Thursday, November 23, 2017

News: Autumn Budget 2017


Rothbiz editor, Tom Austen takes a look at the Budget 2017 and the Conservative Government's "resolve to look forwards not backwards."

The start of the speech by Chancellor Philip Hammond focused on Brexit and the main headline grabber was to do with scrapping stamp duty for first time buyers, but I think that the most important issue, for the country, and especially for this region, is the focus on productivity.

The UK lags behind our European neighbours when it comes to productivity and in turn the Sheffield city region lags behind other UK regions. Closing the gap between the UK's productivity and Germany's would increase the size of the UK economy by a third. However, the Chancellor was forced to tell the House that: "regrettably our productivity performance continues to disappoint."

He added: "The OBR has assumed at each of the last 16 fiscal events that productivity growth would return to its pre-crisis trend of about 2% a year, but it has remained stubbornly flat. So today they revise down the outlook for productivity growth, business investment, and GDP growth across the forecast period."

We know that the Government has an Industrial Strategy which aims to improve productivity and create better and higher-paying jobs across the UK, unfortunately, we are still waiting on further details of how this can happen, and how Rotherham and the Sheffield city region can play its part. The Business Secretary is expected to present a white paper to the House in the next few days.


What we do know is that the National Productivity Investment Fund is being extended for a further year, taking it over £31bn. Announced this time last year, it brings together Government spending on housing, R&D, transport and economic infrastructure.

Other efforts to boost productivity include £2.3 billion of investment in R&D projects, with an extension of tax credits available to companies, from 11% to 12%. Following consultation, a 10-year action plan is being development to unlock over £20 billion to finance growth in innovative firms. A new £2.5 billion Investment Fund incubated in the British Business Bank is being established and the private sector and pension pots are being encouraged to invest in growing UK firms.

The British Business Bank's Enterprise Finance Guarantee is also being extended to 2022 to support up to £500m of loans per annum.

As well as access to finance, also key to productivity is skills and the Budget included plans to create a partnership with industry and trade unions to design a "national retraining scheme" to give people more science, technology and maths (STEM) skills. On technical education, a further £20m to support FE colleges with new "T levels."

It was also included in the Budget that Tech Nation will roll out a dedicated sector programme for growing UK tech companies. £21m has been set aside over the next four years and a regional hub is to be set up in Sheffield.

On Brexit it was confirmed that another £3bn over the next two years is being set aside, on top of the £700m already invested in Brexit preparations. This is to "ensure a smooth transition" for when we leave the European Union.

The Budget was "about more than Brexit" so after a few terrible sore throat, Jeremy Clarkson and I'm a Celebrity gags, the Chancellor made further announcements.

On transport, a £1.7 billion new transforming cities fund (part of the NPIF mention above) led to more head-scratching in the Sheffield city region. The majority of the fund, to improve local transport connections, has been divvied up to regions which have elected mayors, for them to control and spend as they see fit. As the SCR does not yet have an elected mayor, as it stands, the combined authority will have to bid into the remaining funds to get the cash to back its new transport strategy.

The funding was calculated per capita so whilst £243m goes to Greater Manchester and £250m to the West Midlands, the political disputes in South Yorkshire may have cost the Sheffield city region around £100m of guaranteed funding.

The Budget also confirmed a £220m Clean Air Fund to provide support to local authorities (like Rotherham) as they draw up local air quality plans. Already announced was a new 26-30 rail card.

Further detail will be set out in the Industrial Strategy on how city regions can boost productivity and the national economy. On other key areas for Rotherham, like manufacturing, there wasn't anything specific in the Budget.

On the tricky issue of business rates, much needed reform is making steady progress. The Government is bringing forward to next April the planned switch in indexation from RPI to the main measure of inflation (currently CPI) and the £1,000 business rate discount for pubs is being extended.

On personal tax, the personal allowance will rise from £11,500 to £11,850 in April and the top rate of tax will rise from £45,000 to £46,350.

The national living wage paid to workers aged 25 or over will rise from £7.50 an hour to £7.83 an hour next April.

The abolition of stamp duty for first time buyers got the big cheer [what first time buyers need £300,000 for a house in Rotherham? And if you can afford £300,000 then a few grand in stamp duty surely isn't going to break the deal...] and the Chancellor also confirmed a total of at least £44bn in capital funding, loans and guarantees to support the housing market.

For local reaction to the budget head here.

Images: HM Treasury


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