Chancellor of the Exchequer Philip Hammond MP presented his first Autumn Statement to the House of Commons on 23 November 2016. The Autumn Statement provides an update on the government’s tax and spending plans, based on the economic projections provided by the Office for Budget Responsibility (OBR).
The Autumn Statement impacts on Northern Ireland in a number of ways.
OBR Growth Forecasts
- Forecasts predict growth figures of 2.1% in 2016; 1.4% in 2017; 1.7% in 2018; 2.1% in 2019 and 2020; and 2% in 2021.
- OBR believes potential growth over the forecast period is 2.4% lower than would have been the case if the UK voted to stay in the European Union.
Northern Ireland Budget
- Northern Ireland will receive an additional £250m for infrastructure projects over the four years to 2021/21. It will be up to the Executive to decide how the money is allocated.
- £1.3bn will be spent on road improvements in England, with Barnett Consequentials of approximately £40m for Northern Ireland.
Support for Business
- £400m will be made available through the British Business Bank to provide finance to innovative small businesses with potential for growth.
- UK Export Finance will be doubled.
- Local businesses will benefit from further investments in digital infrastructure such as fibre broadband and 5G.
Taxation and Wages
- Corporation Tax in GB will be cut to 17% by 2020. This will make it more affordable for the NI Executive to lower Northern Ireland’s rate in April 2018.
- Fuel duty will remain frozen, saving average car drivers £130 a year and average van drivers £350 per year.
- Personal Allowance (the amount of money a person can earn before having to pay income tax) will rise to £12,500 by the end of the Parliament.
- The threshold for higher income tax will increase from £43,000 to £45,000 in 2017/18.
- The National Living Wage for those aged 25+ will increase from £7.20 per hour to £7.50 per hour. Around 13,000 workers in Northern Ireland are believed to have benefited from the National Living Wage when it was introduced earlier this year.
- The National Minimum Wage will also increase to £7.05 per hour for 21-24 y/o; £5.60 for 18-20 y/o; £4.05 for 16-17 y/o; and £3.50 for apprentices.
- Employee and employer National Insurance thresholds will be equalised at £157 per week from April 2017.
- Funding for research and development will increase by £2bn per year by 2020/21. This money will be allocated to universities and businesses with R&D projects to help the UK “remain an attractive place for businesses to invest in innovative research.”
- A £23bn Productivity Investment Fund will provide additional spending in areas including R&D and digital communications, in order to boost UK productivity.
- The Conservative Government will no longer aim to deliver a budget surplus by 2019.
The 2016 Autumn Statement can be accessed in full here.