Bogs, Brexit and The Budget - An end to austerity?

Philip Hammond

We were not expecting a great deal ahead of today's Budget, with a lot pre-announced at the recent Party Conference and over the following weeks. Indeed, The Chancellor even made a series of “jokes”  relating to a business rate relief for public lavatories concluding “At least this is the only announcement that has not leaked”.

There was also some late drama before the Chancellor stepped up to the dispatch box with Labour accusing him of having broken the ministerial code in not providing advanced copies of the statement.

He began his speech by claiming the “era of austerity is finally coming an end” later adding that “discipline will remain”.

Moving on to the details of the Budget, the Chancellor referenced £1.6bn in new funding for the Industrial Strategy in the Red Book, the official Treasury document for the Budget. In it, the Treasury sets out a vision for an economy driven by research and innovation. Investment comes in the form of additional funding to support the Industrial Strategy Grand Challenges and securing the UK’s position as a world leader in new and emerging technologies such as Artificial Intelligence (AI), nuclear fusion, and quantum computing. 

The Chancellor stated “Britain can lead the world as we exploit a new wave of scientific discovery. We can solve the productivity challenge if we embrace the future”.

We look forward to working closely with the Government to help make this a reality, Games are at the forefront of this 4th Industrial revolution and we are well placed to help realise the ambition.

The Chancellor then moved on to matters concerning education with a “£400m in-year bonus to help our schools buy the little extras they need…a one-off capital payment directly to schools… averaging £10,000 per primary school and £50,000 per Secondary School.

And then detailed a further change to the apprenticeship levy contributions for small businesses, dropping levels from 10% to 5% - This is encouraging news but it remains to be seen whether the levy can work at all for our sector, and the wider creative industries where a lack of standards and a lack of history with apprenticeships remain a barrier.

There was also encouraging news for the investment and start-up-scale up environment. The Annual Investment Allowance increased from £200k to £1m for two years, there was an additional £200m to the British Business Bank, Tax relief for business investment... all positive moves which should help boost the economy.

But the big announcement for the tech sector was still to come. There has been much debate before today about the nature of a Digital Services Tax, something the OECD and EU have been talking about for some time.  

Whilst maintaining that a global agreement would be best, he said progress had been “painfully slow” and so a “carefully designed” Digital Service Tax was announced targeted to “ensure it is established tech giants – rather than our tech start-ups - that shoulder the burden of this new tax.”  The Treasury included a helpful diagram to explain it: 

Digital Service Tax.jpg

With an admission there may well be another full budget in the Spring depending on the Brexit deal situation there may well be more to come.