The Chancellor has set out his plans for tax and spending for the coming year, promising more money for the NHS, schools and an end to austerity.
An end to austerity
The big line from Philip Hammond’s Budget is something the Prime Minister announced last month at the Conservative Party Conference: austerity will soon be over.
He told MPs that the Office for Budget Responsibility (OBR) has upped its forecast for UK GDP growth in 2019 from 1.3% to 1.6%.
He said this year’s borrowing will be £11.6bn lower than forecast at the Spring Statement earlier in the year: “”The hard work of the British people is paying off, austerity is coming to an end”.
Mr Hammond promised to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 from April 2019: “cutting taxes for 32 million people”. The government says this will mean a typical basic rate tax payer would pay £130 less tax per year.
Fuel duty is frozen for it’s ninth consecutive year, the price of tobacco is due to rise at inflation plus 2% and duties on cider, beer and spirits are frozen for the year ahead.
The Chancellor also announced a raise in the National Living Wage to £8.21 from April 2019, up 4.9% from £7.83.
An extra £1bn across five years has also been set aside to ease the implementation of Universal Credit.
Business tax and investment
Mr Hammond said Britain’s high streets would benefit from £675m in co-funding for a Future High Streets Fund. This is aimed to help councils and local governments transform town and city centres.
He also pledged to cut business rates by a third for all retailers in England with a rateable value of £51,000 or less.
A new UK Digital Services Tax was announced to ensure large online companies “pay their fair share”. This will mean revenues of “search engines, social media platforms and online marketplaces” will be taxed at 2%, “reflecting the value they derive from UK users”.
The apprenticeship levy will also be halved for smaller firms hiring apprentices.
An investment of £1.6bn in tech aimed to support the government’s modern industrial strategy was also announced.
An extra £500m has been allocated to ease government departments in preparation for Britain’s exit from the European Union. This makes the government’s investment in Brexit preparations exceed £4bn since 2016.
Funding the NHS
Hammond also repeated the Prime Minister’s promise of record investment in the National Health Service: “A new multi-year budget for the NHS until 2023-24, following the Prime Minister’s June 2018 statement that the NHS budget would increase by £20.5 billion a year in real terms by 2023-34.”
Stamping out plastic
The Chancellor announced a new tax on the production and importation of packaging “which does not contain at least 30% recycled plastic”.
He did not, however, commit to a taxation of plastic drinks cups.
The governments of Scotland and Wales and the executive of Northern Ireland will also see increased budgets.
The Scottish government will receive an additional £950m, and the Welsh government will see and extra £550m.
The executive of Northern Ireland will also receive an extra £320m.
Stamp duty is cut for first time buyers of shared ownership properties valued up to £500,000, applied retrospectively to the date of the last Budget.
A further £500m to the Housing Infrastructure Fund was also announced to support housing associations and smaller house-builders.
Other areas for investment
Schools are to receive a £400m one-off direct payment. This will see every primary school receive an extra £10,000 and every secondary school receive an extra £50,000.
Mr Hammond also allocated an extra £1bn in funding for the Ministry of Defence.
Counter-terrorism policing will also see an additional £160m.
Britain’s roads will see an immediate investment of £420m to battle potholes, bridges and other road repairs. It’s not gone unnoticed amongst the opposition that that’s more than the Chancellor set aside for the schools payment.
The opposition response
In his response to the Chancellor’s Budget, the leader of the opposition Jeremy Corbyn labeled it a “broken promise budget”, and refuted Philip Hammond’s positive claims about an end to austerity: “The NHS is a thermometre of our society, but the illness is austerity”.