State Of The Economy
The Office of Budget Responsibility (OBR) has downgraded its forecast for productivity growth, business investment and GDP, which it now expects to grow 1.5% in 2017 rather than 2%, 1.4% in 2018, 1.3 in both 2019 and 2020. Every GDP forecast until 2021/22 has been downgraded.
“Regrettably our productivity performance continues to disappoint,” he said, adding it “remained stubbornly flat.”
Borrowing is forecast to fall: £49.9bn this year, £39.5bn next year to £25.6bn by 2022-23, the lowest for 20 years.
Debt will peak at 86.5% of GDP this year but fall to 79.1% in 2022-23, “the first sustained decline in debt in 17 years”, Hammond says.
Hammond announced another £3 billion over two years would be set aside in preparation for Brexit, on top of £700 million already invested. “No one should doubt our resolve,” he said. “But this Budget is about much more than Brexit.”
Theresa May’s spokesman said the Budget would “adopt a balanced approach, continuing to restore the public finances to health while investing in the NHS and public services and tackling the chronic shortage of housing”.
He added it would mean “significant investments for the future in skills, infrastructure and research and development”.
As he began, Hammond said the world was on “the brink of a technological revolution” and Britain was at the forefront. He promised “a Britain we can be proud of… …a country fit for the future”, using the Budget’s slogan.
“I know we will not build it overnight… …but in this Budget we will lay the foundations,” he said. However, as HuffPost’s Paul Waugh reported last night, Hammond’s ‘fit for the future’ Budget slogan has been revealed as a byword for cuts programmes.
Hammond is casting this Budget as one for the future, while accusing Labour of “turning inwards to the failed and irrelevant dogmas of the past”.
Rabbits Out Of The Hat
Stamp duty is abolished for first-time buyers purchasing a home worth less than £300,000 and the first £300,000 of ones worth up to £500,000 in London.
- The basic rate income tax threshold will rise to £11,850 in April 2018 and higher rate threshold to rise to £46,350.
Hammond announced there will be a £1.5bn package to respond to “genuine concerns” over the rollout of Universal Credit. Read more about the reforms here.
Hammond confirms 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.
There will be an extra £10 billion in real terms for the NHS a year by 2020 and £350 million right away to allow health trusts to plan for this winter.
After the Grenfell Tower fire, the Chancellor announces £28m to fund mental health services for those who survived and a regeneration support for the surrounding areas.
Noting that home ownership is plummeting among the young, Hammond announces councils will be able to charge a 100% council tax premium on empty homes and a homelessness task, meant to rough sleeping by 2027.
Hammond announces a drive to boost electric cars: new £400 million charging infrastructure fund, n extra £100 million Plug-In-Car Grant, and £40 million in charging R&D.
Road tax for diesel cars that do not meet latest standards is to rise in April and the existing diesel supplement in Company Car Tax is also going up, he said, adding those buying cleaner diesel cars would not be affected.
Another £20m to support Further Education colleges to teach T-Levels for those doing apprenticeships.
The National Productivity Investment Fund will be extended by a year and expanded to more than £31bn.
In a bid to clampdown on tax avoidance companies like Google and Amazon, Hammond pledhed to charge income tax on those companies’ royalties from sales in Britain from April 2019, which is expected to raise £200 million a year.
Duty increase on white ciders will rise but on ciders, wines, spirits and beer it will be frozen to “back our Great British pubs”. “So, Merry Christmas.”
Hammond mocked reports that Environment Secretary Michael Gove had been auditioning for the job of Chancellor by using “long economicky words” during Cabinet meetings. “This is the bit with the ‘long economicky words’,” he said, introducing the economic forecasts.
He gets an unintended laugh from the Labour benches when he praises “driverless vehicles”. “Surely they don’t want me to tell that joke about the Labour Party?” he asks the Deputy Speaker.
On electric cars, he says: “I know Jeremy Clarkson doesn’t like them, but there are many other good reasons to pursue this technology so today we step up our support for it.” He tells Labour’s leader: “Sorry Jeremy, not the first time you’ve been snubbed by Hammond and May.”
Private jets are to get more expensive. “Sorry Lewis,” Hammond says, amid stories about Lewis Hamilton’s own aircraft.
Jeremy Corbyn’s Response
The Labour leader hits out, accusing the Tories of a “record of failure with a forecast of more to come”, citing the OBR’s downgrades.
“The failed and damaging policy of austerity remains,” citing the number of homeless people and how 120,000 children will spend Christmas in temporary accommodation.
He says the pilot schemes intended to fight homelessness “simply doesn’t cut it. We need action now”.
Corbyn berates Hammond for the “cheek” to call Britain a “strong economy”. He says the poorest 10% of households will lose a tenth of their income by 2022. The richest will lose just 1%.
“Shame on the chancellor,” he says as he accuses him of failing to tackle period poverty.
During Corbyn’s fired up attacks over social care, one Tory MP made a remark that prompts outrage n the Labour benches and calls for someone to leave the chamber. See the exchange here.
During this exchange, Corbyn shouted “the uncouth attitude of some in this chamber needs to be called out”.
“People were looking for help from this budget and they have been let down,” he said. “They call this a budget fit for the future but this is a Government that is unfit for office.”