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Spring Budget 2024
Key Announcements
Pre-Budget Announcements
Ahead of the Budget, the Treasury made the following announcements:
- A £360 million investment package to boost British manufacturing and R&D (press release)
- New plans for public sector productivity to deliver up to £1.8 billion worth of benefits by 2029 (press release).
- Pension fund reforms including requirements for Defined Contribution pension funds to publicly disclosure their level of investment in the UK (press release).
OBR Forecasts
Inflation
- Inflation has fallen from 11% when Rishi Sunak took office to 4% today.
- The OBR forecasts show it falling below the 2% target in just a few months time – a year earlier than forecast in the Autumn Statement.
Growth
- OBR expects growth to be 0.8% this year, and 1.9% next year – higher than previously expected.
- The Government is also meeting its rule about having borrowing below 3% of GDP early.
UK National Debt
- Estimates for UK national debt are slightly higher than expected in the Autumn Statement but still on track to fall as a share of GDP in five years times.
- The OBR forecast that it will fall in every year to 94.3% by 2028-29.
- Underlying debt, which excludes Bank of England debt, will be 91.7% in 2024, then 92.8%, 93.2%, 93.2% before falling to 92.9% in 2028-29 with final year headroom against debt falling of £8.9bn.
Deficit
- The budget deficit falls though the next five years, Hunt says, from 4.2% of GDP in the 2023-24 financial year, to 3.1%, 2.7%, 2.3%, 1.6% and 1.2% by 2028-29.
- That’s the lowest level of annual borrowing since 2001 but this will depend on implementing extremely tight spending plans which will imply cuts for many public services.
National Insurance and Personal Taxation
National Insurance
- From 6 April National Insurance contributions for employees will be reduced by a further 2p from 10% to 8%, worth around £450 a year for someone on an average salary.
- Self-employed NI will drop form 8% to 6%.
Non-Dom Regime
- The non-dom tax regime will change so that from April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency but after four years, those who continue to live in the UK will pay the same tax as other UK residents.
- Overall abolishing non-dom status will raise £2.7 bn a year by the end of the forecast period.
Investment and Business Taxation
- The VAT registration threshold will go up form £85,000 to £90,000.
- There will be £200m to extend the recovery loan scheme.
- The alcohol duty will remain frozen until February 2025.
- Full expensing will be extended to leased assets “as soon as it’s affordable”.
- A brand new British ISA will be introduced which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs.
Public Sector Finances
- Planned growth in day to day spending will stay at 1% in real terms.
- The Chancellor argued that it is “not fair to ask taxpayers to pay for more when public service productivity has fallen. Nor would it be wise to reduce that funding given the pressures that public services face.”
- He emphasised the need for the public sector to be more productive (see the press release above)
- He did however commit to funding the NHS productivity plan in full with £3.5bn, estimated to unlock £35bn of savings.
- NHS will also receive an extra £2.5bn to help cut waiting lists.
- £230m rolling out technology to speed up police response time by allowing people to report crimes by video call and, where appropriate, use drones as first responders.
- There will be £105m in funding over the next 4 years to build 15 new special free schools “to create additional high quality places and increase choice for parents”.
Energy, Fuel Duty, and the Windfall tax
- The Oil and Gas Windfall tax sunset clause will be extended for an additional year, to 2029, raising £1.5bn.
- The 5p cut fuel duty will be extended for a further 12 months
- Great British Nuclear will begin the next phase of the Small Modular Reactor selection process, with companies now having until June to submit their initial tender responses.
- There will be £120m more to the Green Industries Growth Accelerator to “build supply chains for new technology ranging from offshore wind to carbon capture and storage”.
- £270 million to advanced manufacturing industries, to fund car and space innovation, to grow “zero emission vehicle and clean aviation technology”.
Pensions and Welfare
Welfare and support
- For people taking advance loans, the repayment programme will increase from 12 months to 24 months.
- The £90 charge for debt relief orders will be abolished.
- The Household Support Fund, which helps low-income families facing particular financial problems, will be extended for another six months with an extra £500m.
Childcare
- The Government will guarantee the rates that will be paid to childcare providers in order to deliver the childcare offer for children over 9 months old for the next two years.
- The threshold at which parents start paying the High Income Child Benefit Charge, from £50,000 to £60,000. The taper rate at which it is withdrawn will increase to £80,000
Pensions
- There will be new powers to the Pensions Regulator and Financial Conduct Authority to ensure “better value” from defined contribution schemes by “judging performance on overall returns not cost”.
Property Taxes
- The Government will abolish the Furnished Holiday Lettings regime and multiple dwelling stamp duty relief.
- The higher rate of property capital gains tax is to be reduced from 28% to 24%.
Defence
- Defence spending will rise to 2.5% of GDP “as soon as economic conditions allow”.
Devolution and Levelling Up
- Chancellor announced the North-East trailblazer devolution deal, providing a package of support for the region potentially worth over £100m.
- He also pledged to devolve powers to Buckinghamshire, Warwickshire and Surrey.
- The Scottish government will receive nearly £300m in Barnett consequentials, with nearly £170m for the Welsh Government and £100m for the Northern Ireland Executive.
- The Chancellor announced £242m for Canary Wharf and the surrounding area to create 8,000 new homes.
- £100m of levelling up funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch and Coventry to support cultural projects in these communities, alongside support for capital projects across the country including in Bingley.
- The Government is expanding the long-term plan for towns to 20 new places including Darlington – home of the Treasury’s fantastic Darlington Economic Campus – Coleraine, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, providing each with £20m of funding to invest in community regeneration over the next decade.
- There will be a long-term funding settlement for the future Development Corporation in Cambridge at the next spending review, with over £10m invested in the coming year to unlock delivery of local transport and health infrastructure.
- £15m in new funding to the West Midlands Combined Authority to support culture, heritage and investment projects.
- funding for north Wales, including money to fund the renovation of Theatre Clwyd; and the Government will be purchasing the Wylfa site on Anglesey, where there are plans for a nuclear power station.
- £5m to renovate hundreds of local village halls across England
Other announcements
- The Government will progress with its plans to sell its stake in NatWest bank.
- There will be a new tax on vapes, a one-off increase in tobacco duties, and an increase in the tax on non-economy flights, he says.
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