Hammond Examined: Budget 2017 and the Impact on the Bid & Procurement Profession
The speculation is over. Earlier today, Philip Hammond delivered his second Budget as Chancellor and at Intellitender HQ we were watching with bated breath as to the affect his announcements would have on our clients, our industry and business in the UK as a whole.
The BBC has an excellent summary of all of the key points at-a-glance, but for bid and proposal professionals, here are the headlines you need to know:
The UK economy is expected to grow slower than predicted for the next five years, averaging annual growth of 1.4%, according to forecasters.
However, the UK’s deficit is expected to fall from 2.4% this year to 1.9% in 2018, with the OBR forecasting the deficit to be 1.3% of GDP in 2020-21, giving £14.8bn of headroom against the 2% target.
Today delivered some very welcome news for the bid and proposal profession’s self-employed workforce, by announcing that the government will consider the impact of IR35 in the public sector before consulting on any changes to the private sector.
In addition, despite much speculation of a reduction in VAT thresholds for SMEs, the Chancellor announced that the point at which small businesses pay will remain the same. Registering for VAT brings large amounts of red tape, which would have unfairly burdened hundreds of thousands of self-employed limited companies and small businesses.
However, the Government are looking at a split VAT payment model to reduce online VAT fraud and improve how VAT is collected.
Defence & Security
The Budget did not reveal any new surprises for the defence industry, with the plans from last year’s Spending Review holding firm.
Last year the Spending Review gave the first real increase in defence spending in six years, with the Government committing to increasing defence budget by 0.5% above inflation every year until 2021. The UK will also continue to meet NATO’s target of 2% GDP spend on defence for the rest of the decade.
Increasing the budget gives the MOD the opportunity to invest in better equipment for troops, and making for a more efficient and effective force.
There was a lot of movement for the construction industry, with the Chancellor announcing that Stamp Duty for first time buyers will be abolished as of today, which is expected to increased housing demand and raise purchase prices.
Furthermore, plans to build 300,000 new and affordable homes in England were announced, with a focus on the urban areas. A very clear plea could also be heard to Councils in high-demand areas, to permit more planning permissions allowing the building of more homes for first-time buyers and affordable renters.
Additionally, the Chancellor announced a planning reform and review of the gap between planning permissions being granted and construction starting was announced. Putting his money where his mouth is, £44billion of funding was announced for housing through capital funding, loans and guarantees, which will include an extra £2.7billion for the Housing Infrastructure Fund.
From tendering perspective, the Government’s injection of cash and enthusiasm on the construction sector is likely to see a knock-on increase in tendering activity for services within the construction industry such as civils, electrical engineering, landscaping, road construction and gasworks, to name a small few.
NHS & Health
Now to the NHS, where the Chancellor announced an additional £2.8billion of funding in England from Winter 2017 to the end of the 2019 calendar year. This funding is in addition to the £4.7 billion funding previously announced and will result in a total of a £7.5bn increase in the NHS budget.
How this will filter down to the twelve Clinical Commissioning Groups (“CCGs”) nationwide, and how this money will subsequently be spent by any one of those CCGs will be to be seen. However, from a tendering perspective we will be interested to see whether this will increase the procurement of new services, or whether CCGs will instead focus on the commissioning of higher service standards.
There was mixed news for the transport industry, and passengers alike. Firstly, fuel duty will be frozen again which with the consistent increases in oil prices is a relief for those funding business and personal travel. However, a higher tax on new diesel cars was announced, for vehicles registered from 1 April 2018 and although this will hit the pockets of those who will be purchasing a diesel car, the desired affect is to deter the use of diesel engines and therefore providing an environmental benefit. Financially the good news story for the manufacturing, delivery and other transport dependent industries is that the higher tax rate is for cars only.
In another boost, the Chancellor announced a £400million charging infrastructure fund, an additional £100 million Plug-In-Car Grant and £40million for research into charging for the electric car industry.
Perhaps the government really is open for business?!
Suzie Dore is a Freelance Bid Writer & Consultant working to support Intellitender’s clients to bid better, improve tender win rates and ultimately deliver long term competitive advantage. She has a particular interest in the healthcare, construction and motorsport sectors.
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