What was notable was the chancellor not telling us how this will be funded, with the likelihood of it coming from an increase in borrowing.
Sunak stuck to the Tories’ fiscal manifesto promises not to raise income tax, national insurance or VAT and its plans to increase the national insurance threshold to £9,500 in 2020 with the ultimate ambition of raising it to £12,500. This will cost around £2bn a year and nearly 30 million workers are expected to be around £100 a year better off. All good but not a shock as he was never going to risk reneging on these pledges or upsetting the electorate.
There was speculation that he was going to cut corporation tax from 19% to 17% but in the end he kept it at the existing rate which I think I was probably the right decision in the current climate and the challenges we face.
The news that Entrepreneurs’ Relief, which costs the Treasury around £2.6bn each year, is to be reformed was widely predicted. I was expecting it to be scrapped, but his decision to retain it and reduce the lifetime limit from £10m to £1m will be welcomed by many small business owners who are relying on the proceeds from the sale of their business to fund their retirement. It only affects a small number of business owners so this is a calculated decision that he knows won’t stir up too much resistance or kick back from industry; especially as he has countered it with an increase in research and development investment to £22bn a year.
The Conservative’s manifesto pledge to invest billions in infrastructure including transforming rail in the north and midlands, as well as better bus services and broadband in every home was, not surprisingly, mentioned with much enthusiasm. I don’t think he would have dared going back on this so close to election after the prime minister placed so much emphasis on rebalancing the UK’s economy during his campaign. The announcement of a £5bn package to roll out high-speed broadband to remote parts of the UK and a £1bn agreement with the mobile phone industry to boost 4G coverage to 95% of the country in the next five years is a gamechanger and can’t come soon enough.
Throughout his speech, the chancellor kept returning to his new catchphrase ‘we are getting it done’. Buzzwords and straplines are all well and good but as they say: only time will tell.