Philip Hammond declares 'era of austerity coming to an end' in final budget before Brexit

Philip Hammond declares 'era of austerity coming to an end' in final budget before Brexit
Philip Hammond declared on the 29th October 2018 that an "era of austerity was coming to an end" as he delivered his last Budget speech before Britain’s exits from the EU.

Hammond opened his speech by announcing a budget that paves the way for a bright future for Britain and for hard-working people who are the "backbone of the economy." Acknowledging that the Budget comes at a pivotal moment in negotiations for Brexit and said the "stakes could not be higher."

Brexit

  • Hammond announces an additional £500m for Brexit preparations in government departments
  • This comes on top of £2.2bn already announced, and £1.5bn announced at the spring statement
  • Hammond says he is prepared to upgrade the spring statement to a “full fiscal event” if necessary

Stamp duty and housing

  • All first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers' relief
  • £500m for the Housing Infrastructure Fund, designed to enable a further 650,000 homes to be built
  • Lettings relief limited to properties where the owner is in shared occupancy with the tenant
  • New partnerships with housing associations in England to deliver 13,000 homes
  • Guarantees of up to £1bn for smaller house-builders

Housing

  • Hammond says the government will provide a further £500m for its housing infrastructure fund, which will unlock 650,000 homes. The fund now stands at £5.5bn

Plastics tax

  • The government will impose a new tax on the manufacture and import of plastic packaging that contains less than 30% of recycled plastic. Hammond says he will consult on the detail and timetable
  • There will be no special levy on disposable plastic cups

Growth

  • Hammond forecasts growth of 1.3% growth for 2018
  • Then 1.6% in 2019, 1.4% in 2020, 1.4% in 2021, and 1.5% in 2022 and 1.6% in 2023
  • In March, growth was forecast at 1.3% for 2019, 1.3% for 2020, 1.4% in 2021, and 1.5% in 2022

Borrowing

  • Forecast for borrowing to be £11.6bn lower in 2018-19 than forecast at the spring statement. That is equivalent to 1.2% of GDP
  • Borrowing forecast to be £31.8bn in 2019-20, then falling to £26.7bn in 2020-21, £23.8bn in 2021-22, £20.8bn in 2022-23 and £19.8bn in 2023-24
  • Hammond says the government will meet its fiscal targets three years early, and will see borrowing as a percentage of GDP fall to 1.3% in 2021

Debt

  • Debt is forecast to be 83.7% as a share of GDP in 2018-2019
  • As a share of GDP, debt peaked at 85.2%
  • Debt as a share of GDP is forecast to fall to 82.8% in 2019-20, 79.7% in 2020-21, 75.7% in 2021-22, 75.0% in 2022-23, and 74.1% in 2023-24

Defence budget

  • Hammond announces an additional £1bn for the defence budget for the remainder of this year and next, to boost cyber capabilities and anti-submarine warfare
  • The chancellor says the Treasury will donate £10m to the Armed Forces Covenant Fund Trust to support veterans on the centenary of the first world war armistice

Schools

  • The chancellor announces £400m extra for schools in this financial year
  • He also says this will average £10,000 per primary school and £50,000 per secondary school

PFI

  • The chancellor says he will abolish the use of private finance initiatives and will sign no more contracts in future, so the Conservatives are “putting another legacy of Labour behind us”

Small business

  • Hammond says he will halve the contribution to the apprenticeship levy for smaller firms from 10% to 5% in a £695m package to support apprenticeships
  • He will extend the minimum qualifying period for entrepreneurs’ relief from 12 months to 2 years

Digital tax

  • The government will now introduce a UK digital services tax. Hammond says it will be expected to raise around £400m per year
  • Digital tech giants will be taxed 2% on the money they make from UK users
  • The chancellor said the tax will be “narrowly targeted” on UK generated revenues of specific firms, rather than UK tech start-ups

High streets

  • The government will provide £675m to create a “future high streets fund” that councils can access to redevelop their high streets
  • The chancellor says for the next two years, up to a business rates valuation, for all companies with rateable value of £51,000 or less the government will cut their business rates bill by one third. A saving for 90% of shops, restaurants and cafes
  • There will also be mandatory business rates relief for public lavatories

Universal credit

  • Hammond announces £1bn of funding for an additional package of measures to aid the transition over five years
  • The government will also increase the work allowance to £1,000 a year under universal credit, at a cost to the Treasury of £1.7bn a year

Income tax

  • Hammond says the government will meet its manifesto commitment to raise the personal allowance to £12,500 (currently £11,850) and the higher rate taxpayers’ threshold to £50,000 (currently £46,351) one year earlier than planned: April 2019
  • The chancellor says this is because the OBR estimates for the public finances are better than expected
  • The minimum wage will also rise by 4.9% from £7.83 to £8.21

Source: www.bbc.co.uk/news, www.independent.co.uk, www.theguardian.com

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