Chancellor of the Exchequer Sajid Javid has finally secured a firm date for his first budget following the Conservatives’ landslide election win before Christmas.
The tax-and-spend set piece will now take place on March 11: a date which may provide a clue as to when Mr Javid’s promised review of planned IR35 reforms could take place. If adopted, any proposed changes to the IR35 reforms could then be incorporated into the budget announcement and this year’s Finance Act.
Mr Javid is set to announce changes to the way in which the Treasury allocates capital spending across the UK’s regions in an attempt to “level up” spending to ensure that struggling towns in northern England and the Midlands receive as much investment as the south-east.
The government want to reward areas won by the Tories at the last general election by allocating tens of billions of pounds for investment on infrastructure projects such as the Northern Powerhouse Rail project that will link areas between Manchester and Leeds.
Announcing the budget date on a visit to the new £350 million Trafford Park tram line project in Manchester, the chancellor said: “People across the country have told us that they want change. We’ve listened and will now deliver.
“With this Budget we will unleash Britain’s potential – uniting our great country, opening a new chapter for our economy and ushering in a decade of renewal.”
The chancellor will generate a £100 billion war chest by loosening fiscal spending rules to take advantage of what are expected to be permanently low interest rates by increasing borrowing. The Conservatives pledged during the election to raise net capital spending from around 2 per cent of gross domestic product to three per cent. Of the £100 billion, the chancellor has about £80 billion left to spend, after allocating some £22 billion in the Tory election manifesto.
The manifesto also promised to balance the budget within three years, giving Mr Javid the opportunity to exceed tax revenues with generous spending pledges this year.
The budget was moved by Mr Javid’s predecessor Philip Hammond from the spring to the autumn but Javid’s first budget, planned for November 6 of last year, was postponed due to the election being called.
In addition to significant infrastructure investment projects, the budget is expected to include an increase in the threshold for National Insurance Contributions to £9,500, investment in hospitals and an increase in the number of police officers. Boris Johnson’s plans to increase the 40 per cent tax bracket were officially shelved when the Conservative election manifesto was announced last November.
7th January 2020.