Budget: Building foundations of a stronger, fairer Britain - Chancellor
ON HIS WAY: The Chancellor of the Exchequer, Philip Hammond MP, leaves 11 Downing Street for the House of Commons.
Posted: 8 Mar 2017
THE Budget sets out a a plan for a "brighter future" as the UK leaves the European Union, the Chancellor has told MPs.
Delivering his first Budget, Philip Hammond said the UK economy had "continued to confound the commentators" by delivering "robust growth".
With Prime Minister Theresa May expected to start the formal Brexit process within weeks, Mr Hammond told the Commons: "As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future; it provides a strong and stable platform for those negotiations."
He added: "We are building the foundations of a stronger, fairer, more global Britain."
Mr Hammond was given a boost as the Office for Budget Responsibility sharply upgraded growth forecasts for 2017 from 1.4% to 2%.
In 2018 growth is forecast to slow to 1.6%, before picking up to 1.7%, then 1.9%, and back to 2% in 2021, the Chancellor said.
Mr Hammond acknowledged there was "no room for complacency" despite the buoyant growth figures and improved forecasts for the public finances.
The OBR forecasts borrowing in 2016-17 to be £16.4 billion lower than expected in November, at £51.7 billion. By 2021-22 the deficit is forecast to have shrunk to £16.8 billion.
The Chancellor said: "As we prepare for our future outside the EU we cannot rest on our past achievements.
"We must focus relentlessly on keeping Britain at the cutting edge of the global economy. The deficit is down, but debt is still too high. Employment is up, but productivity remains stubbornly low.
"Too many of our young people are leaving formal education without the skills they need for today's labour market. And too many families are still feeling the squeeze, almost a decade after the crash."
Budget at a glance:
The Office for Budget Responsibility has upgraded its growth forecasts for the UK economy this year from 1.4% to 2%, while public sector borrowing estimates have been slashed by billions of pounds and real wages will rise through to 2020. But Mr Hammond signalled there will be no end to austerity.
A package of relief totalling £435 million was announced for small businesses. Firms losing small business rate relief will have their monthly increase capped at £50 for a year, some 90% of pubs will be given a £1,000 discount on business rates in 2017, and councils will be given a £300 million fund to deliver relief to small businesses.
Transport spending of £90 million for the North and £23 million for the Midlands was announced to address pinch points on roads, and a new £690 million competition for English councils to tackle urban congestion.
Hospitals will get £325 million to implement their sustainability and transformation plans and another £100 million will be put into a new triaging projects in England to help free up hospital beds.
The crisis-hit social care system will have another £3 billion pumped into it over the next three years, with £1 billion of this available in 2017/18. Mr Hammond ruled out a new "death tax" to fund social care.
Another 110 new free schools will be opened, including a new generation of grammars. Free school transport will be given to children on free school meals who attend a grammar, and £216 million will go into repairing existing schools. New T-levels will be created to improve vocational education, the hours for technical training will be increased and new university-style maintenance loans will be available.
Cigarettes and alcohol
There was no change to previously planned upratings of duties on alcohol and tobacco, but a new minimum excise duty will be introduced on cigarettes based on a packet price of £7.35.
Higher paid self-employed workers are to pay an average of 60p a week more in National Insurance contributions as part of changes to raise an extra £145 million by 2021-22.
Responding, Humber-based Andy Tuscher, regional director for EEF, the manufacturers’ organisation, said: "Current economic indicators offer the Chancellor confidence about the resilience of the UK economy, but we remain some way off from possible Brexit uncertainty. As such, the Chancellor is right to be pragmatic, recognising the need to avoid jam today and saving the fiscal jam tomorrow to use wisely if the economy encounters turbulence during the process of exit from the EU.
“This statement shows government sticking with the challenge of raising productivity levels in the UK economy, this alignment with the industrial strategy priorities will be welcomed by businesses as demonstrating signs of much-needed cross-government coherence.
“While this Budget doesn’t have all the answers to our future growth challenges, the evolution of the R&D tax credit, action on digital infrastructure and regional road networks, together with additional investment in technical skills and lifelong learning is a solid foundation on which future statements must build.
“Manufacturers will, however, be very frustrated by the positive headlines that might be generated by the action on business rates which did not extend to the removal of plant and machinery that could have added further to the overall productivity package.”
Carolyn Fairbairn, CBI Director-General, said: “This is a breakthrough Budget for skills. There has never been a more important time for the UK to sit at the global top table of technical education for young people.
“Firms will be looking for ongoing partnership with the Government as they try to make the Apprenticeship Levy work.
“However, with inflation rising and the cumulative burden weighing on businesses’ shoulders, limited relief for firms hit hard by business rates falls short.
“Firms are wholly committed to the health and wellbeing of their people, and are pleased to see an increase in spending on social care.”
Mike Cherry, national chairman of the Federation of Small Businesses, said: "We welcome the fact that the Chancellor has listened to the small business-led campaign on business rates. The £435 million of new money is a direct and much-needed response to those facing astronomical hikes in their business rates. This immediate relief is vital in the short-term, and action on more frequent revaluations will also help. But this tax remains out-of-date, so today we call for a cross-party Commission to create a simple, fair tax system for a modern economy.
“Mr Hammond announced that he would take forward FSB’s proposals to help the self-employed in the benefits system. We look forward to working with him on what this may mean for maternity benefits and paternity leave.
“However, the National Insurance rise to 10% next year and 11% in 2019 should be seen for what it is – a £1 billion tax hike on those who set themselves up in business. This undermines the Government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business. Future growth of the UK’s 4.8 million-strong self-employed population is now at risk. Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go.”
Labour leader Jeremy Corbyn said the Chancellor had shown "utter complacency" for the state of the economy.