- Today the Chancellor reports that the hard work of the British people is paying off: our careful fiscal management and solid economic recovery means that austerity is coming to an end.
- The OBR report a significant upgrade to our public finances, underscoring the strength of the economic recovery we have seen. Now we turn our eyes to the future, which means more support for our great public services, help for household budgets now, and investment for the long-term to deliver higher living standards as our economy grows.
- Austerity is coming to an end – but discipline remains. That is the clear dividing line in British politics today: a Conservative Government taking a balanced approach and getting debt down. Or Jeremy Corbyn whose version of ending austerity would be to raise taxes to the highest level in peacetime history and send debt soaring – taking us back to square one.
Economy and public finances
The independent Office for Budget Responsibility (OBR) has published its updated outlook for the economy and public finances.
Key points on the economy:
- Economic growth has been revised up – the growth forecast for next year has been revised up from 1.3 per cent to 1.6 per cent.
- Employment has been revised up – with 800,000 more jobs in 2023 than previously forecast.
- Wages are set to rise above inflation in each of the next five years.
Key points on public finances:
- We have met our borrowing target three years early – the deficit is now down to 1.9 per cent of GDP from almost 10 per cent under Labour (target = 2.0 per cent).
- We have also met our debt target three years early – the national debt fell as a share of GDP this year, to 85 per cent, and will fall in each of the next five years (target = debt falling as share of GDP).
Labour opposed all the decisions we took to get the economy back on track. They now want one thousand billion pounds of extra tax or borrowing, which would send debt spiralling and take us back to square one.
Key Budget measures
- Overall investment in public services will increase in real terms over the next five years. Public spending will increase overall by 1.2 per cent in real terms each year, with precise plans to be set out at the Spending Review.
- Funding the Prime Minister’s NHS commitment. We have fully-funded the cash settlement that was set out in June – which equates to £20.5 billion more in real terms by 2023-24, and an average real growth rate in the NHS’s budget of 3.4 per cent a year.
- Fulfilling our promises on income tax one year early, so people keep more of what they earn. We will raise the Personal Allowance to £12,500 and Higher Rate Threshold to £50,000 one year early, saving a typical basic rate taxpayer £130 compared to 2018-19 and £1,205 compared to 2010-11. Nearly 1 million fewer people will pay the higher rate of income tax.
- Supporting our councils with an additional £1 billion of funding. We will support councils with £650 million for social care, £84 million for children’s social care programmes over five years and £420 million for potholes this year.
- Backing high streets by cutting business rates by a third for two years. Rates will be cut by a third for retailers with rateable value under £51,000, saving up to 90 per cent of all shops up to £8,000 each year.
- Investing an additional £1.7 billion per year to benefit working families on Universal Credit. We will increase the work allowance – the amount families can earn before losing benefits – by £1,000, worth £630 per year to those households.
- Providing £500 million more for Brexit preparedness. The Chancellor has already set aside £1.5 billion next year to prepare for all eventualities – today we are increasing that by £500 million to £2 billion.
- A 2 per cent Digital Services Tax will ensure large digital firms pay a fair share of tax to support our public services. From 2020, large social media platforms, search engines and online marketplaces will pay 2 per cent on revenues linked to UK users.
- The Royal Mint will produce a coin to mark the United Kingdom’s exit from the European Union. This will be available in Spring 2019.
Helping families with the cost of living
- Increasing the National Living Wage by nearly 5 per cent, from £7.83 to £8.21. This will deliver a £690 annual pay rise to a full-time worker, taking the total annual pay rise since its introduction to £2,750.
- Fulfilling our promise to cut income tax one year early, so people keep more of what they earn. We will raise the Personal Allowance to £12,500 and Higher Rate Threshold to £50,000 one year early, saving a typical basic rate taxpayer £130 compared to 2018-19 and £1,205 compared to 2010-11. Nearly 1 million fewer people will pay the higher rate of income tax.
- Tackling problem debt and payday lenders with a No-interest Loan Scheme. We will conduct a study looking at how an Australian-style no-interest public loan scheme could work in the UK. We will also increase the ‘breathing space’ period to protect those with problem debt from creditor action from six weeks to 60 days.
