When the Chancellor of the Exchequer rose to his feet in the House of Commons today, he knew the eyes of British business were fixed upon him. In what may well be the last ever Spring Budget delivered to Parliament, Phillip Hammond erred on the side of caution and delivered the thinnest Budget in living memory.
For those expecting significant action on business rates policy, there was huge disappointment as the Chancellor choose to tinker rather than transform the system, by unveiling a £435m relief package to “soften the blow” for those facing large increases in their bills following the revaluation. To summarise where that money will be spent:
Whilst this is good news for some, particularly for those coming out of the Small Business Rate Relief scheme, the Chancellor has not gone far enough and he has totally missed the opportunity to address the fundamental issues at the heart of the business rates system.
Heading into this Budget, the BCA was clear that the Government needed to take immediate action to introduce more frequent revaluations. However, another consultation into the idea has been launched, even though they have yet to publish the result of last year’s consultation on the same topic. The issue is being kicked into the long-grass yet again.
It does not have to be that way. Rather than launching another consultation on more frequent revaluations, the Government could immediately amend the Local Government Finance Bill currently going through Parliament to introduce more frequent business rates revaluations.
And time is of the essence. The Valuation Office (VO) only last week lost a major case on the business rates system in the Supreme Court and the VO is still dealing with a massive backlog from the last revaluation. By every single measure the system is not fit for purpose but this Budget was not forthcoming with solutions.
Beyond business rates policy, the Government did very little. The amount of national insurance contributions paid by the self-employed will increase to come in line with employees. In April 2018, Class 4 National Insurance Contributions (NICs) will increase by 1% and then by a further 1% in April 2019, representing a significant tax increase for self-employed individuals.
The other key announcements, which were widely trailed in advance, were some additional money for Adult Social Care, the introduction of a new technical qualification called “T-Levels” and more funding for 110 new free schools across the country.
This was a damp squid budget which missed the opportunity to tackle the reform of business rates head on. Thin on detail, thin on ideas, thin on reform, the Spring Budget could be remained the “Thin Budget” leaving the BCA and our members extremely disappointed.