Delivering the Autumn Budget, Chancellor of the Exchequer Philip Hammond opened by saying that his Government’s stewardship of the economy would prepare the UK for life outside of the European Union.
He continued by saying that this budget would create opportunities for Britain in the future. As Chancellor his duty was to create jobs and prosperity for UK citizens throughout the planned implementation period, he added.
Mr Hammond explained that the UK must be prepared for any eventuality in Brexit negotiations, and that he had set aside £700m for this already. He added that he was setting aside another £3bn, and was prepared to allocate further funds in the future if necessary.
However, Mr Hammond said that the Budget was about more than Brexit. In particular, he highlighted a “technological revolution” taking place around the world and the need to build on this to ensure the UK was successful.
He stressed the need to prepare people to meet the challenges, declaring that Britain could and should take advantage of this revolution. However, he stressed the need to invest to secure this success.
He emphasised his desire for a balance between fiscal responsibility, continued investment and helping families to cope with the cost of living.
Mr Hammond said the Government would seek to build homes and help families on low incomes.
The Chancellor set out his vision for an inclusive and prosperous economy for all that was a hub for innovation as part of an outward-looking and free trading nation.
“That is the Britain I want to leave to my children […] a country fit for the future”, he said.
Continuing, Mr Hammond said he believed that people’s lives could be best improved by getting people into work. He cited the UK’s unemployment figure and praised the Conservative Government’s record on job creation. He said the Government had a “relentless focus” on supporting people find work.
He admitted that productivity continued to disappoint and spoke about the economic forecasts of the Office for Budget Responsibility (OBR), which had been revised down. He said GDP was forecasted to be 1.4% in 2018, 1.3% in 2019, 1.3% in 2020, 1.5% in 2021 and 1.6% in 2022. He also confirmed that the target of 2% CPI inflation continued to be in effect.
Mr Hammond continued by saying that the deficit had been shrinking in recent years, and would fall below 2% next year. He asserted that the national debt remained too high, and described this as being unfair for future generations, as well as calling it poor economics.
Mr Hammond went on to say that the OBR expected debt to peak this year, and then gradually fall as a percentage of GDP in each year of its forecasts.
He accused the Labour Party of being economically reckless by wanting to borrow money. He reaffirmed the Government’s pledge to stick to the fiscal rules it had set out the previous Autumn.
Mr Hammond said that he would use the headroom he had left in the past to balance managing the deficit with investment in the economy.
He noted that the OBR had said the Government was on track to meet fiscal goals. He stated that borrowing would fall in every year in the forecast.
Following, he outlined the continuing reduction in borrowing from 2.4% this year, to 1.9% in 2018-19, 1.6% in 2019-20, 1.5% in 2020-21, 1.3% in 2021-22, and 1.1% in 2022-23.
Debt would peak this year, he said, and would then continually decline every year.
The hard work of the British people was being rewarded, he declared.
The Chancellor said the heart of global Britain would be a dynamic and innovative economy built on an Industrial Strategy. He noted that Business Secretary Greg Clark would present an Industrial Strategy White Paper in the next few days.
Mr Hammond said the Government had invested half a trillion pounds since 2010 in infrastructure.
He reiterated his pledge to raise productivity and wages in the UK economy, and said the National Productivity Fund would be extended by another year and raised to £31bn.
He also announced £2.3bn in R&D and an increase in the main the R&D Tax Credit rate to 12%.
Mr Hammond said that the UK was the sixth largest economy in the world and London had a leading financial services sector. He argued that those who underestimated Britain did so “at their peril”.
He then declared that the Government would embrace the future and, as part of this, it would invest over £500m in a range of initiatives from artificial intelligence, to 5G and full fibre broadband. He explained that the Government would today publish an ‘Action Plan’ to unlock over £20 billion of new investment in UK scale-up businesses.
He also said that the UK Government was prepared to replace funding from the European Investment Bank if this was necessary.
Turning to driverless vehicles, the Chancellor said that the Government would be stepping up its support for the technology. He added that the switch to electric vehicles would be happening sooner still, with investment of £40m for R&D on charging points.
The law would also be clarified so that those who charged their electric vehicle at work would not suffer from this being treated as a benefit in kind.
On clean air, Mr Hammond said that from April 2018 the first-year VED rate for diesel cars would go up by one band. This measure only applied to cars, he clarified.
This would feed into a new £200m fund for improving the quality of air in cities and towns throughout the UK.
He next turned to the problem of plastics pollution as highlighted in BBC’s Blue Planet.
He stated that the Government would examine how the tax system and rules around single-use plastic items could be used to help the environment.
Turning to skills, Mr Hammond noted the Government’s plans for 3m apprenticeship starts, and said he would examine the flexibilities employers had on how to spend this sum. He announced £20m to help FE colleges prepare for T-Levels.
The Teaching for Mastery of Maths programme would be expanded, he stated, with £40m for teacher training and a £600m premium for schools. In addition, he said the Government would accept proposals for new maths schools. The Chancellor said the scheme would mean more maths for everyone.
He also said the number of trained computer science teachers would be tripled to 12,000.
Mr Hammond said rapid technological change meant that people needed help retraining during their careers.
The Government would work with the Confederation of British Industry (CBI) and other stakeholders to ensure that a national retraining programme could be developed, the Chancellor said.
He added that £30m would be allocated for the development of digital skills through distance learning courses.
Regional connectivity and devolution
Mr Hammond then moved to stress the importance of improving national infrastructure.
He emphasised that all parts of the UK mattered in terms of economic performance. He referenced the purpose of the Government’s Industrial Strategy and announced a new £1.7bn Transforming Cities Fund.
He then said that £30m would be made available to trial new solutions on the TransPennine route to improve mobile and digital connectivity on trains.
Next, he announced a new West Midlands City Deal, and also said the 40-year-old rolling stock on the Tyne and Wear Metro would be replaced.
He explained that the Government was investing £300m to ensure HS2 infrastructure could accommodate future Northern Powerhouse and Midlands Engine rail improvements.
He also spoke about investment in the Redcar steel site, the piloting of a new approach to business rates in London, and Crossrail 2.
Turning to devolved spending, the Chancellor said that £2bn in additional spending would be made available for the Scottish Government, £1.2bn for the Welsh Government, and £650m for the Northern Irish Executive.
He continued by noting that the City Deal for Tay and Stirling was progressing, as was the growth deal for the borderlands. He added that talks on city deals in Northern Ireland would be opened too.
He committed to legislating for VAT refunds from April 2018 and went on to announce that, from November 2018, transferrable tax history for oil from the North Sea would be possible. This would boost investment in the region, he asserted.
Mr Hammond said that negotiations would begin for growth deals in North Wales and Mid Wales, and discussed the abolition of tolls on the Severn Bridge.
He said that the Government would report on tourism taxes and Air Passenger Duty in Northern Ireland at the next Budget, and also discussed plans for a Belfast City Deal.
Turning to Universal Credit, he emphasised the value of the system and reforms taking place. However, he recognised the concerns about the operational delivery of the benefit.
He announced that the seven-day waiting period at the beginning of the claim would be removed. Further, the advances system would be improved so that households in need would be able to access the full monthly benefits after five days.
The Chancellor also said it would be possible to apply for a Universal Credit advance online and extend the period. He added that those receiving Housing Benefit would also not lose out under UC.
Mr Hammond said the Government would commit £1.5bn to help those concerned about the operation of Universal Credit.
Work and Pensions Secretary David Gauke would make a further statement on the changes tomorrow, he announced.
Income and Personal Taxation
He then announced that the National Living Wage and the National Minimum Wage would see their rates rise, with the former reaching £7.83 from £7.50, from April 2018.
Mr Hammond noted that income inequality was at its lowest level in the UK for 30 years. This, he contended, illustrated that the Conservatives were delivering a “fairer Britain”.
He then turned to the Personal Allowance, saying that, from April 2018, this would increase to £11,850, and the higher rate Income Tax threshold to £46,350.
Cost of living
Turning to duties, the Chancellor said that alcohol duty on beer, wine, cider and spirits would be frozen.
Mr Hammond went on pledge a freeze on passenger rates on all short-haul and long-haul economy air travel, paid for by taxes on private jets and long-haul business travel.
He also announced a new railcard, giving a third off rail fares, for those aged 26 to 30. He confirmed that the fuel duty rise for both petrol and diesel would be cancelled again.
Turning to the NHS, the Chancellor said that the Government would back both the health service and its employees.
He insisted that the NHS was treating a record number of patients, and highlighted public satisfaction among hospital in-patients.
It was essential that everyone had access to the NHS free at the point of use, he said. However, he acknowledged the pressures the service was facing
He announced £10bn in capital investment for frontline services over the course of the Parliament. However, he added that NHS was under pressure now, and therefore gave £350m immediately and £2.8bn overall in resource funding for the NHS.
There would thus be a total increase of £7.5bn for the NHS between this year and next year, he said.
He noted that Health Secretary Jeremy Hunt would submit evidence to the NHS Pay Review Body, and pledged to provide additional funding for any settlement reached.
Mr Hammond said the UK tax system should raise revenue, support public services and be robust against abuse, and announced that the Budget would contain measures to raise an additional £4.5bn in revenue that was owed.
