Autumn Budget- What to Expect
September 15th, 2017
Last November, the then relatively new Chancellor, Philip Hammond, announced he would be switching to Autumn Budgets, starting after the Spring Budget in 2017. This was a reversion to an idea introduced in the early 1990s, but abandoned when Gordon Brown replaced Ken Clarke at the Treasury in 1997.
Following last year’s announcement, the Treasury published a “7 things you need to know” press release explaining how the Autumn Budget timetable would work. This said “From winter 2017, Finance Bills will be introduced following the Budget. The aim will be to reach Royal Assent in the spring, before the start of the following tax year.” It also promised that “Legislation Day”, when most tax policy consultation summaries and draft Finance Bill legislation is published, would move from December to the summer, starting in 2018.
What the Treasury did not say was that there will effectively be no Legislation Day for the Autumn Budget 2017 because there is not sufficient time. However, the Treasury has “opened the Budget representations portal earlier than usual to allow more time for HM Treasury to note and consider representations”. The deadline for submitting representation for the Autumn Budget 2017 is 22 September, according to Treasury guidance.
Before considering what might be in the Autumn Budget, some background points need to be considered:
- Traditionally, the first Budget after an election is when the unpalatable medicine, ie tax increases, is dispensed. According to the Institute for Fiscal Studies, prior to the 2015 election, each of the previous five post-election Budgets saw net tax rises of more than £5bn in today’s terms. The Summer Budget after the 2015 election topped this, aiming to raise the Treasury’s inflow by more than £9bn. However, over a third extra of this revenue disappeared in the following Autumn Statement., when George Osborne was forced to climb down on reforms to tax credits.
- Philip Hammond has already lost planned income from of his own Budget climb down on NIC Class 4 contributions – a measure which never even reached the first Finance Bill. In the grand scheme of things, the loss is small beer – about £2bn spread over four years from 2018/19. He is on record as saying he will need to replace the missing revenue, but any recoup will be lost on the noise of overall numbers.
- On the expenditure side, Mr Hammond must find the extra £0.5bn a year over the next two years that was pledged to Northern Ireland as part of the DUP’s “confidence and supply” deal following the general election.