Thursday 09 March 2017

*NEW RESEARCH* Spring Budget 2017

Spring Budget 2017Philip Hammond’s Spring Budget contained few surprises. It was a cautious, but forward looking Budget, that put science, technology and industry collaboration at the forefront of the Government’s plans to improve productivity.

Further details were provided on how the National Productivity Investment Fund (NPIF), which was announced at Autumn Statement 2016 (see Autumn statement 2016: ICT for productivity), will be spent. The NPIF will invest £740m in digital infrastructure by 2020-21, including £200m to establish a programme of local projects to help accelerate delivery of full-fibre broadband networks and up to £16m to trial 5G applications. NPIF will also be used to invest £90m to help fund 1,000 PhD placements in areas aligned with the Industrial Strategy and a further £160m will be allocated to help researchers working in these areas.

We already knew about the Industrial Strategy Challenge Fund (ISCF) (see Government technology strategy: first the good news…), but we now have a bit more detail. The first wave of challenges funded by the ISCF will include: 1) batteries for the next generation of electric vehicles; 2) AI and robotics systems for extreme environments; and 3) developing new medicine manufacturing technologies. Greater collaboration between universities and industry is key to much of what NPIF and ISCF are designed to achieve, and we expect to see collaboration increasingly being encouraged through tendering requirements in the future.

In the education sector, the Budget announced further funding for free schools and a continued push towards selective schools. It also took forward the recommendations of Lord Sainsbury’s review of 16-19 education by introducing new T-Levels qualifications. These technical courses will be designed to help ensure that students qualify “work-ready”. Technical training has been neglected for too long, but it is critical component, alongside the apprenticeship agenda, in ensuring that business can access the right skills for the future.

As widely expected, the Chancellor also announced funding to support social care and the NHS in England over the next few years. The government will be providing an additional £2bn to councils in England over the next three years to spend on adult social care services. £1bn of this will be provided in 2017-18 enabling councils to take immediate action to support social care provision and in turn relieve pressure on the NHS. This additional funding will of course be welcomed by councils, but with the social care system under such pressure it’s unlikely much of it will filter through to SITS suppliers.

Self-employed workers were hit the hardest by the Chancellor’s announcements. Hammond said that Class 4 National Insurance contributions for self-employed workers will increase from 9% to 10% in 2018 and to 11% in 2019. The Chancellor also had the self-employed firmly in his sights when he announced that the dividend allowance will be reduced from £5,000 to £2,000 from April next year. The Government says it is acting to reduce the unfairness in the National Insurance contribution system, but it needs to be careful that it doesn’t discourage entrepreneurship in the process.

It’s good to see science and technology investment and industry collaboration at the forefront of the Budget. It was a Budget designed to prepare the country for a post-Brexit future. We get another Budget later this year, as we move to a single fiscal event to take place in the autumn. It remains to be seen how different things look once Article 50 has been triggered.

Subscription service clients can read our full report on Spring Budget 2017 here. If you’re not a subscriber please contact Deb Seth in the Client Services team for more information.

Posted by Dale Peters at '09:23' - Tagged: budget   spring   2017