis and needing to improve economic performance and productivity. He has given a nod to that with £23bn for “innovation and infrastructure” over the next five years and a commitment to building new homes and a recognition in the range of new housing.
Growth & Inflation
- GDP growth forecast for 2017 lowered to 1.4 pc due to lower investment and weaker consumer demand
- Vague surplus target “as soon as practicable” in the next parliament.
- Three new fiscal targets
Structural Deficit below 2% of GDP in 2020-2021
Welfare spending below cash limit by 2020-2021
Debt falls as % of GDP by 2020-2021
- 2016/17 borrowing forecast £68.2bn ,£59bn in 2017/2018, 56.5bn 2018/2019
- No changes to stamp duty
- £2.3bn housing infrastructure fund to open up sites for up to 100,000 homes
- £1.4bn for 40,000 affordable homes, as well as a relaxation of restrictions on Government grants to help building
- Right-to-buy pilot for housing association tenants
- Letting agency up-front fees for tenants banned. Possibly a tad short sited as if transferred to landlords rents are likely to increase to cover these costs.
Social,Personal Tax and Pension
- Universal Credit taper ( how quickly the benefit is withdrawn as recipients earn more) reduced from 65% to 63% – an additional 2p for every pound earnt in employment
- Income tax personal allowance will rise form £11000 to £11500 in April 2017
- National Insurance threshold for employees and employers will be aligned at £157 a week
- Insurance premium tax to rise from 10% to 12% next June
- The national living wage increase from £7.20 an hour to £7.50 in April 2017.
- Salary sacrifice schemes , such as company cars, gym membership, mobile phones and health screen checks, to be subject to the same tax as cash income from April 2017 (pensions, childcare and cycle-to-work schemes exempted)
- Doubling UK Export Finance capacity
- Corporation tax will fall to 17pc
- £400m into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms