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The Spring Statement And The Autumn Budget

There are two economic statements, usually made every year - the Spring Statement and the Autumn Budget. Both offer an opportunity for the Government to outline their plans for the economy, as well as the Government’s plans for changes to tax. 

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The Spring Statement And The Autumn Budget
The Spring Statement And The Autumn Budget

There are two economic statements, usually made every year - the Spring Statement and the Autumn Budget. 

In 1975, Parliament made it a duty for the government to publish two economic updates a year. The Government requires the approval to actually spend money, and also outline a need to raise taxes.

Both offer an opportunity for the Government to outline their plans for the economy, as well as the Government’s plans for changes to tax. 

These are now based on the most recent forecasts from the Office for Budget Responsibility (OBR) The OBR was first established in 2010, providing independent and authoritative analysis of the UK’s public finances.

Who announces the financial Statements?

These annual Statements are made by the Chancellor of the Exchequer to the House of Commons. Both Statements set out what the Government's spending plans will be for the year ahead.

The purpose of the Budget

The main objective, for the government, is to make sure they are balancing the budget within a set period of time.

With a balanced budget the government can make sure that they’re spending the correct amount on services like education and the NHS inline with the amount being paid by taxes. 

These Statements are usually released each in line with changes to income tax and corporation tax, which have to be reviewed and renewed each year.

What do the Statements cover?

The Budgets include announcements about Income Tax and Corporation Tax as these are annual taxes, which have to be renewed by legislation each year. The Budget also includes information about the state of the UK economy, and proposals to generate revenue.

The Spring Statement

The Spring Statement provides an update about the health of the economy and any progress that has been made since the Autumn Budget.

As a taxpayer, it might affect you because of changes to tax that are presented. With the possibility of changes to rates and tax-free allowances.

The Autumn Budget

The Autumn Budget is the second statement made by the Chancellor of the Exchequer to the House of Commons. This sets out the Government’s plans for spending money.

When do changes from the Statements take effect?

If changes are announced, these changes can take place the same day or the day after, such as tax on alcohol or tobacco. 

This will happen once a motion is approved by the House of Commons.

Once the Chancellor has finished speaking, the Chairman of Ways and Means will be required to put in a single motion to the House of Commons asking for them to agree to these changes.

This is a provisional change, called the 'Provisional Collection of Taxes' allowing the changes to come into effect at 6pm on the day of the Budget.

Debates following the Budget

For any changes to take place with regards to other measures, the Government is required to get approval in the form of budget resolutions.

It’s normal for the Budget to be followed by a four day debate. The four days allows for a discussion of tax measures announced in the Budget. Each of the four days covers a specific policy, such as health, education and defence. 

The Shadow Chancellor will then make a response the day after the Budget statement during the Budget debates.

Budget Resolutions can come into effect immediately if the House of Commons agrees to them at the end of the four days of debate, but they require the Finance Bill to give them permanent legal effect.

The red Budget box

Traditionally the Chancellor is photographed on Budget day on the steps of 11 Downing Street, the official residence of the Chancellor of the Exchequer, holding up the Budget Box. 

This distinctive red Budget Box is used to carry their speech from 11 Downing Street to the House of Commons.

The first box was hand-crafted for William Ewart Gladstone around 1860. That box was lined with black satin and covered with scarlet leather.

The Spring Statement And The Autumn Budget
The Spring Statement And The Autumn Budget

Most recent budget changes

This year the Autumn Statement was cancelled. The Spring Statement was focused on the Coronavirus, released by Chancellor of the Exchequer Rishi Sunak.

He stated he would, "do whatever it takes to support the economy" and will give the NHS "whatever extra resources" it needs to combat the coronavirus outbreak.

He made these key announcements :

Coronavirus : COVID-19

  • £12 billion for temporary measures to provide security and stability for people and businesses

  • Extra NHS funding - support health service to cope with COVID-19

  • Statutory sick pay - the Government will pay sick pay for up to 14 days, this includes those in self isolation

  • Business rates reform - retail, leisure and hospitality businesses with a rateable value of under £51,000 will pay no business rates between 2020-21 tax year

  • Small business grants - up to £3,000

  • Easy access to benefits - a boost of £500 million to the welfare system, along with a £500 million hardship fund. Temporarily removed the minimum income floor in Universal Credit

Other announcements

  • Flooding - £120 million fund to repair damage in the winter floods. £5.2 billion to be invested in flood defences for the next six years

  • Fuel duty - frozen for another year

  • Alcohol duty and pubs - duties frozen on beer, cider, wine and spirits. £1 million to support Scottish food and drink overseas and £10 million to help distilleries “go green”

  • Cladding - £1 billion building safety fund will be set up to ensure all unsafe combustible cladding is removed from buildings above 59ft (18m) tall

  • National Insurance and pay - threshold will increase from £8,632 to £9,500

Also announced that the National Living Wage will rise to £10.50 per hour by 2024 if economic conditions allow.

  • Environment - Plastics packaging tax, charging £200 per tonne on packaging made of less than 30% of recycled plastic to be introduced in April 2022

  • Tampon tax - Abolition of the "tampon tax" from January 2021 there will be no VAT on sanitary products

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