Spring Statement 2024

I can’t believe how fast this has come around. It feels like only a couple of weeks since I was writing about the Autumn Budget. Back then, the Chancellor was confident that their “plan was working”, still desperately clinging to hope that the Conservatives would remain in power.

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Let’s see what’s changed, shall we…

Jeremy Hunt kicked off the Spring Budget as if the Channel 4 cameras were shining on him. It felt almost like his opening gambit at a debate with the opposition in the build-up to the election.

Mr Hunt told us that despite recent economic challenges, the UK economy has grown at the highest rate in every large European economy since 2010 (when the Conservatives were elected into power). Unemployment has also halved, and absolute poverty has gone down.

And then it felt like the beginning of the manifesto.

According to the chancellor, ‘we are delivering the Prime Minister’s economic priorities!’ How fantastic!

Not only that, but his measures were going to mean ‘More Investment! More Jobs! Better Public Services! And Lower Taxes!’

This sounds great!

…I hope you can note the tone.

After that enthusiastic introduction, the rest of what the Chancellor had to say felt like a bit of a damp squib, if I’m honest.

The disappointing news was that the UK economy was only going to grow by 0.8% this year. This is not too bad, considering we’re currently in a recession. The OBR has forecast that inflation will fall to 1.5% by next year.

Then, the continuing terrifying statistic that public debt for the UK is forecast to be 91.7% of GDP by the end of the year. In 2010, it was 74.2%, and the Conservatives promised to eliminate the bulk of the deficit by 2015. We are nowhere near that, sadly. The pandemic and ongoing war in Europe have not helped.

Onto the measures!

The chancellor broadly chose to stay strong with the spending pledges made in the Autumn statement. Salary thresholds at which people start paying taxes remain frozen. Sir Keir Starmer and the rest of the opposition are constantly calling out the fiscal drag caused by this.

There were also freezes to existing duties on both fuel and alcohol, which are not something consumers will notice. But there were some changes.

For businesses

There’s not really much to say on this.

The threshold at which small businesses must register to pay VAT has gone from £85,000 to £90,000. Sure, that’s nice, but it’s not exactly a pressing issue for businesses or contractors.

For contractors & limited companies, the Chancellor chose not to address the biggest tax discrepancy facing them, IR35. The rules are designed to stop contractors working as ‘disguised employees’ by taxing them at a rate similar to employment.

IR35 has been deemed fundamentally flawed and branded as too complex. Contractors will now need to wait to see the upcoming manifestos to see if their concerns will be answered.

For individuals

National Insurance is being cut by 2p for employees & the self-employed. That is good news. However, when you take into account the aforementioned fiscal drag from not increasing the tax thresholds and the continued issues of currently high inflation, many individuals will not be much better off.

In summary

It was a very limited budget. Maybe it’s because the government ran out of ideas after 14 years of being in power. Maybe it’s that they know they are destined to lose the next election, based on all the polling for the last 2 years?

Or maybe, and most probably, due to the economy and the government's spending capacity, there isn’t much the government can do right now to revolutionise the economy.

This will most likely be the last time a Conservative chancellor steps up the despatch box for at least 5 years. Mr Hunt could have tried to go out with a bang. He could have set up some big promises for their manifesto. Tried to do what little he could to rally the swing voters into sticking Conservative.

But in truth, there wasn’t very much to say, and the chancellor played it very safely.

For the cricket fans out there, it definitely wasn’t Bazball but much more Boycottball!

If this is to be the last budget delivered by this government, can we really say we’re better off economically than we were 14 years ago? I’ll let you decide…