CIPP Budget 2018 summary 29 October 2018
Also available in PDF format - CIPP Budget 2018 summary
Introduction
In the last Budget before we exit the EU, the Chancellor Philip Hammond appeared to relish the delivery of his 2018 Budget speech, so much so that he took an hour and a quarter to deliver it and even found space for a little toilet humour - which earned him the biggest groan of the entire Budget statement. His task this year is not an enviable task as the ‘deal or no deal’ debate continues with many questions unanswered. Admitting to being at a pivotal moment in their Brexit negotiations, the government is confident but not complacent and is “preparing for every eventuality”. We were assured that this is a Budget for Britain’s future, a Budget that paves the way for a brighter future; a Budget for hard working families, for the strivers, the grafters and the carers; and that government would minimise the amount of tax it has to take from their wages. Which brings us neatly to the Conservative’s promise of a £12,500 Personal Allowance and £50,000 Higher Rate Threshold by 2020. We are to see this come to fruition a year earlier than previously announced, from April 2019, and with expectation high that this manifesto promise could be broken this year, this announcement came as a pleasant surprise at the end of the lengthy Budget narration. The National Living Wage and National Minimum Wage rate increases recommended by the Low Pay Commission have been accepted in full and the Chancellor acknowledged the importance of updating the LPC remit for monitoring the National Living Wage once it achieves the ‘60% of median earnings’ target by 2020. A further package of measures was announced to tackle tax avoidance and evasion and, as has been widely speculated over recent weeks, the off-payroll reforms that were rolled out to the public sector last year will be extended to medium and large engagers in the private sector from 2020. Smaller firms taking on apprentices will see their contribution halved to 5% by the government. The Employment Allowance is to be restricted so that only SMEs will benefit. A new UK digital services tax is to be introduced from 2020 and add to that the proposal that there is to be a new tax introduced on plastic packaging and it is fair to say that a number of changes face us all in the coming years. “Universal Credit is here to stay” announced the Chancellor, but government recognises the concerns that have been raised so is providing additional measures to aid the transition worth 1 billion pounds over the next five years. The economic forecast from the Office for Budget Responsibility (OBR) was positive; with wages growing at the fastest pace in almost a decade we are assured of sustained real wage growth in each of the next five years. The OBR also confirmed significant improvement in our public finances with national debt having peaked in 2016-17. This means a new path for public spending: “Fiscal Phil says Fiscal Rules OK” – we are not making that up, he really did say that. Every chancellor likes to have a rabbit or two in his hat when it comes to revealing their Budget but some of “his bunnies” have escaped early – referring to ‘leaks’ to the media that financial support is to be given to fix the nations’ potholes, increase broadband coverage, help social care, defence and the ailing high street. On a crescendo finish, “We have reached a defining moment…the era of austerity is finally coming to an end…but discipline will remain”. The word “budget” derives from the term “bougette” – a wallet in which either documents or money could be kept. As the Budget document published today runs to 106 pages together with the associated publications and consultation responses I think we can all agree that the 2018 “bougette” needs to be pretty hefty in size to hold it all. Measures were confirmed and announced to help with the cost of living including fuel duties being frozen for the ninth consecutive year. Beer, cider and spirit duties are also to be frozen for one year.
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