With no tax or spending changes, the simplified Spring Statement is to be heartily welcomed, writes Hannah Solel
Short and simple is not the usual way to describe the Budget or Spring Statement, but from now on, it could become the norm. That’s certainly how the chancellor Philip Hammond wants it to be with his Spring Statement — to be delivered on Tuesday 13 March.
According to the Treasury this will be a straightforward economic update containing no drastic policy upheavals to neither taxes nor spending. Indeed, a Treasury spokeswoman confirmed to Spear’s that it will also make history as ‘the smallest event ever’, lasting approximately 15 minutes – a marked departure from the hour-long speeches usually delivered. But brevity isn’t the only story – on 13 March there will be no red box, a longstanding icon.
The shake up is to be heartily welcomed.
Andrew Goldstone, a partner at Mishcon de Reya, no doubt speaks for many when he tells Spear’s: ‘If “Box Office Phil” really will keep it short and sweet in March, that can only be a good thing. The deluge of new tax legislation over recent years, with major tax changes being announced twice a year, serves nobody well. It’s bad for taxpayers who feel the goalposts are always moving.’
The seemingly never-ending changes also create difficulty for government lawyers who have to draft legislation, notes Goldstone, ‘leading to loopholes and mistakes’. He adds: ‘Even professional tax advisers, who make money from change, will welcome some stability.’
For years there has been an annual springtime Budget announcement of economic and fiscal policy followed by an Autumn Statement in November. Some of these statements have grown to become what could best be described as mini-budgets, leading to major policy overhauls just six months after the full-blown Budget. In 2015 George Osborne had three major Treasury events — with a usual spring Budget in March, a post-election Budget in July and then an Autumn Statement in November (which included a significant U-turn on tax credit cuts). It must have been exhausting.
Therefore, Hammond’s decision to make the Spring Statement just that is an enormous relief and sends a strong message that he’s committed to improving the nation’s finances — instead of complicating them with too many new policies too frequently. The Budget will take place in the autumn.
Goldstone adds that the ‘right way’ to introduce tax changes is to announce a proposal, consult fully and not rush. ‘That way, new tax rules are properly thought through and well drafted. Yes, a few taxpayers might act quickly before the shutters come down, and the Treasury could lose some cash, but the risks of that happening are usually exaggerated.
‘What’s far more important is that tax policy decisions are translated into technically robust legislation, without ambiguities, omissions or unintended consequences. Believe it or not, the UK tax profession wants to help.
‘The government, with its own limited resources, should make the most of the undoubted skills and experience the tax profession can offer to help make better law. And if the chancellor is serious about creating more tax stability by sticking to an annual budget, that alone deserves a big thumbs up.’
Hannah Solel is a Researcher and Writer at Spear’s