UK Chancellor of the Exchequer Jeremy Hunt outlined a plan to deliver better public services, a higher investment allowance, and an increase in the value-added tax (VAT) registration threshold on Wednesday as part of the UK’s spring budget.
The spring budget also includes a second Employee National Insurance tax cut, from 10% to 8%, in April for 27 million working people, even as the country’s investment in the National Health Service (NHS) increases.
The chancellor also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, along with a plan to grow the economy by 0.2% in 2028–2029.
The Public Sector Productivity Plan is a £4.2 billion investment with the goal of improving public service delivery and gain better value for taxpayers’ money, he said. “Good public services need a strong economy to pay for them,” Hunt said. “But a strong economy also needs good public services.”
The NHS will receive £3.4 billion as part of the plan to invest in new tech and digital transformation, and £800 million will be invested to boost productivity across other public services.
The money will go toward artificial intelligence to potentially cutting in half form filling by doctors; toward updating IT systems, slashing the 13 million hours lost by doctors and nurses because of outdated systems; and toward setting up a new NHS app that can be used to confirm and modify all appointments, reducing up to half a million missed appointments, Hunt said.
These changes, along with others, mean “all hospitals will use electronic patient records, making the NHS the largest digitally integrated healthcare system in the world,” Hunt said.
The NHS also will receive an additional £2.5 billion to “meet pressures in the coming year,” he said.
Regarding the higher investment allowance, Hunt introduced a new ISA, which will allow an additional £5,000 annual investment in UK equities tax-free. The new British Savings Bonds will offer savers a guaranteed rate for three years, delivering better returns.
The VAT registration threshold will increase from £85,000 to £90,000, which will remove about 28,000 small businesses from paying it altogether. Small and midsize enterprises will be supported through a £200 million extension of the Growth Guarantee Fund.
Andrew Harding, FCMA, CGMA, chief executive–Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants, approved of the public sector plan.
“We welcome the chancellor’s announcement of a public sector productivity plan, especially since it recognises the need for investment to produce these vital enhancements,” Harding said in a statement.
“It would have been good to see more action on increasing private sector productivity. The increase in VAT thresholds and extension of full capital expensing to leased equipment are steps in the right direction. The additional ISA allowance should increase the capital available for UK listed companies to invest, and the child benefit changes ought to improve the labour supply.”
Harding’s statement touched on items that were not mentioned in the budget.
“To increase productivity, we need to upskill the workforce, and this focus was missing from the budget,” he said. “We were hoping for reform of the apprenticeship levy to allow more companies, especially SMEs, take advantage of the funding. Further action on upskilling will be required by future administrations if we are to generate sustainable growth and build the high-wage, high-skill economy we all want to see.”
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.