Mr Hammond said that the Government remained committed to ensuring the UK’s Corporation Tax rate remained competitive. He also said that the indexation allowance for capital gains would be frozen from January 2018.
With regards to the VAT registration threshold, he spoke about the benefits of this for small businesses. He said he was not minded to reduce the threshold but added that the Government would consult on its design, pledging that the VAT threshold would continue to be set at £85,000 for the next two years.
He then turned to the 5.5m small businesses in the UK economy and stressed that these had to be supported given the pressure they were under.
Mr Hammond want on to say that he had listened to groups such as the British Chambers of Commerce (BCC) and CBI, and would be bringing forward by two years the planned switch from RPI to CPI for business rates to April 2018.
He then said that the “staircase tax” would be cancelled and businesses would be given the option of having their original tax bill reinstated if they chose, complete with backdated repayments.
Turning to measures for pubs, the Chancellor said that he would extend the £1,000 discount for pubs with a low rateable value by a year. He added that future evaluations would take place every three years after the next valuation.
Mr Hammond noted concerns in the House and the business community about the tax system in the digital age. He suggested that it posed challenges for businesses, and said that action to tackle this needed to be taken internationally.
He discussed a position paper on the Government’s analysis of the growth in the digital economy.
However, Mr Hammond added that from April 2018, Income Tax would be applied to sales made by companies who paid duties in foreign jurisdictions.
This indicated the Government’s determination to tackle the problem, he said.
Further, he discussed online VAT fraud and said that all online marketplaces would now be jointly liable with sellers for VAT compliance.
Mr Hammond said that following the Grenfell Tower disaster, Kensington and Chelsea Council would be given £28m to support the victims, fund regeneration and build a new community space.
He stressed that financial constraints would not stand in the way of fire safety concerns.
Mr Hammond also said local authorities would be given the power to charge a 100% Council Tax premium on empty properties and announced that a consultation on longer private sector tenancies would be launched.
He also announced funding to tackle rough sleeping and homelessness, including launching a new homelessness taskforce.
Continuing, Mr Hammond said that investment, whether in skills or infrastructure, would aid productivity growth and, ultimately, deliver a stronger economy overall.
He said that young people were right to be concerned about their housing prospects given the high costs at present. He cited falling home ownership amongst young people and said successive Governments had failed to build enough homes.
Today, he declared, the Government would choose to build. He referenced the Right to Buy scheme and how many affordable homes had been built over recent years under the Conservatives.
The Chancellor said that there had been a 217,000 net addition to the housing stock last year, the highest rate since the financial crash.
He continued that solving the housing crisis would require intervention in a number of areas. Consequently, over the next five years the Government was committing a minimum £44bn in funding to support the housing market, boost skills in the housebuilding sector, and to incentivise home creation.
This should help meet the target of 300,000 net additional homes on average by mid 2020s, he predicted.
Mr Hammond continued by saying that new money would be made available for the Home Building fund, with £635m for the Small Sites Fund, £2.7bn for the Housing Infrastructure Fund, £1.1bn to unlock strategic sites for building, and £8bn of guarantees for private house building.
In addition, there would be a lifting of HRA caps for high demand areas, he announced.
Mr Hammond added that £34m would be provided to develop construction skills across the country.
He went on to stress the need for planning reform, highlighting reforms in urban areas and stating that the Green Belt would be protected.
Councils in high-demand areas would be expected to provide more houses for local first-time buyers and renters, he explained.
However, he noted the differential between the number of planning permissions granted and the amount of housing being built. He announced an urgent review to examine this issue, and stated that it would be led by Conservative MP Oliver Letwin.
This would report by the financial statement in Spring 2018, he said, and the Government would look to intervene actively if necessary.
Mr Hammond stressed that the Government wanted to help realise the dreams of those who sought home ownership.
In order to support young people, he announced that, effective from today, Stamp Duty would be abolished for all first-time buyer purchases up to £300,000. He also said that those buying homes worth up to £500,000 would not have to pay Stamp Duty on the first £300,000.
He also said that an extra £10bn would be invested into the Help to Buy equity loan.
Mr Hammond said the Prime Minister had pledged that the Government would fix the housing market, but noted that the solution would not deliver itself.
He added that the Homes and Communities Agency would be expanded to become Homes England, to facilitate a sustained improvement in housing affordability.
Mr Hammond said new town development corporations would be used to kickstart five new garden towns, adding that he backed the Cambridge-Milton Keynes-Oxford corridor. This included a housing deal with Oxfordshire to deliver 100,000 new homes.
The Chancellor concluded by saying that this Budget was intended to create opportunities for people.
He added that the Budget was building on the UK’s strong economy and preparing for the future.
Original summary provided by DeHavilland.