The UK has come a long way over the last eight years, with our economy growing strongly, unemployment at a near-record low, the deficit down and more investment in public services like the NHS.
The Government is taking a balanced approach as we build an economy that works for everyone. We have invested over £60 billion since Autumn Statement 2016, in public services and in building the infrastructure for the future, while continuing to cut tax for millions of working families and seeing debt start its first sustained fall in a generation – a turning point in our recovery from Labour’s mess. Labour would do it all over again – sending debt spiralling by over £350 billion, meaning billions more wasted on debt interest and leaving our economy vulnerable.
This Spring Statement reports on our progress creating a country that works for everyone: getting control of the public finances whilst investing in our public services; investing in our economy to create better, higher-paying jobs; and supporting families with the cost of living.
What the OBR has said about the economy and public finances
- The economy is set to grow more strongly than previously thought. The OBR today increased their estimate for growth in 2017 from 1.5 to 1.7 per cent, and forecast stronger growth of 1.5 per cent for 2018. Our economy has now grown for eight consecutive years, and is nearly 17 per cent bigger than it was in 2010.
- We’re at a turning point; debt is beginning to fall – the first sustained fall in debt in 17 years. We’ve reduced our deficit by £108 billion over the last seven years thanks to the hard work of the British people; while since Labour’s manifesto was published last year, they’ve committed to spending £106 billion – blowing away eight years of hard work in just nine months.
Other good economic news
- Manufacturing has grown for the longest consecutive period in 50 years, with high-tech manufacturing sectors growing strongly since 2010.
- There are 1.2 million more businesses across the UK than there were in 2010, with 200,000 more women-led SMEs in 2016 than there were in 2012.
- Disposable income per person is now 4.4 per cent higher in real terms than it was in 2010, while income inequality is lower than in 2010 and is close to its lowest level since the mid-1980s.
Our priorities for Britain
- Getting control of the public finances whilst investing in our public services
Controlling public spending. We’ve demonstrated beyond doubt that controlling public spending is compatible with world-class public services. There is more work to do to get debt down, because we still spend around £50 billion a year on interest payments – more than we spend on the police and armed forces combined.
Investing to support our world-class public services. Due to the decisions this Government has made, the IFS found that we have the highest level of sustained investment in 40 years. Since Autumn Statement 2016, we’ve invested £60 billion in our public services and invested in Britain’s long-term future, while continuing to cut tax for working people.
Key political point: Labour might make big promises on the campaign trail, but don’t know how to manage the economy to be able to deliver on them. Labour’s promises would mean increasing our national debt by £106 billion, meaning £8 billion more wasted on debt interest rather than funding our key public services.
- Investing in our economy to create better, higher-paying jobs
Investing in people. We’re building a country that works for everyone, one which is ready to meet the challenges of the future head on. It's vital that people have the right skills to thrive in a modern dynamic economy. That’s why we’ve launched a National Retraining Partnership between government, industry and unions to equip workers with the skills they need to succeed as we make the UK a world leader in new technologies.
Investing in infrastructure. Since 2010, we’ve provided over half a trillion pounds in capital investment. We’re embarking on the biggest rail modernisation programme since Victorian times and major infrastructure projects like Crossrail and the Merseyside Bridge. While the IFS have said that our plans will see public investment increase to the highest sustained levels in 40 years by the end of the Parliament.
Making a success of Brexit. At the Autumn Budget 2017, we’ve set aside £3 billion over 2 years so that we’re ready for Brexit. Today, we’re allocating £1.5 billion to Devolved Administrations and Departments to ensure that we are prepared for any possible outcome of the negotiations.
Building a modern economy that creates better higher-paying jobs. The only way to improve living standards, and deliver the high-skilled, high-wage jobs of the future is to boost productivity so that we can build an economy fit for the future. The Autumn Budget extended the National Productivity Investment Fund to £31 billion, and committed to raising Research and Development support to the highest level in 30 years.
Key political point: Under Labour, the UK’s infrastructure ranking fell from 7th in the world to 33rd. Instead of having a proper plan for the future, Labour want to renationalise the railways, the Royal Mail, the water industry and the energy networks. That wouldn’t prepare Britain for the future, would lead to worse services and less investment; nationalisation would cost at least £176 billion, meaning more debt and more wasted on debt interest payments instead of being spent on our public services.
- Continuing to support families with the cost of living
Boosting wages for the lowest paid. It was this Conservative Party that introduced the new National Living Wage – delivering the fastest pay rise for lower earners in 20 years. In April this year, we will increase it again leaving a full time worker on the National Living Wage over £2,000 a year better off since its introduction. Over 2 million people are expected to benefit from the increases to National Living Wage and National Minimum Wage in April, with under 25 year olds and Apprentices seeing the largest increases in 10 years.
