14 Mar Spring Statement 2019: Key Announcements and Reactions
SPRING STATEMENT 2019
KEY ANNOUNCEMENTS
Chancellor Philip Hammond delivered few significant announcements in his Spring
Statement on 13 March 2019, instead reiterating or updating those made in Budget 2018.
Aside from a response to the updated economic and fiscal forecasts from the Office for
Budget Responsibility, here are some of the key areas covered in the speech, and in the
Chancellor's written statement.
Spending review
The Chancellor confirmed that the Government will hold a full three-year spending review
which will begin before the summer recess and conclude alongside the Budget.
He said this will set departmental budgets and include areas such as social care, local
government, schools, police, defence and the environment.
However, he warned that investment in these areas will depend on an orderly departure
from the EU.
MTD: light-touch approach confirmed
Making Tax Digital (MTD) for VAT is still set to come into force from 1 April 2019.
However, the Government has confirmed it will take a light-touch approach to penalties
during the first year, and will not issue penalties to businesses that are doing their best to
comply. It also said MTD will not be mandated for any new taxes or businesses in 2020.
Digital companies
In response to a review into competition in the digital economy, the Chancellor has asked
the Competition and Markets Authority to carry out a study of the digital advertising market.
The Government has also said it will publish a consultation on the design and
implementation of the upcoming digital services tax, which is set to apply to large
technology companies from April 2020.
Structures and buildings allowance
Draft legislation has been published on a new, permanent allowance for investments in
non-residential structures and buildings. This was announced in Budget 2018 and is intended to create a more competitive tax
regime for businesses.
Apprenticeships
Reforms to the apprenticeship levy that were announced in Budget 2018 will now take place
from 1 April. This includes reducing the co-investment required from smaller firms from 10% to 5%, and
increasing the amount of funding employers can transfer to their supply chains to 25%.
REACTIONS
New measures to tackle late payments
Mike Cherry, national chairman of the Federation of Small Businesses, said:
‘The commitment from the Chancellor that the Business Secretary will [tackle late
payments] is welcome, and we are especially pleased that the first measure has been
announced. The end of late payments could finally be in sight. It can’t come soon enough, to bolster
small businesses at a time when they are in great need of support and a lift in confidence
Apprenticeship levy reforms to begin from1 April 2019
Jane Gratton, head of skills at the British Chambers of Commerce, said:
‘We have spent months pushing ministers to make practical changes to the way the
apprenticeship system works, and this is an important step in the right direction.
But the inflexibility of the apprenticeship levy means there’s still not enough training taking
place in businesses, and this will hamper efforts to boost productivity’
No announcements for social care
Steven Cameron, pensions director at Aegon, said: ‘Social care funding did receive a solitary mention but only to say it will be considered as part of a comprehensive summer spending review, suggesting the long overdue Green Paper is further delayed. The Government urgently needs to put the future funding of social care on a sustainable footing. Our ageing population deserves clarity on what the state will pay for and what individuals will have to fund themselves, based on their wealth’
Biodiversity targets for housing developers
Brian Berry, chief executive of the Federation of Master Builders, said: ‘The burdensome and poorly thought-through biodiversity targets for developers will bring yet more costs and more delays for builders. Just as the environment for SME house builders starts to improve, these measures could end up stalling our progress’
Digital services tax for tech giants
Rain Newton-Smith, the chief economist at the Confederation of British Industry, said ‘Going it alone on a digital services tax is high risk, especially at a time when the UK already looks increasingly isolated. The EU has dropped their plans and got behind the OECD’s efforts – the UK should follow suit. The Government needs to be doing all it can to encourage investment in the UK and
adoption of new technologies, not putting up barriers’