Stamp duty is to be abolished for first-time buyers on properties up to £300,000 as Chancellor Philip Hammond put measures to tackle the UK’s housing crisis at the centre of his Budget.
The measure will also apply on the first £300,000 of a purchase in high-price areas, meaning 95% of first-time buyers will see at least a cut in the amount of stamp duty, with 80% paying none at all.
The cut will come into force immediately, Mr Hammond said, as he set out plans to build 300,000 extra new homes a year by the mid 2020s.
“This is our plan to deliver on the pledge we have made to the next generation that the dream of home ownership will become a reality in this country once again,” Mr Hammond said.
Over the next five years Mr Hammond pledged a total of at least £44 billion of capital funding, loans and guarantees to support the housing market.
But in a sign of the economic difficulties facing the UK, Mr Hammond said the Office for Budget Responsibility had downgraded growth forecasts across the next five years.
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Labour leader Jeremy Corbyn condemned the Budget, saying it was a “record of failure with a forecast of more to come”.
The Chancellor’s room for manoeuvre has been limited by grim economic forecasts from the OBR as a result of the UK’s poor productivity performance.
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The OBR now expects to see GDP grow 1.5% in 2017 – down from the 2% forecast in March – 1.4% in 2018, 1.3% in both 2019 and 2020, before picking back up to 1.5% in 2021, and 1.6% in 2022.
Borrowing is forecast to be £49.9 billion this year – £8.4 billion lower than forecast at the Spring Budget – and will fall every year to £25.6 billion in 2022-23 – “its lowest level in 20 years”.
As a percentage of GDP, debt will peak at 86.5% this year before falling to 79.1% in 2022-23 – “the first sustained decline in debt in 17 years”.
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Despite the tight finances, Mr Hammond set out a series of spending measures including an emergency cash injection for the NHS, with £350 million to cope this winter.
Mr Hammond also indicated that extra money could be available if the cap on NHS staff pay rises is lifted. He set out plans for a £10 billion programme of capital investment to 2022.
But he also acknowledged that “the NHS is under pressure right now” and announced £2.8 billion of funding up to 2019-20.
However, there was no mention of social care, the issue at the heart of the Tory election campaign’s troubles.
Critics from across the Commons have put pressure on Mr Hammond to act on universal credit and in response he announced a £1.5 billion package including the removal of the seven-day waiting period applied at the beginning of a benefit claim.
The National Living Wage will rise 4.4% from April from £7.50 an hour to £7.83 – a £600 pay rise for full-time workers
From April, the income tax personal allowance will rise to £11,850 and the higher rate threshold to £46,350.
There was good news on booze as the Chancellor said most duties would be frozen, but he said there would be an increase for high-strength “so-called white ciders”.
Smokers were also hit with an extra 1% duty on hand rolling tobacco this year on top of the normal annual duty increases.
For motorists, the Chancellor confirmed the annual fuel duty rise for both petrol and diesel would be cancelled again.
But drivers of new diesel cars will face higher taxes unless their vehicles meet the toughest emissions standards, with the money used to pay for a £220 million “clean air fund” to improve air quality.
In an effort to address concerns on the business rates regime, Mr Hammond announced a series of measures.
From April, business rates will increase in line with the CPI rate of inflation rather than the higher RPI rate – a shift that was not due to come in for another two years – saving firms £2.3 billion over the next five years.
He also set out measures to compensate firms affected by the so-called “staircase tax” which hits firms with premises on different floors of a building.
And in an effort to tackle tax-dodging by multinational online firms, income tax will be applied to royalties relating to UK sales, raising about £200 million a year.
On Brexit, the Chancellor said negotiations with Brussels were entering a “critical phase” but early progress in trade talks would be “one of the biggest boosts we can provide to businesses and families”.
Mr Hammond has been under pressure from Tory Eurosceptics to increase funding to prepare for a “no deal” Brexit – in order to show Brussels that the UK is serious about its warning that it could walk away rather than accept a bad deal.
“We have already invested almost £700 million in Brexit preparations and today I am setting aside over the next two years another £3 billion.and I stand ready to allocate further sums if and when needed. No one should doubt our resolve,” he said.