Chancellor, Sajid Javid has confirmed the date of the upcoming Spring Statement. Taking place on March 11, 2020, it promises to be the most politically significant Budget announcement to date.
The Government will be under public pressure to honour the promises made during last year’s general election, while the Budget delivery itself will be the country’s first as a non-EU member in over forty years.
*Since this article was published this morning Sajid Javid has announced his resignation as chancellor.
The Budget: a snapshot
If the Budget follows the pledges set out in the Tory manifesto, it will be a mixed bag for UK businesses. On the whole, businesses in regional areas could benefit from better infrastructure, including new transport links and more general investment.
Environmentally speaking, carbon-emitting businesses will have twenty more years to comply with the Government’s ‘net-zero’ goal under the Conservatives, (2050 vs Labour’s 2030). On the other hand, businesses already operating in the green economy may not see any specific funding allocated to help its sector grow.
While smaller and store-based businesses could benefit from tax breaks, the promised corporation tax cut might not come, with the money used to facilitate more public projects instead. However, increased public spending could create new training opportunities that might benefit businesses, providing them with more upskilled talent.
With less than a month to go before the announcement, here’s the roundup of what Javid’s expected to say:
1. More regional investment
Largely, it’s been Northern MPs and business owners who have been the biggest supporters of HS2, the yet-to-be-completed high-speed rail service that will make travel between the region’s cities and journeys to the South more efficient.
There hasn’t been significant rail investment outside of the London area for years, with poor regional connections between Northern towns and cities a thorn in the side of smaller business owners in the region, many of whom still rely on visiting footfall. Javid’s Budget date announcement, made from a Manchester tram construction site, sends the message that the Conservatives may heed their call and fund more infrastructure projects in the region.
Another hint that the Government will spend more on projects outside of the South-East lies in their party manifesto, which says they will increase capital spending by 20bn, suggesting there will be more funding available for infrastructure projects nationwide.
There are also whispers that Javid wants to change the rules on governmental investment in the UK and is keen to set targets to enable better investment in areas such as in the North and the Midlands to plug regional productivity gaps.
If this happens, it will be in reaction to opposition over the Government’s method of “measuring economic output” which based on a “gross value-added” model, benefits investment in the South-East at the expense of other areas, so say its critics.
For businesses operating in or wanting to enter the green economy, while there might be opportunities to do so under Johnson’s government, (the Conservatives remain committed to reaching their goal of net-zero emissions by 2050), will there be the targeted funding allocated to the green economy of the likes that Labour promised, such as its pledge to create 1m green sector jobs?
‘The environment’ will be prioritised in the forthcoming Budget announcement, says the Government. However little information has been offered concerning how this will be achieved, perhaps the Budget announcement will reveal all.
Going on the pledges set out in the Tory manifesto, the Budget may include funding to make new build homes and public buildings more energy-efficient via insulation technology. Off-shore wind farms are also expected to be promoted, with an 800m investment into “carbon capture” technology and 500m’s worth of funding released to help carbon-intensive industries reduce their emissions.
While the Government seem comitted to reducing business rates for UK enterprises with premises, (including high street businesses), as well offering a tax cut for smaller businesses, (raising the allowance for their national insurance bills from £3,000 to £4,000), other promises made by the Torys suggest the forthcoming Budget might not completely protect the interests of the private sector economy.
Prior to the election, Boris Johnson said he would freeze a corporation tax cut in order to provide funding for other areas of the economy, the additional money possibly going to public funding projects. The Conservatives have also faced opposition from the business community over possible plans to scrap Entrepreneurs’ relief, which business owners take advantage of to help with retirement planning. Considering the backlash, the plan may not be followed through on March 11.
4. Public funding
For businesses that benefit from apprenticeships, the Government is expected to announce a healthy amount of public services funding which will signal the end of austerity and include “more vocational training,” programmes, according to The Guardian. Overall, public funding is set to rise by 1.5bn, suggesting there could be more funding opportunities available for things beyond health and welfare, which is good news for businesses needing a little help to grow.