Chancellor of the Exchequer Rishi Sunak delivered the Spring Statement to MPs and the public on Wednesday 23 March.
As a background to the announcements, UK inflation has hit 6.2% and families face the worst real-terms income squeeze in 50 years. With the cost of living soaring in the UK, Mr Sunak announced a rise in the threshold of National Insurance, and pledged cuts to the basic rate of income tax and fuel duty.
Forecasts from the Office for Budget Responsibility showed the economy would grow by 3.8% this year. GDP is predicted to grow by 1.8% next year, 2.1% in 2024, 1.8% in 2025, and 1.7% in 2026.
Healthcare sector summary
Regarding health, no changes have been made to the new Health and Care levy, which will see National Insurance payments rise to provide an additional £12 billion over the next three years. Mr Sunak announced he would increase the threshold by £3,000 this year, up from a planned rise of £300. According to the Guardian, “this equalises the national insurance contributions threshold with the personal income tax allowance of £12,570”.
The change to the threshold represents a £6 billion personal tax cut for 30 million people, with 70% of workers seeing their National Insurance contributions reduced.
The “flagship industrial policy” is to be overhauled through modifications to the R&D tax credit system. As a result of this, larger companies will be incentivised to engage in further R&D and training. In the autumn, there may be further expansions of R&D credit decided by the Treasury.
A new Government partnership is also to be initiated with industry and academia, to create 1000 new AI PhDs; a boost for the integration of Artificial Intelligence in healthcare. Also announced was that all cloud computing costs associated with R&D, including storage, will qualify for relief.
The Treasury and Downing Street recently committed to a crackdown on waste and inefficiency across the public sector. A larger budget for the NHS to meet a higher annual efficiency target was also announced by the Chancellor.
In terms of the reaction of health organisations to the mini-budget, the Royal Pharmaceutical Society called on Mr Sunak to ensure that new Health and Care Levy is spent as wisely as possible from next month to benefit patients and the care service. The Nuffield Trust welcomed the higher threshold for NI payments as support for low-earners. It said that NHS trusts, despite the extra efficacy funding, will need to work hard to streamline their functions and manage costs due to ongoing “tight budget constraints”.