Procurement and best value public service delivery take place within the constraints of broader public sector budgetary provision. Here, we look at some of the more popular predictions for this year’s Autumn Budget and the potential impact on public procurement.
Why has the Autumn Statement changed?
As the Autumn Statement was scrapped by Philip Hammond in 2016, the Chancellor of the Exchequer will instead present his Autumn Budget on 22 November 2017. As always, the Budget will be presented in the House of Commons, outlining the Government’s national spending plans for the year ahead.
8 March 2017 saw the last budget to be held during the spring. The Government decided to switch the interim statement and full budget on the recommendation of the Institute for Fiscal Studies (IFS). As there is now an Autumn Budget, there will be a Spring Statement in 2018 instead.
The Government has also released an official statement explaining that changing the tax system once a year, rather than twice, will lead to greater financial stability.
Procurement predictions
First, let’s look at what the broader outcome is likely to be. When Philip Hammond became Chancellor of the Exchequer last summer he pledged to reduce public borrowing to less than 2% of national income by 2022. This bold plan aims to eliminate the budget deficit totally by the mid-2020s.
This would suggest that public spending can expect to face further cuts; however, pressure from public sector bodies means that the Chancellor’s spending plans may be reassessed. If public spending were to increase, that would be excellent news for those organisations seeking to do business with the Government.
We will not know what the Autumn Budget contains until the Chancellor’s famous red briefcase is opened on Wednesday; however, we can make some informed predictions about what will be revealed on the day.
Healthcare
It is no secret that Health Secretary Jeremy Hunt wants more money to spend on the National Health Service – could this mean that there will be an increase in the NHS budget?
We can only surmise that more money will be allocated. The Autumn Budget will reveal whether or not the Conservative Government sticks to its 2017 general election manifesto. Earlier this year the Government pledged to increase NHS spending by a minimum of £8 billion over the next five years.
Tax
How has taxation changed in recent years? The Spring Budget 2016 stated that the Government would reduce corporation tax from the then current rate of 20% to 17% by 2020. So far, the Government has reduced it by 1%; this occurred in April this year.
Will the Government make further changes? Many have predicted that with only eight months between the Spring Budget and the Autumn Budget, it could be that this will be a quiet Budget for tax measures. The Finance Bill 2018 is currently available for access – and it already contains eight tax measures.
Impact on the private sector
Could the contracting community be affected by this year’s Autumn Budget? Potentially.
Changes to IR35 in the public sector are expected to be rolled out in time across the private sector. This would see responsibility for determining IR35 status shift from the limited company contractor to the private sector body that is engaging them, in line with practice in the public sector.
What is IR35? To summarise, IR35 is tax legislation that has been designed by the UK Government to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company.
Commentators are becoming increasingly confident that such a measure affecting the private sector will not feature in the forthcoming Autumn Budget. Instead, there is hope that the Government will give the public sector reforms more time to bed in, and tackle the issues arising from them first.
How can we forget Brexit?
It is still unclear what way Brexit negotiations are going. However, the Government has already announced £250 million in extra departmental spending on preparations – which includes planning for ‘no-deal’ scenarios.
The uncertainty and controversy that continues to surround the Brexit legislative programme also hints at what the Chancellor may or may not propose at this Autumn Budget. We predict that he is less likely to announce any controversial proposals that could split opinion on the back benches.
Preparing for Brexit is something that every organisation should consider. If you are working within the UK marketplace, we advise that you look over our Brexit: A Buyer Perspective PDF. This report is an excellent resource for businesses looking to plan ahead as it examines public sector buyer opinion across a range of topics.
Release of the Autumn Budget 2017
Not long to wait now! If you want to keep up with all of the latest news from the Autumn Budget 2017, this Wednesday 22 November, live tweets will be available on the Gov Opps Twitter feed.
We will then cover the key points for the procurement sector in detail once the Budget has been fully released. We have been helping to connect the public and private sectors for over 30 years, and are now Europe’s leading provider of procurement support and intelligence. Find out more about our brands and what we do here.
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