We look at some of the main talking points from Chancellor Philip Hammond's first Spring Statement.
Chancellor Philip Hammond delivered his first Spring Statement. This is the speech that has replaced the traditional Budget – now moved to November – and which is designed to offer an update on the UK’s economic outlook and the state of the public finances.
While the statement is not supposed to contain any new policy announcements, Hammond did unveil a number of consultations, including one which could see vehicle excise duty (VED), also known as road tax, cut for van drivers.
The UK economy
The main thrust of the Spring Statement concerned the economic forecasts produced by the independent Office for Budget Responsibility (OBR).
Hammond was pleased to announce that growth for 2018 is now expected to be 1.5%, a slight rise on the 1.4% that was predicted four months ago for the November Budget.
However, growth over the following two years is still expected to fall to 1.3% before rising again at a slow pace at the start of the next decade.
The UK economy continues to be held back by low productivity – although this has improved to a small extent recently, the OBR said – as well as ongoing high inflation, which has squeezed the level of disposable income available to consumers.
The Chancellor said that any further improvements in the UK’s economic outlook could potentially result in increases in government spending, and that an official spending review will start in 2019.
In international terms, however, the UK continues to perform poorly: the OECD published figures this week which showed that the British economy is expected to perform worst out of all the G20 countries over the course of this year.
Hammond unveiled a number of consultations which the government will use to develop future tax and spending policies.
These included plans to look at reducing VED for the least-polluting vans, in a similar way to the government’s policy on zero-emissions taxis.
The Chancellor wants the tax relief on red diesel – which is sold for agricultural use – to be examined to see whether this fuel plays a significant part in urban air pollution.
Ministers will also consider a new tax regime for single-use plastics following increased awareness of the impact of plastic pollution in the world’s oceans.
And the government will look at new ways of taxing large digital businesses more effectively.
The Chancellor updated MPs on the £44bn pledged to increase the UK’s housing supply last autumn.
He said that an extra £1.7bn had been earmarked to build 26,000 affordable homes over the next four years in London, and added that 60,000 first-time buyers had benefited from the stamp-duty exemption that was announced in the 2017 Budget.
The OBR also predicted that the amount that the UK will have to pay to the European Union in the form of a final financial settlement – the Brexit divorce bill – is expected to be £37.1bn.
Recap: 2017 Autumn Budget
While there were no new major motoring annoucements made in the Spring Statement, there were a few in last Autumn's Budget. Here is a quick recap of what was annoucned.
Fuel duty remains frozen: The decision to freeze both petrol and diesel duty means that the typical car driver will have benefited to the tune of £850 since the policy was introduced by the coalition government in 2010. Over the same period, the average van driver will be £2,100 better off – and overall, the policy has cost the government £46bn.
Increase in first year tax for diesels: There had been speculation before the Budget that the Chancellor might decide to raise duty on diesel vehicles as part of a policy to reduce air pollution. But instead, the government has decided to increase the amount of first-year vehicle excise duty payable on diesel cars which do not meet the latest emissions standards. Vans, however, will not be affected.
£400m for electric charging infrastructure: The government is also devoting £400m to improving the UK’s electric-vehicle charging infrastructure. And there are also changes planned for drivers who use their employers’ charging points while at work: from next year, this practice will no longer attract a benefit-in-kind tax charge.
Confirmed abolition of Severn Bridge tolls: He also confirmed the government’s plans to abolish tolls on the Severn Bridge from the end of 2018.
For more information on the key annoucements that affect drivers, take a look at our UK Transport Budget tracker.
First published on the 13th of March 2018