Helping families keep more of what they earn. We’ve raised the personal allowance so that, this April, the 31 million people will see their income tax bill cut by over £1,000 since 2010 – keeping taxes low for ordinary families. While we’ve taken 4 million of the lowest paid out of paying income tax altogether. We believe in taxes that are low but taxes that are paid.
Supporting consumers, while ensuring a strong safety net if someone slips into debt. We are helping consumers deal with their debts through increasing financial capability. We fundamentally reformed consumer credit regulation in 2014, giving the FCA robust regulatory powers, while the new Single Financial Guidance Body will give consumers free advice and guidance on all money matters.
The Labour Party: the price we will all pay
For all the promises Labour make, they won’t deliver on them. They don’t know how to handle the economy and we know what that means from last time – more debt, higher taxes and fewer jobs. We will all pay the price for that.
Jeremy Corbyn and his top team are unqualified and not up to the job. Time and time again, he breaks his promises – whether it is his pledge on student debt, renewing our Trident defence system, or standing up to people in his party who do and say things that don’t belong in our public life.
On Brexit, one of the biggest issues facing our country, Labour are working to frustrate it, rather than make it a success, and they have no interest in controlling our borders.
Spring Statement 2018: Consultations and proposals announced
- Corporation tax and the digital economy – an update on the challenges posed by the digital economy for the international corporate tax framework, and a proposed approach for addressing those challenges.
Why we are doing this: We welcome and embrace the benefits brought about through the digital economy. But we must make sure that our tax system is fit for the future as the digital economy grows. That’s why the position paper today looks at what types of businesses are mostly affected, and what works in the longer term. While doing this, we will ensure that we will protect and support Britain’s thriving start up tech sector.
- VAT, Air Passenger Duty and tourism in Northern Ireland – calls for evidence on the impact of VAT and APD on tourism in Northern Ireland.
Why we are doing this: The tourist industry in Northern Ireland has experienced consistent growth in recent years, and we want to help businesses build on that success. There are concerns that VAT and APD have had adverse impact on the tourism industry in Northern Ireland, however, opinion has been divided, so we are seeking further views on these issues.
- Business Rates Revaluation – to enable businesses to benefit from more accurate bills, the Spring Statement announces that the next revaluation will be brought forward a year to 2021.
Why we are doing this: At the Autumn Budget 2012, we announced an increase in the frequency of revaluations from every 5 years to every 3 years after the next property revaluation. This move will ensure that bills more accurately reflect properties current rental value and relative change in rents, and has been welcomed by the Federation of Small Businesses and the British Retail Consortium.
- VAT threshold – looking for more evidence on how the current threshold affects business.
Why we are doing this: At the last Budget, the Chancellor froze the VAT threshold for two years from April 2018. As he said in November, he is not minded to reduce it. However, we know setting the VAT threshold at the wrong level may dis-incentivise small businesses from growing. So we will look at whether the threshold design could be changed to drive small business growth.
- Cash and digital payments in the new economy – the Spring Statement calls for evidence on whether we can do more to support digital payments.
Why we are doing this: This will explore how we can further support digital payments, ensure the ability to pay by cash is available for those who need it, and crack down on the minority who use cash to evade tax and launder money.
- Single use plastics – a call for evidence on how the tax system, including charges, can reduce single use plastics waste.
Why we are doing this: Plastics don’t decompose and can last centuries in landfill, littering the streets or polluting the oceans. The UK produces 2.26 million tonnes of plastic packaging waste a year, but only a third is recycled – compared to half in Germany. Although we’ve made big strides, reducing usage of plastic carrier bags by 80 per cent through the carrier bag charge, we want to lead the way in tackling this global problem.
- Red Diesel for Non-Agricultural Users – look at whether red diesel, for non-road use, discourages the use of cleaner alternatives.
Why we are doing this: Red diesel is a long-standing relief for all non-road uses of diesel fuel, such as airport operations, off-grid heating and agriculture. Red diesel benefits from a reduced duty of 11.14 pence per litre, compared to the main duty of 57.59 pence per litre. Advances in modern technology and concerns over these harmful emissions make it appropriate to review the relief.
- Van Vehicle Excise Duty - to encourage van drivers to choose cleaner vehicles the government will consult on reforming Vehicle Excise Duty (VED) for vans.
Why we are doing this: The reform proposed in the consultation is designed to support the transition to zero and ultra low-emission vehicles. The consultation will look at reducing VED rates for the cleanest vans through creating a graduated first year rate for vans, as is already in place for cars. The proposals would mean most van purchasers paying less tax in the first year as a result of the change compared to if they kept their current van, particularly if they switch to a ULEV. This measure is not designed to penalise drivers. When the document is published it will outline a number of options – the most costly option for existing van drivers would add around £5 a year to their annual VED bill, to help fund relief for greener vehicles.