Spring Budget - CSA statement

Commenting on the Spring Budget, CSA Chief Executive Chris Leslie said:

“For the collections sector, Jeremy Hunt’s Spring Budget has greatest relevance in its impact on the surplus money people have at their disposal and the cost-of-living squeeze that may affect an individual’s ability to repay debts they owe. 

“So although it is welcome that the overall economic outlook has eased (with growth flat for a period but no technical recession), it remains of concern that the Real Household Disposable Income (RHDI) per person is expected to fall by 5.7% over the coming two year period, still the steepest fall since the 1950s. This is driven predominantly by the energy price level, though the Chancellor took steps to maintain the price cap for a little longer still, and also by changes to income tax which rise because of maintained freezes in the tax thresholds. 

“Nevertheless, it is very welcome that inflation is forecast to fall to 2.9% by the end of this year. And there were welcome changes which will put money in the pockets of the least well-off, the most vulnerable in society and for families struggling to make ends meet. For instance, a significant sum is being made available to fund childcare costs for those with children over nine months old and there are structural reforms being made to DWP benefits especially for those with disabilities, principally to incentivise employment. Measures to encourage retention and a return to the labour market for older workers are also positive, though may not have a significant impact. 

“Some of the biggest tax and spend changes do not affect our sector more than any other – so the capital allowances reform allowing 100% full expensing for main rate assets and the money committed to extending fuel duty freezes are of note but not especially game-changing. 

“Changes were announced to end the disparity between amounts paid for customers on energy pre-payment meters and those on direct debits, which is a welcome change. 

“The work of the Treasury Working Group on VAT treatment of financial services was noted in the Budget document and we have been pleased to feed into that process which is ongoing. 

“However, the announcement that £47m is being invested in new HMRC systems to improve their “debt management capability” is eye-catching – and they predict will yield several hundred million pounds of new revenue in the years to come. The Chancellor says that they will enhance their online self-serve ‘Time To Pay’ service and improve their systems to sift between those who genuinely ‘can’t pay’ from those who won’t pay “to ensure that those who can afford to settle their debts do so”. Seeing the public sector commit to policy and infrastructure change to improve their debt collection strategy is something we have heard before from HMRC but this does look like a significant change – so we will watch closely what this involves.” 

Chris Leslie
CSA Chief Executive