In recent years, the sight of the Chancellor on his feet in the Commons in March, talking about the economy, would have meant it was Budget Day and media outlets, and businesses, would have been hanging on every word.
In 2019, the Spring Statement is very much the poor relation to the “real” Budget in the Autumn and, as even the Chancellor conceded, MPs currently have bigger fish to fry.
Philip Hammond opened his speech by saying that to avoid making the Statement any longer than necessary he would provide a Written Ministerial Statement containing much of the detail.
It is hardly surprising therefore that Edwin Morgan, Interim Director General of the Institute of Directors, said: “In all honesty, today’s Spring Statement will barely register with most business leaders, as Brexit uncertainty continues to cast a shadow over their organisations”.
The Spring Statement is supposed to be an opportunity for the Chancellor to update everyone on the overall health of the economy and the Office for Budget Responsibility’s forecasts for growth and the public finances.
Mr Hammond’s problem this year, of course, is that he has no idea whether he will be dealing with a country heading into a long implementation period with the EU or one that has suddenly cut all ties with its largest trading partner.
As he said: “I need to be straight with the House: a no-deal Brexit would deliver a significant short- to medium-term reduction in the productive capacity of the British economy”.
The Chancellor went on to say that he was ready to spend £26.6 billion to boost the economy, if MPs vote to leave the European Union with a deal.
Assuming a smooth Brexit (admittedly a large assumption), what was there in the Statement for employers?
From 1 April, 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 will be able to share more funds across their supply chains, with the maximum amount rising from 10% to 25%.
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.
A full response to last year’s call for evidence on the problem of late payments will be published shortly, but the Chancellor announced that, as a first step, company Audit Committees are to be required to review payment practices and report on them in their Annual Accounts.
Research institutes and innovating businesses will benefit from an exemption for PhD-level occupations from the cap on high-skilled visas from this autumn. Overseas research activity will also count as residence in the UK for the purpose of applying for settlement, meaning researchers will no longer be unfairly penalised for time spent overseas conducting vital fieldwork.
The Government is to undertake a review of the latest international evidence on the impact of minimum wages, to inform future National Living Wage policy after 2020.
Comment by Croner Associate Director Paul Holcroft
The Chancellor has revealed that UK employers could stand to benefit from an increase in financial support providing the UK reaches a deal with the EU over Brexit.
This includes a £37 billion National Productivity Investment fund to help businesses address the UK’s lagging productivity rate, while it was also confirmed that the £700 million previously suggested to help small firms take on more apprentices will become available from as early as April 2019.
Furthermore, the changes to the UK’s visa scheme detailed above will make it easier for employers to recruit highly-skilled individuals in the face of an ongoing talent shortage.
However, the review of low pay in Britain (which mirrors the Government’s recent efforts to improve protections under the Good Work Plan) may be less welcome to employers and payroll departments.
This could see minimum wage rates increase in the future which is likely to come at a considerable cost to a large number of employers.
Last reviewed 15 March 2019