Dear Resident,
As I am sure many of you will know, the Chancellor of the Exchequer, Jeremy Hunt MP’s Spring Budget was delivered in the Commons Chamber yesterday afternoon. The Prime Minister and his Government have been working incredibly hard to maintain the success of the PM’s economic pledges, as he continues to reduce inflation and grow the economy, as national debt is forecast to fall.
Falling from its recent peak, inflation has more than halved and is forecasted to fall to its 2% target in Q2 2024, a year earlier than forecasted. Falling inflation has already seen a significantly positive impact on real wages for working people. While the OBR forecasted a year-long recession and a contraction in the economy by 1.5% for 2023, our economy has been supported by Government policy and proven resilient, with GDP growing by 0.1%. I am pleased to report that the UK is also set to meet both its debt and borrowing fiscal rules, with underlying debt set to fall as a share of GDP to 92.9% in 2028-29.
This Spring Budget echoes these continued efforts, while ensuring that the public see a tangible benefit both in their finances and in their public services. The Spring Budget was defined by three key points: reforming public spending, rewarding work, and delivering our plan for growth.
Spring Budget Highlights
But with all of these announcements, what are the key points that we can take away from this?
- Improved value to the taxpayer through increased public sector productivity.
- £6 billion additional investment into the NHS to reduce backlogs, increase productivity, and improve everyday care.
- Bringing NICs down from 10% to 8%, putting more money in workers pockets.
- Reform of the High Income Child Benefit Charge and increased funding to the free childcare scheme.
- Protecting pensioners by maintaining the Triple Lock.
- Freezing alcohol duty from 1 August 2024 until 1 February 2025.
- Supporting motorists by maintaining the 5p fuel duty cut for a further 12 months.
- Making 2024 the year of SMEs by extending the Recovery Loan Scheme under the name of the “Growth Guarantee Scheme”.
- Sharing success nationwide, through the maintenance and expansion of Levelling Up across the UK.
Please find below a more in-detail outline of yesterday’s Spring Budget delivered by the Chancellor.
Reforming Public Spending
A disciplined approach to public spending remains a vital way in which this Government aims to support a growing UK economy. The Government aims to support key public services through targeted additional funding where needed, but a primary focus highlighted in this year’s Spring Budget is reform. While cash injections can produce improved delivery within public services, it is important that the taxpayer receives value for money with these boosts to funds.
This is why the Government has established the Public Sector Productivity Programme to ensure that costs to the taxpayer remain under control, and positive outcomes are achieved in areas that matter most to the public. These boosts in performance outcomes without the added strain to the taxpayer will, ultimately, ensure the long-term sustainability of our public services.
Without a doubt, one of our most important services that we have in the UK is our fantastic NHS. The Chancellor recognises the value of this service, and the pressure the NHS has to perform. In their acknowledgement of these pressures, the Government has provided record funding for the NHS to reduce backlogs, in addition to £6 billion of new investment.
There are two prongs that this investment comprises of, with those being:
1. An additional £2.5 billion next year, to make strong and steady progress in reducing waiting lists, boosting everyday services, and improving maternity care. We want patients to see a real improvement in the care that they receive, and the time in which they receive it. This funding will target these areas, with a real aim to addressing the issues that patients may currently face when requiring treatment.
2. Investment of £3.4 billion over three years, to boost productivity with improved technology and streamlining work processes. In conjunction with pre-existing plans and policies implemented by the Government, this additional funding will look to find new ways in which processes can be expedited. By improving technology systems, capacity and treatment will see major improvements with doctors spending less time on poor IT and more time on patients.
This is an absolutely huge boost to our NHS, and will result in significantly better levels of care provided to patients. Improvements in productivity will deliver cumulative savings of £35 billion by 2029-30, and a substantial increase on historical NHS productivity growth.
The newly announced abolition of non-dom tax rules and establishment of tax duty on vapes, paired with increasing tobacco duty, will also look to raise revenue to support public services like the NHS, while ensuring that those with the broadest shoulders pay a bit more.
