Budget, November 2017

The media will be full of facts and deep analysis on the Budget that Philip Hammond has delivered,
including the headline grabbing rabbit that escaped the chancellor’s hat to abolish stamp duty for most
first-time buyers in England and Wales. Out of the 88 pages which constituted the chancellor’s second
Budget, table 2.1 on pages 28-30 (see below) is once again the most revealing.

It shows plainly the impact on the public finances of each measure being announced: a (-) is a ‘giveaway’
or fiscal boost from Treasury to the economy, (+) takes money out of the economy and into the public
finances. We call it “THE table” because it is the quickest way to gauge the reality of what has just been
announced.

It identifies 69 specific policy decisions with either a positive or negative effect on the public finances.
Taken together they represent a near £25 billion giveaway over the six years from 2017/18. This is pretty
substantial when compared to the equivalent number in the Spring Budget, which indicated a mild
tightening of £2bn over five years. The Autumn Statement last year was the greatest giveaway in recent
years at £33 billion. So, taken together, the chancellor will have put £56 billion from the public purse into
the UK economy in just over a year.

The table shows the detail in 414 entries across housing, the NHS, families and work, economic
development, tax compliance, tax rates, air quality and other measures.
Budgets are one of the most important set-piece events in the national calendar. Markets move, careers
are made and lost, the economy can be aided or hindered. And sitting behind the Budget is the
independent forecast of the Office for Budget Responsibility (OBR).
The OBR published its November outlook for the economy and public finances as the chancellor sat
down today. The economy and public finances are naturally very difficult to forecast but the point of trying
to nail this particular jelly to a wall is to determine the projections for the health of the economy, the
subsequent flow of tax revenues to the exchequer, and demands upon the same for spending. The
performance of the engine of the economy is far more important than any one headline tax or spend
measure.

At the core of those forecasts was the fact that this is the first time in modern history that the official UK
GDP growth forecasts are below 2% every single year through to 2022. A sobering thought for us all as
we look towards the festive season.

 

