A quiet rebound in public finances
Despite the economic uncertainty, the UK public finances have been quietly improving. In November, the Office for Budget Responsibility though that borrowing would be around £50bn. Now, economists predict it could fall as low as £41bn. This would see the UK running a current budget surplus (i.e. a surplus on day to day spending and not capital projects or investments) for the first time since 2001-02.
The IFS warns that we shouldn’t get too ahead of ourselves. Some of these tax receipt increases which have helped to bring down borrowing could be one-offs. Interest rate raises could increase the cost of debt and the loss of legal cases on Personal Independence Payments could add to the spending bill. That being said, reductions in debt does give the Chancellor more wiggle room. This could be spent on the NHS or social care, which are known to be under severe pressure. It might also give the government the Chancellor to ease up on other cuts to local councils which recent stories have shown are right on the wire.
New tax consultations
The government has a number of policies in the pipeline such as increases to inheritance tax thresholds and freeze in fuel duties as well as welfare reforms. Some of these are going to bring in money, others are going to spend money. Brexit has also led to companies putting more pressure on the government to reform the tax system so that they can be competitive when we leave the European Union. Business rates could be consulted on (again!) which would impact on charities.
The Chancellor might also announce a review into VAT zero rates and schedules, which has been recommended by the Office for Tax Simplification. Both of these could be good or bad news depending on the final proposals. The good news about the Spring Statement setting these consultations up is that there is now more time for the issues to be considered and for charities to feed in their concerns.
Charity Commission funding/resourcing
There may be some small spending adjustments in the Spring Statement, more tidying around the edges, but given the focus of charities and safeguarding in the media, there may be an opportunity for the government to put more resource into the Charity Commission. We have asked the Chancellor and HM Treasury to consider this, but we will have to watch carefully to see whether there is any progress on this front.
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