Rewarding Work
Building on the commitments set out at last year’s Autumn Statement, the Government has announced further tax cuts for 29 million working people. National Insurance contributions (NICs) were cut by 2% last year, and have been cut by yet another 2% to the main rates of employee and self-employed NICs from 6 April 2024. This is a tax cut worth over £10 billion per year. The average worker on £35,400 will receive a tax cut of over £450 per year from April 2024. Alongside the cuts from Autumn Statement, this is a total annual tax cut of over £900.
The Government also remains committed to their support of working families, and removing barriers to work. The provision of free childcare for 38 weeks a year was announced at Spring Budget 2023, and the Government wants to ensure that this plan makes financial sense for childcare providers. It is for this reason that the hourly rate providers are paid to deliver these free hours offers will be increased in line with the metric used at last year’s Spring Budget for the next two years. This reflects that workforce costs are the most significant for childcare providers, and represents an estimated additional £500 million of investment over two years.
This is in addition to a reform of Child Benefit to support working families. In the long-term, the Government plans to administer the High Income Child Benefit Charge (HICBC), on a household basis rather than an individual basis as is current procedure. This will, however, not come into practice until 2026. In the meantime, the Government has looked to take 170,000 families out of paying this tax charge by increasing the HICBC threshold from £50,000 to £60,000. The rate at which HICBC will be charged has also been halved, so HICBC is not paid in full until individuals earn £80,000 or more.
It is important to remember that while we are seeing improvements in our economy, cost of living is still an area of concern for the public. The Government has looked to mitigate the impact of rising costs through a variety of avenues, including:
- Supporting low-income households with increasing rent costs by raising Local Housing Allowance rates to the 30th percentile, benefitting 1.3mn low-income households.
- Maintaining the Triple Lock, so the full yearly amount of the basic State Pension will be £3,700 higher, in cash terms, than in 2010.
- Supporting motorists by maintaining the 5p fuel duty cut for a further 12 months.
- An additional £500mn in funding to extend the Household Support Fund from April to September 2024.
- Freezing alcohol duty from 1 August 2024 until 1 February 2025.
Delivering Our Plan for Growth
In order to strengthen the economy, the Government remains absolutely focussed on taking long-term decisions by boosting productivity and increasing the number of people in good jobs, as is highlighted in the above. This has been a sustained effort, as over a series of fiscal events, the Government has worked to address key drivers of long-term economic growth.
A prime example of this is the work of the Government to support SMEs. The Government recognises that SMEs are the lifeblood of the economy and the beating heart of local communities. That is why at Autumn Statement 2023 the government announced measures to support SME leaders to acquire vital skills and seize opportunities to increase productivity and grow their businesses. This was in addition to a business rates package to support small businesses and the high street, and action to encourage prompt payments.
Spring Budget builds on this, continuing the Government’s momentum in making 2024 the year of the SME by extending the Recovery Loan Scheme to support SMEs to access the finance they need and renaming it as the “Growth Guarantee Scheme”, and publishing updated HMRC guidance on the tax deductibility of training costs for sole traders and the self-employed to provide certainty to those that want to invest in boosting their productivity.
In addition to this, the Government wants to catalyse the growth sectors of the future. Creating long-term success for the UK in a number of industries that are playing an ever-increasing role in our society is key to the prolonged strength of the UK economy. This is why the Government is providing additional support and funding in a number of priority growth sectors including creative industries, advanced manufacturing, green industries, digital technology and AI, and life sciences.
But the Government doesn’t want this success to be centralised in one area of the UK. Levelling Up across the country remains a key priority for the Government, and Investment Zones across the UK continue to attract investment into local areas, ensuring that success is spread. We have seen the benefits of Levelling Up here in Scunthorpe already, and with the Government’s prolonged commitment to this project, the benefits are sure to grow both in Scunthorpe and across the UK.
Thank you for taking the time to read this Special Update.
As you can see above, the Chancellor has provided the UK with the right conditions to improve the lives of Scunthorpe and UK residents, while strengthening our economy. These measures, alongside many others, will have a really positive impact on local residents, ensuring success, growth and prosperity across Scunthorpe.
If you have any questions or concerns, on this matter or any other, please do not hesitate to get back in touch with myself and my team. We are here, and we are more than happy to help.
I look forward to seeing you all again in my next update.
My very best wishes,
Holly