- Investing an additional £1.7 billion per year to benefit working families on Universal Credit. We will increase the work allowance – the money families can earn before losing benefits – by £1,000, worth £630 per year to those households.
- Freezing fuel duty for the ninth year, saving the average car driver a cumulative £1,000 by April 2010.
- Freezing beer, cider and spirits duty for another year, supporting patrons of the Great British pub and saving people 2p on a pint of beer and 30p on a bottle of Scotch or gin.
- Keeping Air Passenger Duty for short haul flights at current levels. Short-haul rates will not rise for the eighth year in a row, benefiting 80 per cent of passengers and keeping the cost of the family holiday down.
- Rolling out the 26-30 railcard on a permanent basis, giving young people a third off their fares.
Labour always end up hurting the people they claim to help – no Labour government has ever left office with unemployment lower than when they came in. Jeremy Corbyn has voted against £6,500 worth of tax cuts for families, and the CBI has warned Labour’s plans would ‘reduce pay in people’s pockets’.
Supporting our public services
- Funding the Prime Minister’s NHS commitment. We have fully-funded the cash settlement that was set out in June – which equates to £20.5 billion more in real terms by 2023-24, and an average real growth rate in the NHS’s budget of 3.4 per cent a year.
- £2 billion more per year for mental health. The long-term plan for the NHS will commit further funding to help achieve parity of esteem between mental and physical health services. It means anyone experiencing a crisis can call NHS 111 24/7, more mental health ambulances, increased community support and comprehensive support at every major A&E by 2024.
- £400 million more for schools this year. We are allocating £10,000 to the average primary and £50,000 to the average secondary to help schools buy the equipment they need.
- £1 billion for defence across this year and next. This will ensure our world-class Armed Forces can face the new threats, and build on the UK’s record of spending more on defence than any NATO member except the US.
- £160 million counter-terror police funding next year – the biggest one-off funding boost since 2015. This means we can recruit more of the vital counter-terror officers who protect Britain against the evil threats we face.
Labour can’t deliver the strong economy that pays for our public services. They have made 39 unfunded spending commitments since the election – meaning broken promises, or more borrowing and extra taxes.
Investing to improve productivity
- Increasing the National Productivity Investment Fund to £37 billion and extending it to 2024. This will take public investment to the highest consistently sustained level in 40 years, and to £22 billion more a year in real terms than under Labour.
- £28.8 billion for England’s largest roads – the biggest-ever single cash investment. We will allocate £28.8 billion to the National Roads Fund from 2020-25. This will be the first time ever that all ‘road tax’ will be spent on roads, increasing Highways England’s budget by 40 per cent.
- £200 million for full fibre broadband rollout. This will be used to pilot new approaches to fibre rollout in rural areas, starting in primary schools.
- Abolishing the use of PFI and PF2 for future projects to deliver value for the taxpayer. Labour agreed nearly 90 per cent of all PFI contracts, leaving a bill for the country of more than £200 billion. We will honour existing contracts, but the days of the public sector being a pushover must end, putting another legacy of Labour behind us.
Backing business
- We will back firms to invest by:
- Extending the Annual Investment Allowance to £1 million to help businesses invest to grow.
- Introducing a permanent Structures and Buildings Allowance to support investment in buildings.
- We will support start-ups to grow by:
- Extending the Start Up Loans programme to 2021, backing up to (no space) 10,000 entrepreneurs.
- Extending New Enterprise Allowance to help benefits claimants get their idea off the ground.
- We will help businesses with their costs by:
- Delivering the lowest Corporation Tax rate in the G20.
- Freezing HGV Vehicle Excise Duty and short haul Air Passenger Duty.
- Keeping three million small businesses out of VAT altogether by maintain one of the highest VAT thresholds in the world.
- Making it cheaper to take on apprentices by halving the co-investment rate for non-levy payers.
- And we will invest in the technologies of the future with:
- £121 million to support cutting edge digital manufacturing.
- £78 million to fund electric motor innovations.
- £315 million in quantum technologies.
- £50 million for new Turing Fellowships to attract and retain the world’s experts in AI.
