On 22 November the Chancellor Philip Hammond rose to the dispatch box to unveil his first Budget statement since the general election in June and the third since he became Chancellor. This year’s financial statement is seen as critical for Theresa May’s survival with the Chancellor under pressure to set out a vision for ‘post–Brexit Britain’, push through measures that improve the economy’s productivity and sate the growing demands for greater funding across public services and welfare provision.
The Chancellor penned in by worsening economic growth forecasts, the political constraints imposed by a tiny Commons majority and the willingness of Eurosceptic Tory MPs to seize on any mistake delivered a Budget he framed as about “much more than Brexit”.
· Economic Growth
o Growth estimates have been revised down. They are now: 2017 – 1.5%, 2018 – 1.4%, 2019 – 1.3%, 2020 – 1.3%, 2021 – 1.5%, 2022 – 1.6%
o Borrowing is forecast to be £49.9bn this year – £8.4bn lower than forecast in the spring budget.
o It will fall to its lowest level in 20 years by 2022/23, he says.
o In percentage terms, it is forecast to be 2017/18 – 2.4% then 1.9%. then 1.6%, then 1.5%, then 1.3% and finally 1.1% in 2022/23.
o OBR is forecasting another 600,000 people in work by the 2020s
o For the last 15 budget events, the OBR has forecast productivity growth at 2%. But that has been revised downwards.
National Living Wage
· The National Living Wage, the minimum wage for the over–25s, will rise from £7.50 to £7.83 in April giving full–time workers a further £600 pay increase. The policy was set in train by his predecessor Mr Osborne, who hoped it would break the UK out of its “low–pay, low–productivity trap”.
Plastic Waste Tax
· The Chancellor announced plans to explore a levy on plastics that are not easy to recycle.
Duties and Levies
· On alcohol duty, the Chancellor has outlined plans to increase duty on high–strength low–quality alcohol from 2019, but duties on other ciders, wines, spirits and on beer will be frozen.
· Cancellation of fuel duty rise for both petrol and diesel, which had been scheduled for April.
· The Chancellor confirmed tobacco tax will continue to rise at inflation plus 2%. That could see the cost of cigarettes rise by about 6%.
Stamp duty changes for first time buyers
· First–time buyers will no longer pay stamp duty on homes up to £300,000. It will also be available on the first £300,000 of a home up to £500,000 to help those buying in London.
· Over the next five years £44bn will be committed to help the housing market. By the mid–2020s there should be 300,000 homes being built every year – the highest level since the 1970s.
· The Chancellor’s “ambitious plan” includes: – £44bn of capital funding to boost the housing market – Target of 300,000 net new homes per year by mid 2020s – New SME housebuilding fund – £2.7bn to more than double housing infrastructure fund – £1.1bn to ‘unlock strategic sites’ – £1.5bn to help small developers build more homes
· The Chancellor has announced plans to legislate for councils to be allowed to impose a 100% empty homes premium on properties left vacant.
· Oliver Letwin will chair a review of how land is being used for housing. It will report by the spring of next year, in time for the financial statement then. If necessary, the government will take powers to intervene to ensure land is used for housing
· The government wants homes built in high–demand areas and around transport hubs.
· Sajid Javid, the Communities secretary, will make a statement on the plans in due course.
· The Government is committed to building up to 1 million homes on the Cambridge–Milton Keynes–Oxford corridor by 2050.
· On Taxes for digital companies the Chancellor stated that income tax will be applied to sales abroad. He stated all online market places will be jointly liable with sellers for VAT.
· Invested almost £700m in Brexit preparations an extra £3bn is being set aside for Brexit contingency planning.
· The Chancellor said the government will replace European investment fund money if necessary.
· Plans to extend the national productivity fund for a further year, and expand it to over £31bn (from £23bn).
· £400m will be made available on boosting electric vehicle charge points with an extra £100m in Plug–In–Car Grant and £40m in charging R&D
· Tax rates on new diesel cars (but not vans) will go up 1 percentage point, until manufacturers can improve the technology and reduce emissions, while owners of existing diesels will have to pay more in road tax, achieved by moving the cars up a band.
· Chancellor announced £2.5bn of investment to kickstart the UK’s lacklustre productivity. The British Business Bank will be seeded with £2.5bn of public money, The Government is also set invest over £500m in a range of initiatives from artificial intelligence, to 5G and full fibre broadband,
· The Chancellor stated funds for “retraining” workers who’ve been disrupted will be important.
· New £1.7bn “transforming cities fund”, designed to boost growth beyond the south–east. More funding for improving wifi connections on the trans–Pennine trains. The government will also pay for new rolling stock on the Tyne and Wear metro.
Air Passenger Duty
· From April The Chancellor will again freeze short–haul air passenger duty, and long–haul APD for economy passengers. This will be funded by an increase on taxes for private jets.
· NHS to get an extra £10bn capital investment over this parliament and an extra £3.75bn this year for its current budget. Some £2.8bn will be for the NHS in England.
· The Chancellor said he will provide extra funding for NHS pay.
· For businesses threshold for VAT registration to stay at £85,000 for the next two years. There had been speculation he would bring it down.