Spring Statement Summary
On Wedneday the 13th of March the Chancellor delivered the Spring 2019 Statement to Parliament, within the statement the Chancellor Stated that “the UK economy continues to grow, with wages increasing and unemployment at historic lows, providing a solid foundation on which to build Britain’s economic future. With borrowing and debt both forecast to be lower in every year than at last year’s Budget, the Chancellor set out further investments in infrastructure, technology, housing, skills, and clean growth, so that the UK can capitalise on the post-EU exit opportunities that lie ahead.”
Relevant announcements for BEAMA members from the spring statement can be found below.
Economy
The government’s efforts to build a stronger, fairer economy are paying off. The economy remains resilient, and is forecast to continue growing:
- there have been nine consecutive years of growth, and the OBR has forecast further growth every year for the next 5 years
- since 2010, the economy has grown faster than France, Italy and Japan
- the OBR expects inflation to stay close to or on target for the duration of the forecast
- business investment is forecast to start growing again from next year, once businesses have the certainty they need to invest
And employment continues to break records
- since 2010 there are over 3.5 million more people in work, and the OBRforecast employment will increase by a further 600,000 by 2023
- the unemployment rate of 4.0% is the lowest rate since 1975. The OBRforecast it will remain near historic lows over the next five years
- wages are increasing at their fastest pace in over a decade, and are forecast to continue growing faster than inflation, which means more money in people’s pockets
Tech and the new economy
Budget 2018 included significant additional support for cutting-edge science and technologies that will transform the economy, create highly skilled jobs, and boost living standards across the UK. Yesterday the Chancellor:
- welcomed the Furman review, an independent review of competition in the digital economy, which has found that tech giants have become increasingly dominant. The Chancellor announced that the government will respond later in the year to the review’s calls to update competition rules for the digital age – to open the market up and increase choice and innovation for consumers
- has written to the Competition and Markets Authority (CMA) asking them to carry out a market study of the digital advertising market as soon as is possible. This was a recommendation of the Furman Review
- committed to funding the Joint European Torus programme in Oxfordshire as a wholly UK asset in the event the Commission does not renew the contract, giving the world-leading experts working at the facility certainty to continue their ground-breaking fusion energy research
Clean growth
The Budget 2018 set out how the government is accelerating the shift to a clean economy, building on the Industrial Strategy, Clean Growth Strategy, and 25 Year Environment Plan. The Spring Statement builds on this commitment:
- to help smaller businesses reduce their energy bills and carbon emissions, the government is launching a call for evidence on a Business energy efficiency scheme to explore how it can support investment in energy efficiency measures
- to help meet climate targets, the government will advance the decarbonisation of gas supplies by increasing the proportion of green gas in the grid, helping to reduce dependence on burning natural gas in homes and businesses
- to help ensure consumer energy bills are low and homes are better for the environment, the government will introduce a Future Homes Standard by 2025, so that new build homes are future-proofed with low carbon heating and world-leading levels of energy efficiency
- to give people the option to travel ‘zero carbon’, the government will launch a call for evidence on Offsetting Transport Emissions to explore consumer understanding of the emissions from their journeys and their options to offset them. This will also look into whether travel providers should be required to offer carbon offsets to their customers
Education and skills
Ensuring people have the skills that employers need is vital to creating the workforce of the future. The Budget set out steps to equip people with the skills to succeed in the modern economy, and today the Chancellor announced:
- updates to apprenticeship reforms announced at Budget that mean from April 1st employers will see the co-investment rate they pay cut by a half from 10% to 5%, at the same time as levy-paying employers are able to share more levy funds across their supply chains, with the maximum amount rising from 10% to 25%
Investing in the future – housing and infrastructure
The government is determined to fix the broken housing market. Building more homes in the right places is critical to unlocking productivity growth and makes housing more affordable. At Autumn Budget 2017, the government set out a comprehensive package of new policies to raise housing supply by the end of this Parliament to its highest level since 1970, on track to reach 300,000 a year on average. The Spring Statement set out further steps to deliver this ambition:
- published a consultation on Infrastructure Finance, seeking views on how the government can best support private infrastructure investment in the context of the UK’s changing relationship with the European Investment Bank
- reiterated the government’s commitment to publishing a comprehensive National Infrastructure Strategy – the first of its kind – setting out the government’s priorities for economic infrastructure and responding to recommendations in the National Infrastructure Commission’s National Infrastructure Assessment
- £717 million from the £5.5 billion Housing Infrastructure Fund to unlock up to 37,000 homes at sites including Old Oak Common in London, the Oxford-Cambridge Arc and Cheshire.
- through the Affordable Homes Guarantee Scheme, the government will guarantee up to £3 billion of borrowing by housing associations in England to support delivery of around 30,000 affordable homes
Spending Review
The Chancellor also confirmed that the government will hold a Spending Review which will conclude alongside the Budget. This will set departmental budgets, including 3 year budgets for resource spending, if an EU exit deal is agreed. As at the past three Spending Reviews, the government will run a Zero-Based Review of capital spending where each programme or project will be scrutinised from the bottom up, ensuring the maximum return for the country. The Spending Review will also have a renewed focus on the outcomes achieved for the money invested – supporting a high-growth economy with public services that work for everyone.