Labour will never understand that local businesses are the backbone of our communities and our economy, create the jobs that help people get on in life, and pay the taxes which support public services. They call business the ‘enemy’, and want damaging tax rises that will stop businesses hiring workers.
Supporting local communities
Councils and high streets
- £650 million more for social care next year. Councils will receive additional grant funding of £650 million for social care, building on the £240 million for winter pressures this year announced at Conservative Party Conference.
- £84 million for children’s social care. We will expand successful children’s social care programmes from Leeds, North Yorkshire and Hertfordshire to up to 20 other councils with high or rising need.
- £420 million for potholes. We will make £420 million available immediately via an uplift in the Highways Maintenance block grant to help tackle potholes, bridge repairs and other minor works. £150 million will also be made available to improve local traffic hotspots such as roundabouts.
- £900 million to cut business rates by one third for two years. This is for retailers with rateable value of under £51,000, saving up to 90 per cent of all shops up to £8,000 each year, and building on previous reductions worth more than £12.5 billion. We will introduce 100 per cent relief for public toilets, benefiting many town and parish councils.
- £675 million for a Future High Streets Fund and a new High Streets Taskforce. This will support councils to implement plans for the transformation of their high streets. We will also relax town planning rules to support new mixed-use businesses on the high street and the conversion of under-used retail units into offices and homes.
Housing
- Abolishing stamp duty retrospectively for first-time buyers of all shared ownership properties up to £300,000, helping more people to get a foot on the housing ladder.
- Putting an additional £500 million into the Housing Infrastructure Fund, unlocking thousands of new homes so more people have a decent place to call home.
- Committing over £7.2 billion to a new Help to Buy Equity Loan scheme to support 110,000 new homebuyers in England. The scheme will run for two years, targeted at first-time buyers with new regional property price caps.
- Formally abolishing the Housing Revenue Account cap. We will abolish the cap that controls local authority borrowing for house building from 29 October in England. This will enable councils to increase building to around 10,000 homes per year.
Environment
- Introducing a new tax on plastic packaging which does not contain 30 per cent recycled plastic. We will consult on the design of this new tax, which will encourage the manufacture of sustainable packaging.
- £60 million to plant millions more trees. £10 million match-funding will be provided for new street and urban trees, and up to £50 million to purchase carbon credits from landowners who plant qualifying woodland. The latter would provide for an estimated 10 million new trees over the next 30 years.
- We will also continue to protect our environment by:
- Investing up to £315 million in an Industrial Energy Transformation Fund.
- Investing £13 million to extend the flood warning service.
- Providing £10 million to clear up abandoned waste sites.
- Providing £20 million to develop easier-to-recycle materials.
Regions and Nations
- Boosting transport in English regions by increasing the Transforming Cities Fund by £770 million. This will bring the fund to £2.4 billion, and support further investment in public transport to boost connectivity and reduce congestion.
- Because of the Chancellor’s decisions at this Budget:
- The Scottish Government’s budget will increase by over £950 million through to 2020-21 before adjustments for tax devolution.
- The Welsh Government’s budget will increase by over £550 million through to 2020-21 before adjustments for tax devolution.
- The budget for a Northern Ireland Executive will increase by over £320 million through to 2020-21.
- For Scotland, £150 million will be invested in the Tay Cities Deal, we will continue negotiations on the Borderlands and Ayrshire deals, and will begin formal negotiations on a Moray deal. We will support Scotch Whisky producers by freezing spirits duty, and support industry in oil and gas by keeping tax low, removing tax barriers to new investment, and making Scotland a global hub for decommissioning. We will also launch a Scotland-based team for the British Business Bank’s UK network.
- For Wales, we have announced £120 million for the North Wales Growth Deal and will continue negotiations on the Mid Wales deal. We will support the delivery of the M4 relief road through a review of the Welsh Government’s borrowing powers, and launch a Wales-based British Business Bank team.
- For Northern Ireland we have announced £350 million for the Belfast City Region Deal, and will open formal negotiations for a Derry/Londonderry and Strabane City Region Deal. We will provide £2 million to help with regeneration in Belfast following the fire this summer, and move forward with shared and integrated schools projects worth £300 million.