Still reeling from the effects of a proposed Insurance Premium Tax hike and the slashing of the personal discount rate, insurers were approaching this year’s Spring Budget with a fair amount of trepidation – with many fearing that further IPT hikes may be revealed.
In reality however, Philip Hammond’s first Budget as Chancellor was relatively uneventful in terms of its direct impact on the insurance industry – something that has caused disappointment in some circles, particularly relating to the lack of attention to IPT.
“We are very disappointed with the Chancellor’s decision to not use the Budget as an opportunity to address the unfair levels of insurance premium tax (IPT),” Keith Richards, managing director of engagement at the Chartered Insurance Institute told Insurance Business in a statement.
“After effectively doubling IPT over the past two years, the government has not tackled this pressing issue. We are concerned the unintended consequences of artificially increasing the cost of insurance could dissuade people from insuring against the risks they face, potentially leaving thousands unprotected.”
Here is our summary of the key points of what was actually included in the speech.
National Insurance contributions
It may not be the type of “insurance” we usually cover here at Insurance Business, but national insurance contributions have stolen the headlines from this year’s Budget speech and may have an impact on some insurance brokers. The main rate of class four national insurance contributions will jump to 10% in April 2018 and 11% in April 2019, adding around 60p a week to those affected.
Tech help
In a move that may grab the interest of some insurance firms looking to innovate and tie-up with insurtech firms, £500 million was committed to support robotics, electric insurance and artificial intelligence.
Public borrowing
Annual borrowing was reported at £51.7 billion over 2016-17 – some £16.4 billion below what had been forecast. Meanwhile, debt reached 86.6% this year but is expected to drop to 79.8% by 2021-22.
Economic situation
The UK was reported to be the second fastest growing economy throughout the G7 during the year. Its growth forecast has been lifted from 1.4% to 2% with suggestions that an additional 650,000 will be employed by 2021.
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Business
Part of the speech included a commitment to support businesses with £435 million for companies affected by business rates.
In addition, a tax avoidance clampdown will take place – with £820 million to prevent businesses from converting capital losses into trading losses. There will also be a clampdown on abuse of foreign pension schemes and VAT on telecoms roaming outside the EU.
Health
An additional £100 million has been committed in an effort to ensure there are more GPs available to assist in accident and emergency departments during the winter.
Transport
£90 million has been committed to boost the north of England; while £23 million will be put towards the Midlands in an effort to ease traffic issues.
In addition, £270 million has been committed to supporting new technologies, including the driverless cars that have caused such interest among insurers.
“The announcement that the Government is to invest £270m in disruptive technologies such as driverless cars is most welcome,” David Williams, technical director of AXA UK said in a statement to Insurance Business. “The UK has a well-established and growing role as a leader in the development of disruptive technologies both in Europe and across the world and today’s commitment will go some way to cementing that position.
“Driverless technology will revolutionise the way we drive, how businesses transport goods and, crucially, improve the safety of our roads. AXA has been playing a central role in the three Government-backed projects to make driverless cars a reality on our roads and we will continue to support the Government to ensure any investment is channelled in the right way to get the most benefit.”
Education
Notable additions include extra money for free schools; and free transport being extended to all pupils who receive free school meals at selective schools.
Alcohol and tobacco
Isn’t this the one everyone looks for? There are actually no tobacco or alcohol increases on the duties previously announced: but there will be an updated minimum excise duty on cigarette packs priced at £7.35.
What do you make of the Budget 2017? Could more have been done, do you feel let down, or are you satisfied with the measures? Leave a comment below with your thoughts.
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