Leading experts across financial services weigh in with their thoughts on a key moment for chancellor Philip Hammond after he presented his Spring Statement today amid Brexit upheaval in parliament
While we could have all predicted that today’s statement would be overshadowed by Brexit, long-term thinking is crucial in pensions policy. It’s disappointing that the government didn’t take this opportunity to offer a good news story by undertaking to extend auto-enrolment to the thousands of workers not currently covered by the scheme.
It’s vital that the government delivers on its promise to lower the age limit for auto-enrolment from 22 to 18, calculate contributions from the first pound earned, and go beyond its existing promises to bring in half a million new savers – the vast majority women often combining part time work with caring – by lowering the £10,000 earnings trigger to the primary national insurance threshold.
People’s Pension director of policy Gregg McClymont
Today’s Spring Statement was little more than a blip on the political radar. Squeezed in-between Prime Minister’s Question Time and a motion on leaving the European Union without a deal, it’s clear that Parliament’s mind was somewhere else. Despite the long shadow cast by the Brexit drama, Philip Hammond came to the House of Commons with positive news on tax receipts meaning that the government is on course to have a smaller deficit in this financial year.
While in theory this should give the chancellor greater wriggle room, he was at pains to point out that the purse strings won’t be loosened until there is greater clarity around the UK’s future relationship with the EU.
More than anything, today’s statement had a very clear motive; to dangle the prospect of a ‘deal dividend’ in-front of those MPs who may still change their mind and vote for Theresa May’s withdrawal agreement if it comes back for a third time.
Sanlam UK chief investment officer Philip Smeaton
I am looking forward to seeing what the ‘deal dividend’ actually means for tax. I would be surprised if there are any real tax cuts, especially with planned tax changes already in place
I would like to see the ‘deal dividend’ used for a further reduction in corporation tax to 15 per cent, especially in the event of a no-deal Brexit.
Assuming a no deal Brexit, EIS should be widened and relaxed to encourage more private investment in UK business, we would no longer be bound by the EU State Aid rules.
Blick Rothenberg partner Nimesh Shah
The Chancellor was right to highlight that an additional 220,000 new homes have been built as this is certainly helpful in controlling house price inflation.
However, it was disappointing to again hear the promotion of the First Time Buyers relief which although helping 240,000 FTBs, has done so at a staggering cost of £600m to the taxpayer.
As AAT has repeatedly highlighted, this scheme is costly and bureaucratic and should be scrapped in favour of simply switching Stamp Duty liability from the buyer to the seller.
Switching liability is a cost free alternative that would save the taxpayer hundreds of millions of pounds; protect existing revenue streams; ensuring every FTB was free from Stamp Duty whilst helping tens of thousands of other home owners who are moving up the property ladder – by ensuring they pay a lower sum on the house they are selling and not the house they are buying.
AAT head of public policy Phil Hall
The Chancellor’s words were as reliable as a weatherman’s with the forecasts and announcements having the potential to be blown away overnight depending on whether a Brexit deal is sorted.
Gratefully social care got a cursory nod as the Chancellor announced a three year spending review to be published alongside the next budget. Having a clear vision on how much the government is willing and able to spend on social care will enable policymaking. At the moment all we have is an illusory green paper that seems to be a figment of our imagination, and even when it’s produced, it will be a series of ideas, rather than a concrete plan of how we are going to deal with the colossal challenge of funding long term care.
Government need to produce clear guidelines on how much the state will contribute towards a person’s long-term care and how so the wealth management and insurance industry can create products that will help remove the rest of the uncertainty. The weight of the concern of being able to pay for care should not be underestimated.
Quilter tax and financial planning expert Rachael Griffin