02 November 2018

FODO RESPONDS TO AUTUMN BUDGET 2018

In his Budget statement on Monday 29 October the Chancellor, Philip Hammond declared the “the era of austerity is finally coming to an end” reflecting what the Prime Minister had told the Conservative Party Conference on 3 October. It was also the pre-Brexit budget but may need to be revised next March if an acceptable exit package cannot be agreed.

NHS

On health, the Chancellor confirmed the increased spending of 3.4% real-terms growth per annum until through to 2023/24 (announced by the Prime Minister in June) and said that this would include funding for a new mental health crisis service including in A&E departments.

This is a welcome increase but follows the long period of squeezed funding through austerity. It also has to be set against the traditional long-term NHS funding requirement of 3.7% in real terms to keep pace with demand and the lack of balancing investment in social care to help community discharges.

It is unlikely therefore that any this money will find its way into GOS or enhanced services fees in England. It may be just enough to enable the NHS to limp on without genuine structural change, such as moving hospital care to the community, so either way is not good news for the community optical sector.

A new NHS long term plan, setting out delivery against this budget, will be published shortly. FODO has already responded to this consultation.

On the business and employment front, announcements included changes to IR35, reform of the apprenticeship levy and business rates support for small retailers.

IR35 Changes

The Chancellor announced reform of the off-payroll working rules for companies (known as IR35) in the private sector. This follows the roll-out of reform in the public sector last year. Responsibility for operating the off-payroll working rules will move from the company to the organisation, agency or other third party engaging the worker. This means employers will have to decide whether individuals provided by the company are employed or contractors, and in the former deduct Income Tax and NI Contributions at source and pay Employers’ NI Contributions. HMRC has listened to representations, this will provide support and guidance to medium and large organisations affected ahead of implementation.

The Government has clarified that:

• Tax and NI changes will not be retrospective i.e. HRMC will not carry out an enquiry into earlier years when companies start paying employment taxes under IR35 for the first time.
• The change will not be introduced until April 2020, allowing time to prepare.
• The existing rules will continue to apply to the 1.5 million smallest businesses.

There will be a consultation on the detailed operation of the reform to which FODO will contribute and we will provide further information at that time.

Business Rates bills for retailers with a rateable value of £51,000 or less will be cut by a third each year for two years, starting in April 2019.

Apprenticeship Levy for small firms taking on apprentices  will be halved from 10% to 5%.

Annual Investment Allowance – the qualifying limit will increase from £200,000 to £1 million.

FODO Chief Executive David Hewlett said:

“This budget contained some welcome news for small optical businesses, but little which will benefit the profession more widely or the NHS in the longer term.

The new NHS plan could have a negative effect on the expansion of care outside hospitals, seeking to merge health and underfunded social care into joint contracts may only stretch the strained NHS budget still further.  It may also stifle commissioning and encourage hospital trusts to resist necessary reform.”

The full text of the Chancellor’s speech can be read here.