The UK chancellor Jeremy Hunt has announced a series of tax cuts in order to fund growth and build a “high-skill, high-growth economy”, as the government looks to make an impact on the economy ahead of the next general election.
Headlining the budget was a 2% cut to National Insurance, following on from a similar 2% cut in the Autumn statement, which the Treasury say amounts to £900 for each household.
Taxes
Hunt also froze fuel duty for another year, following the policy of his predecessors in the role, and scrapped the ‘non-dom’ tax exemption rule.
A freeze on alcohol duty, which had been due to end in August 2024, was also announced. The planned freeze will now last until February 2025.
“We’re backing the ‘great British pub’”, Hunt told the Commons.
In spite of the tax cuts, it is widely reported that the tax burden remains the highest in almost a generation, according to the FT.
‘Responsible’ borrowing
The chancellor said that debt continued to fall, with borrowing “slightly lower” than the Autumn Statement, although BBC Verify questioned whether debt was in fact falling.
From 1 April, VAT registration threshold will be increased from £85,000 to £90,000, which he said was the first raise in the threshold in seven years. He also said that full expensing, made permanent in the Spring Budget last year, would be expanded.
Investment in the regions
Addressing his ‘levelling up’ agenda for the UK’s regions, Hunt cited the freeports and investment zone policies, and said that he was giving more powers to local authorities.
“Today, I devolve further power to local leaders who are best placed to promote growth in their areas.”
He announced a £100m north-east trailblazer devolution deal, as well as support for counties such as Buckinghamshire, Warwickshire and Surrey.
Notably, Hunt promised that in April the first of the UK’s investment zones in the North of England and the Midlands will be launched, adding that this included a 10-year package of funding benefitting local skills, R&D, local infrastructure & business investment.
He also promised financial support to projects in Northern Ireland to grow trade and investment there, as well as a plan to turn Cambridge into a ‘life science powerhouse’.
Canary Wharf, not often mentioned as a site for levelling up, was also mentioned as the government looks to make it a centre for life sciences, as well as the financial and banking sectors.
Services
Hunt also promised more plans to improve the UK’s attractiveness for services.
“We’re on track to become the world’s next Silicon Valley,” he said of the UK’s start-up scene, saying it was currently double the size of Germany’s and triple the size of that of France.
“We have become Europe’s largest film and TV production centre, he said, citing stars like Idris Elba, Keira Knightley and Orlando Bloom that had recently made films in the UK.
“Studio space has doubled in the UK, [and[ at the current rate of expansion we will be second only to Hollywood globally.”
To support the UK’s creative service industries, he promised tax relief to help film and practical effects studios, as well as a new tax credit for independent films with budgets of less than £15m.
The total support on offer for the UK’s creative industry was worth over £1bn in total, according to the Treasury.
Support for the energy transition was provided in the form of £120m more in funding to the Green Industries Growth Accelerator, aimed at building up the UK’s supply chains for new technology such as offshore wind and carbon capture.
Manufacturing
Earlier in the week (4 March), the Treasury announced a £360m research and development plan for the life science, pharmaceutical and manufacturing industries.
This included a £200m joint investment in zero-carbon aircraft technology and £92m joint government-industry collaboration to expand facilities to manufacture life-saving medicines and diagnostics products.
‘No’ to May
The Spring Budget is likely to be one of the last remaining set-piece occasions for the chancellor ahead of the next general election, widely expected in 2024.
Trade minister Greg Hands, when asked whether a general election was expected in May, gave a simple “no” answer to a Times Radio interviewer.
