KEY POINTS
- The outlook for productivity growth, business investment and GDP growth has been significantly downgraded
- Stamp duty abolished for first-time buyers on homes up to £300,000, up to £500,000 in London
- Chancellor bowed to pressure over controversial Universal Credit with a £1.5 billion package to cut
- waiting period for payments and to make it easier for claimants to receive an advance
- An extra £3 billion will be set aside over the next two years to prepare for “every possible outcome” in the Brexit process
- Extra £2.8bn to NHS resource spending and £350 million available immediately to allow health trusts to plan for this winter
- Basic rate income tax threshold will rise to £11,850 in April 2018 and higher rate threshold to rise to £46,350.
- A further pay rise of £600 for full-time workers through an increase in the National Living Wage. It will rise 4.4% in April, from £7.50 an hour to £7.83.
- £500 million investment in artificial intelligence and other technical innovations including driverless cars and electric vehicle charging points
- Fuel duty rise cancelled again
- Duties on “so-called white ciders” from 2019 will increase, but duties on other ciders, wines, spirits and beer will be frozen
- Tobacco duty to rise by 2% as planned and 1% on hand rolling tobacco
- Extra £28m to help Grenfell residents and those in the surrounding area
Chancellor Philip Hammond has bowed to pressure on reforming Universal Credit as he revealed growth forecasts for the UK have been dramatically cut.
In a boost for first-time buyers, the Government also abolished stamp duty for first-time buyers for all homes up to £300,000 and announced £15bn for new housing.
But the Chancellor also used his Budget to reveal the OBR (Office for Budget Responsibility) has significantly revised growth down for next year from 2.0% to 1.5%. The forecasts equate to 2.2% of GDP or around £40bn over five years.
The Chancellor is also setting aside an extra £3bn over the next two years to prepare for “every possible outcome” in the Brexit process.
A £1.5bn support package will cut the waiting period for the benefit payments, he told the Commons, and make it easier for claimants to receive an advance.
It comes after howls of pain from across the country as people were being forced into poverty by six-week waits for Universal Credit.
The Chancellor said he recognised the concerns of claimants, raised by MPs across the Commons.
He said: “Today we will act on those concerns. First, we will remove the seven day waiting period applied at the beginning of a benefit claim so that entitlement to Universal Credit will start on the day of the claim.
He added: “We will change the advances system to ensure that any household that needs it can access a full month’s payment within five days of applying.
“We will make it possible to apply for an advance online and we will extend the repayment period for advances from 6 months to 12 months.”
Turning to Stamp Duty, the Chancellor said the Stamp Duty cut was aimed at easing the burden on younger people.
He said: “When we say we will revive the home-owning dream in Britain we mean it. We do not underestimate the scale of the challenge but today, we have made a substantial downpayment.”
Other housing measures included:
£630m small sites fund
£2.7bn to double the Housing Infrastructure Fund
£400m for estate regeneration
£8bn of new financial guarantees to support private house-building
£34m to develop construction skills
As fears grow about the impact Brexit is having on the economy, the Chancellor said that he expected inflation to stabilise next year, falling back within targets by the close of 2018.
With productivity forecasts also down, the Chancellor also added £2.3 billion for investment in research and development.
In other announcements, the Chancellor has committed an extra £350 million immediately to allow health trusts to plan for this winter, recognising the NHS “is under pressure right now”.
He has also added £2.8bn to NHS resource spending overall.
The low paid were also handed a wage boost, through an increase in the National Living Wage. It will rise 4.4% in April, from £7.50 an hour to £7.83.
Labour leader Jeremy Corbyn condemned the Budget, saying it was a “record of failure with a forecast of more to come”, adding that “this is a Government no longer fit for office”.
Michael Jacobs, Director of the IPPR Commission on Economic Justice, was also scathing about the growth forecasts and a lack of investment.
He said: “The Chancellor said the future is bright. But that’s not what it looks like to workers on low wages in insecure jobs in poor communities around the country.
“It’s not what it looks like to young people unable to afford a decent home. And it’s not what the vast majority of economists think the future will be like either. The uncertainties of Brexit – which have already cut growth and raised inflation – are just the tip of the iceberg.