Given the Spring Statement has – since its introduction by the Chancellor in 2018 – been a fiscal non-event to make it easier for businesses to manage changes, this year's was always going to be a damp squib. But compared to the enormity of the Brexit, today’s announcements are largely insignificant. Nevertheless, they are relevant to entrepreneurs and the tech sector, and the Statement was a welcome distraction from the daily humiliation of watching our politicians try to leave the European Union.
There was some good news. Tax receipts from Income and Corporation Tax were higher than expected, helping reduce the deficit. But economic growth remains weak. Chancellor Philip Hammond expects business investment to start growing again from next year, although all the forecasts are based on May’s deal passing – which is looking increasingly unlikely.
Wages are increasing at their fastest pace in over a decade, outstripping inflation. But The Government remains concerned about low wages, and has appointed Professor Arindajit Dube to undertake a review of the latest international evidence on minimum wages to inform future National Living Wage policy after 2020. This could ultimately impact any employers of low-wage employees and increase demand for technology to replace their tasks.
It’s widely acknowledged that apprenticeships aren’t working as intended. That’s why the government is reducing the percentage that employers will need to pay towards training from 10% to 5% and increasing the amount that levy-paying firms can pass on to their supply chain from 10% to 25%. This is a step in the right direction, but as we called for in our Business Stay-Up report, this should be increased to 50% as many businesses can’t find relevant training courses for their business needs.
The Chancellor has called for a CMA Market Review of digital advertising. This follows the release today of the Furman Review on competition rules for the digital age. It calls for closer examination of acquisitions by large tech companies, more data portability between social networks, and a new digital markets regulator to work with industry to develop a code of conduct for big digital platforms. This is all sensible stuff, with Furman’s report prioritising competition and consumers without resorting to potentially destructive suggestions such as breaking up tech firms or regulating them like utilities.
Hammond did manage to sneak in a couple of relatively minor funding announcements, including committing to fund the Joint European Torus (JET) programme in Oxfordshire as a wholly UK asset if the European Commission doesn't renew the contract. JET’s raison d'etre is to pave the way for nuclear fusion grid energy. There’s also £81m in Extreme Photonics (state-of-the-art laser technology) at the UK’s cutting-edge facility in Oxfordshire, £79m for a national supercomputer in Edinburgh, five times quicker than the UK’s current capabilities, and £45m for Bioinformatics research in Cambridge.
Research institutes and innovating businesses will benefit from an exemption for PhD-level occupations from the cap on high-skilled visas, and overseas research activity will now count as residence in the UK when applying for settlement. As such, researchers will no longer be penalised for research time spent overseas. Alongside scrapping landing cards and allowing some foreign nationals to use e-gates, the Government clearly wants to show that we are open for business. All this can’t and won’t offset the talent we will lose from ending free movement with the EU though – assuming, that is, we actually leave the EU.
Business is all the better for owners not having to keep up with the machinations of 650 politicians in Westminster. That’s why Hammond downgraded the Spring Statement three years ago. In these exceptional times politics will have an undue influence, with sharp changes in access to talent, tariffs and investment directly and indirectly impacting every business in the country. This statement isn’t enough to put a spring in anyone’s step, but Hammond can’t work miracles.