Chancellor Hammond is not about fancy initiatives, meddling too much or tweaking things for the sake of a good headline; he does something only when it is required
November 24, 2016: The UK government’s first – and last – Autumn Statement will be remembered for its sensibleness.
When faced with a crisis, Ronald Reagan had a catchphrase. Don’t just do something. Stand there.
Prime Minister Theresa May’s Chancellor is cut from the same cloth. Philip Hammond is not about fancy initiatives, meddling too much or tweaking things for the sake of a good headline. He does something only when it is required.
At a time when Brexit is going to change everything, we needed a sensible Autumn Statement from a government that lets businesses just get on with it. In years to come, I think we will look back at Theresa May’s style and be impressed.
As well as additional spending on housing (£1.4bn for 40,000 new affordable homes announced), there was confirmation that the ‘triple lock’ policy on the state pension would remain.
From April 2017, the Personal Savings Allowance for income tax will be raised from £11,000 to £11,500 and the National Living Wage will increase from £7.20 an hour to £7.50.
The government recommitted to cutting the rate of Corporation Tax to 17% by 2020 and reducing the burden of business rates by £6.7bn over the next five years.
There was 100% Rural Rate Relief announced for businesses in rural areas, a cancellation of the planned fuel duty rise and over £1bn pledged for improving the country’s digital infrastructure.
There was also good news for the North West.
What is particularly good about this Autumn Statement is the good news it delivers for the regions. May understands that it’s not all about what happens in London.
The government has committed to raising productivity across the UK. With the Northern Powerhouse Strategy, there will be £1.8bn funding for regions through the Local Growth Fund. It will be interesting to see what this means for the North West as the new mayors are elected – I expect they will have the power to spend regionally.
The new £400m Digital Infrastructure Investment Fund and the commitment to rolling out fibre to more homes and businesses will also be good for the North West.
Perks for employees are set to cost more. Known as ‘salary sacrifice’ schemes, employees have traditionally been able give up part of their salary for a non-cash benefit allowing them to buy gym memberships, mobile phone deals and take car allowances. From April, the scheme will only be beneficial for people using it for childcare vouchers, cycle to work schemes and pension contributions.
In 2010, the Personal Savings Allowance was £6,750. So this has gone up massively in a very short space of time, particularly when you consider our low inflation rate in that time.
The Autumn Statement also announced a new 2.2% fixed savings bond, which will go on offer next year.
This catches the eye but in reality it’s fairly inconsequential. Savers can only invest a maximum of £3,000 in total over the three year period – making just £66 a year in interest.
This may not have been one of the most exciting Autumn Statements but it’s just what businesses need.
Alan Mellor is Managing Director of Cheshire-based Chartered Financial Planners Phillip Bates & Co