Table 2.1: Autumn Budget 2017 policy decisions (£ million)1
Head 2017-18 2018-19 2019-20 2020-21 2021-22 2022-232
Housing and Homeownership
1 Land Assembly Fund3 Spend 0 0 -220 -355 -355 -355
2 Housing Infrastructure Fund: extend3 Spend 0 0 -215 -710 -1,070 -1,185
3 Small sites: infrastructure and remediation Spend 0 -275 -355 -120 0 0
4 Local Authority housebuilding: additional investment Spend 0 0 -355 -265 -260 0
5 Stamp Duty Land Tax: abolish for First Time Buyers up to £300,000 Tax -125 -560 -585 -610 -640 -670
6 Right to Buy for Housing Association tenants: pilot Spend 0 0 -85 0 0 0
7 Council Tax: increase maximum empty home premium to 100% Tax 0 0 0 0 +5 +5
National Health Service
8 NHS: additional resource Spend -400 -1,900 -1,070 0 0 0
9 NHS: additional capital Spend -600 -420 -840 -1,020 -960 -360
Supporting families and working people
10 Fuel Duty: freeze for 2018-19 Tax 0 -830 -825 -845 -865 -885
11 Alcohol Duties: freeze in 2018 Tax -35 -225 -230 -230 -235 -240
12 Air Passenger Duty: freeze for long-haul economy flights and raise business class multiplier Tax 0 0 +25 +25 +25 +30
13 Targeted Affordability Fund: increase Spend 0 -40 -85 -95 -100 -110
14 Universal Credit: remove 7 day wait and extend advances to 100% Spend -20 -170 -205 -195 -160 -145
15 Universal Credit: run on payment for housing benefit recipients Spend 0 -130 -125 -135 -110 -40
16 Universal Credit: in-work progression trials Spend * * * -5 -5 0
17 Private rented sector access schemes: support for households at risk of homelessness Spend 0 -10 -10
18 Disabled Facilities Grant: additional resource Spend -50 0 0 0 0 0
19 Relationship Support: continue programme Spend 0 -5 -10
An economy fit for the future
20 Domestic spending: preparing for EU Exit Spend 0 -1,500 -1,500 0 0 0
21 National Productivity Investment Fund3 Spend 0 0 0 0 0 -7,000
22 Research and Development: NPIF investment3 Spend 0 0 0 0 -2,300
23 Research and Development: increase R&D expenditure credit to 12% Spend -5 -60 -170 -175 -170 -175
24 Oil and Gas: transferrable tax history Tax 0 +5 +20 +10 +10 +25
25 Patient Capital Review: reforms to tax reliefs to support productive investment Tax 0 0 +45 +35 -15 -20
26 Innovation: Ultra Low Emission Vehicles: plug in car grant Spend 0 -50 -50 0 0 0
27 Innovation: tech, AI, and geo-spatial data Spend 0 -70 -75
28 Transport: accelerate capital investment for intra-city transport (Transforming Cities Fund) Spend 0 -10 -240 -285 +525
29 Transport: additional investment in local roads Spend -55 0 0 0 0 0
30 Public Works Loan Board: new local infrastructure rate Spend 0 * -5 -5 -5 -5
31 Skills: National Retraining Scheme initial investment Spend 0 -20 -45
32 Skills: investment in computer science teachers and maths Spend 0 -30 -50
33 Skills: teacher premium pilot Spend 0 -10 -15 -15 -5 0
34 Business Rates: bring forward CPI uprating to 2018-19 Tax 0 -240 -530 -525 -520 -520
35 Business Rates: extend pubs discount to 2018-19 Tax 0 -30 0 0 0 0
36 Competition and Markets Authority: additional enforcement Spend 0 -5 -5 +5 +15 +10
37 Aggregates Levy: freeze in 2018-19 Tax 0 -15 -10 -10 -10 -10
38 HGV VED and Road User Levy: freeze in 2018-19 Tax 0 -15 -10 -15 -15 -15
Avoidance, Evasion, Fraud and Error
39 Avoidance and Evasion: additional compliance resource Tax -10 +10 +170 +585 +580 +740
40 Corporation Tax: tackle related party step up schemes Tax +15 +45 +45 +45 +45 +45
41 Corporation Tax: depreciatory transactions Tax +5 +10 +10 +10 +10 +10
42 Royalty payments made to low tax jurisdictions: withholding tax Tax 0 0 +285 +225 +160 +130
43 Online VAT fraud: extend powers to combat Tax 0 +10 +20 +40 +50 +45
44 Offshore Time Limits: extend to prevent non-compliance Tax 0 * * * +5 +10
45 Carried Interest: prevent avoidance of Capital Gains Tax Tax 0 +20 +170 +165 +150 +145
46 Insolvency use to escape tax debt Tax 0 -5 +70 +135 +150 +150
47 Dynamic coding-out of debt Tax 0 0 +55 +30 +20 +20
48 Construction supply chain VAT fraud: introduce reverse charge Tax 0 0 +90 +135 +105 +75
49 Waste crime Tax 0 +30 +45 +45 +50 +45
50 Fraud, Error, and Debt: greater use of real-time information Spend 0 +85 +75 +65 +40 +40
A fair and sustainable tax system
51 Corporation Tax: freeze indexation allowance from January 2018 Tax +30 +165 +265 +345 +440 +525
52 Capital Gains Tax: extend to all non-resident gains from April 2019 Tax +5 +15 +35 +115 +140 +160
53 Non-resident property income: move from Income Tax to Corporation Tax Tax 0 0 0 +690 -310 -25
54 Capital Gains Tax payment window reduction: delay to April 2020 Tax 0 0 -1,200 +950 +235 +10
55 VAT registration threshold: maintain at £85,000 for two years Tax 0 +15 +55 +105 +145 +170
56 Tobacco Duty: continue escalator and index Minimum Excise Duty Tax +45 +35 +40 +45 +40 +35
Other public spending
57 Adjustments to DEL spending Spend +1,000 0 -1,135 0 0 0
58 Official Development Assistance: meet 0.7% GNI target Spend 0 +375 0 0 0 0
59 Scotland police and fire: VAT refunds Tax 0 -40 -40 -40 -45 -45
Air Quality
60 Air Quality: increase Company Car Tax diesel supplement by 1ppt from April 2018 Tax 0 +70 +35 -30 +130 +90
61 Air Quality: First Year Rate increased by one VED band for new diesel cars from April 2018 Tax 0 +125 +50 +10 * *
62 Air Quality: funding for Air Quality Plan and Clean Air Fund Spend -20 -180 -215 -80
Previously announced policy decisions
63 Tuition Fees: raise threshold to £25,000 in April 2018 Tax 0 -50 -100 -175 -235 -295
64 Tuition Fees: freeze fees in September 2018 Tax 0 -5 -15 -25 -35 -45
65 Oil and Gas: funding for UK continental shelf exploration projects Spend 0 -5 0 0 0 0
66 NICs: maintain Class 4 NICs at 9% and delay NICs Bill by one year Tax -10 -125 -645 -685 -565 -525
67 Making Tax Digital: only apply above VAT threshold and for VAT Tax * * -65 -245 -515 -585
68 City Deals: Swansea and Edinburgh Spend 0 -30 -30 -30
69 Social rented sector: maintain current rent policy without Local Housing Allowance cap Spend 0 0 -155 -205 -255 -320
Total policy decisions3 -230 -6,045 -9,915 -3,315 -2,960 -2,520
Total spending policy decisions -150 -4,460 -7,190 -3,625 -1,450 -1,105
Total tax policy decisions -80 -1,585 -2,725 +310 -1,510 -1,415
* Negligible
1 Costings reflect the OBR’s latest economic and fiscal determinants.
2 At Spending Review 2015, the government set departmental spending plans for resource DEL (RDEL) for the years up to and including 2019-20, and capital DEL (CDEL) for the years up to and including 2020-21. Where specific commitments have been made beyond those periods, these have been set out on the scorecard. Where a specific commitment has not been made, adjustments have been made to the overall spending assumption beyond the period.
3 These figures do not feed into the Total policy decisions line. In 2021-22 and 2022-23, funding for these measures has been allocated from the aggregate total for capital spending. This includes the National Productivity Investment Fund. The NPIF will extend into 2022-23 at £7bn in that year.