As this week marks the last Spring Budget, Freshwater’s specialist public affairs team considers where the chips may fall on Wednesday…
Tomorrow (8 March 2017), the chancellor of the exchequer, Philip Hammond, will present the last ever March budget. From 2018, the budget speech will be moved to spring and will be reserved for responding to forecasts from the Office for Budget Responsibility (OBR).
With the UK’s public borrowing at around 4% of GDP, the chancellor is tasked with keeping to his target of reducing it to 3.5% by the end of the year. He appears to be on track - thanks in part to a rise in VAT and corporation tax receipts in January - so we can expect his announcement to be free from new and big ticket spending flourishes or swingeing cuts. Giving credence to Tony Blair’s recent assertion that the government “has bandwidth for only one thing”, the preoccupation with Brexit means that it is likely to be a cautious budget from the former foreign secretary.
Business rates rise
The government is looking to revaluate business rates based on 2015 values. As a party traditionally seen as a friend of small business, the Conservative chancellor will look to give support to those businesses hit hardest by the revaluation.
The rates rise is risky and complex, and may provoke stronger calls for a similar process on council tax rates. According to Sajid Javid, secretary of state for communities and local government, only a quarter of all UK-based businesses will be negatively impacted by the change. However, the majority of those businesses are in Conservative strongholds.
Indeed, some of the highest average rates rises come in constituencies such as Runnymede and Epsom & Ewell, held by the chancellor and the transport secretary respectively. Introducing financial relief mechanisms like vouchers to improve broadband coverage, would soften the impact and lessen political pressure.