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The Last Autumn Statement

When issuing Budgets and Autumn Statements it is traditional for the Chancellor of the Exchequer to keep the big announcement to last. If so, the big announcement from the Chancellor Philip Hammond was that not only was this to be the last Autumn Statement but also that the Budget next March will be the last Spring Budget.

That does not mean that the country’s finances are frozen for evermore, simply that the Chancellor intends to fall in with recommendations from external bodies and in the future deliver one budgetary announcement each year in the Autumn with an interim commentary on the OBR’s yearly analysis taking place each Spring. Having said that, this year’s Autumn Statement was hardly a quiet affair with one eye on further boosting the economy and the other on the possible implications of Brexit being triggered next Spring.

On the plus side, despite all the gloom and doom predictions earlier this year, the IMF has forecast that the UK’s economy will be the fastest-growing in the world this year. On the negative side, tax receipts have been lower than expected, partially due to a rise in incorporations and self-employment. Despite this, the Chancellor felt secure enough to confirm a number of previously announced measures including the increase in personal allowance threshold and a further freezing of fuel duty.

Other positive measures announced include:

• an increase in national living wage to £7.50 with effect from April next year


• a reduction in the universal credit taper rate and


• the introduction of a National Savings Bond in 2017 which is expected to have an interest rate of 2.2% over three years. The maximum investment in this will be £3,000 per person.

The losers in the Budget include those employees who currently receive benefits in exchange for salary sacrifice as they will, from April 2017, be taxed on benefits received. However some benefits such as pension contributions and the cycle to work scheme will be excluded from the tax exercise. There’s also a sting in the tail for businesses with employer and employee national insurance contributions to be aligned at £157 per week from April 2017.

Pensioners are also winners and losers with the triple lock staying in place. However for pensions that have been drawn down, the money purchase annual allowance is to be reduced to £4,000 in order to prevent double tax relief. Measures are also going to be taken to ban pension cold calling and other pension scams.

Overwhelmingly though this was a Statement for business and infrastructure. Transport, housing and innovation are all to receive significant levels of investment with money also being spent to boost fibre and 5G connectivity. The productivity gap also came in for some attention with the UK significantly behind US and European competitors. For example, a UK worker produces in five days what a German worker produces in four. In order to address this, the Chancellor has announced a national productivity investment fund of £23 billion. Venture capital funds also receive a boost making this Autumn Statement very much one for businesses which are looking to increase productivity and grow.

If you’re looking to create an investment portfolio, or if your situation has changed and you may therefore need to review your existing portfolio, contact Beckworth by using one of the links on our website.

23rd November 2016