For any eagle-eyed politico, the budget is a day we often have marked in our calendars. Undeniably some are more exciting than others. Sadly, long gone are the days when the Chancellor would sip on whisky during their statement. This one – Hammond’s third – will likely be most remembered as the final budget before Brexit day in March. It’s also the first Budget since 1962 that is being given on a Monday; you can thank Halloween for that one.
We don’t all have an hour of our day to sit down and listen to the Budget statement. So grab a double espresso (à la Truss) and I’ll give you a whirlwind round up of the key announcements in the budget. Yep, that includes all the details about the new Brexit 50p coin. Oh, the exciting times we live in.
In her conference speech, Theresa May announced the end of austerity. That meant all eyes then moved to the budget to see if this pledge was grounded in reality. There’s the added angle of this being the finale pre-Brexit budget. During his ‘Sophy Ridge on Sunday’ interview, the Chancellor appeared to suggest that a new budget would need to be presented in the event of no-deal. Following this, No10 said that the commitments in today’s Budget will be carried out “irrespective of a deal”.
What were the key announcements in the Budget?
Hammond said this budget was for “hard working families…people who we on this side of the House are proud to represent“. A budget that “paves the way for a brighter future“, as we are “opening a new chapter in our economic history“. He confirmed what the Prime Minister said earlier this month, that “the era of austerity is finally coming to an end“.
The Economy & State of Public Finances
- Eight straight years of economic growth. Higher employment and lower unemployment in every region in the UK. Wages growing at their fastest rate in a decade. “An economy working for not for the few, not even for the many. An economy working for all”.
- Growth forecast: 1.6% in 2019, 1.4% in 2020, 1.5% in 2021, 1.5% in 2022 and 1.6% in 2023. (Growth upgraded for the next two years)
- “Britain’s job miracle” – increasing participation in the labour market. 800,000 more jobs by 2023 – making it 4.2 million net new jobs since 2010.
- OBR says there will be sustained real wage growth in each of the next five years
- Deficit down by almost 10% under Labour to less than 1.4% next year, and falling to 0.8% by 2023/24. Borrowing this year will be £11.6bn lower than forecasted at the Spring statement – just 1.2% of GDP.
- Borrowing forecast: 31.8bn in 2019/20, 26.7bn in 2020/21, 23.8bn in 2021/22, 20.8bn in 2022/23, 19.8bn in 2023/24
Taxation & Wages:
- Introduction of a UK Digital Services Tax in April 2020 – digital tech giants will be taxed 2% of the money they make from UK users. This is not an online sale tax, only paid by companies which generate at least £500m a year in global revenue. Expected to raise £400m
- Consultation on a plastic packaging tax for April 2022 on the manufacture and import of plastic packaging which contains less than 30% recycled plastic
- From April 2020, Air Passenger Duty will be indexed in line with inflation but no change in duty rate for short-haul flights.
- From April, national living wage will rise by 4.9% to £8.21 giving full-time workers a further £690 annual pay increase.
- Freezing of fuel duty for the ninth year running. Duty on beer, cider and spirits remains frozen.
- Increasing the tax-free personal allowance to £12,500 in April 2019
- Raising the higher rate threshold to £50,000 from April 2019
- An extra £2bn a year for mental health services in England by 2023 – which is part of the PM’s extra £20.5bn a year within the NHS.
- A new mental health crisis service with comprehensive mental health support available in every A&E.
- Development of specialist crisis teams for children and young people that will be set up across the country
- Launch of a twenty-four hour helpline
- More safe havens in communities and more mental health specialist ambulances to treat patients suffering from conditions such as PTSD and depression.
- £10m funding made available for air ambulances
Education & Housing:
- A further £500m for the Housing Infrastructure Fund to unlock 650,000 homes.
- Lifting the borrowing cap to allow local authorities to build more houses.
- £400million in-year bonus to help schools with a one-off capital payment directly to schools, averaging £10,000 per primary school and £50,000 per secondary school
Infrastructure & Technology:
- £30bn is being invested in transportation across England.
- £420million in-year bonus to go to councils in order to maintain and improve roads, repairing issues such as potholes and maintaining bridges.
- £1.6bn of new investments to the government’s modern industrial strategy, ranging from nuclear fusion to quantum computing
- £150m for fellowships to attract talent from around the world for scientific research
- Honour existing contracts, but abolishing PFI contracts for future projects
Defence & Policing:
- Additional £1bn to Minister of Defence to cover this year and next year
- Additional £160m of counter-terrorism police funding to protect counter-terrorism police numbers in 19/20
- To mark the centenary of the armistice with a £10 million donation to the Armed Forces Covenant Fund Trust to support veterans with mental health needs.
Business & High Street:
- Increase of UKEF’s direct lending facility by up to £2bn to help more businesses export.
- Increasing the annual investment allowance from £200,000 to 1m for 2 years.
- Large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain
- Retained entrepenuers relief, with an extended minimum qualifying period from 12 months to 2 years.
- A £1.5bn boost to local high streets
- Business rates cut by a third for small retailers for two years.
- £675m future high streets fund
- new mandatory business rates relief for public lavatories
Universal Credit & Social Care:
- A package of measures worth £1.7bn over five years for universal credit, with universal credit work allowances to be increased by £1,000 per year. Increases to work allowances means working parents and people with disabilities claiming universal credit will take £630 more home a year.
- Building on £240 million for social care winter pressure that was announced this month, a further £650 million of grant funding will be given to English authorities for 19/20 and additionally £45m for the disabled facilities grant in 18/19
- Investment of a further 84m over next five years to expand children social care programme to twenty further councils with high or rising number of children in care.
Regions & Fishing :
- Increasing the Transforming Cities Fund to £2.4bn
- £320m for the Northern Ireland Executive and £350m for a Belfast City Region Deal. £300m to progress shared and integrated education projects.
- £500m for the Welsh Government and £120m for North Wales Growth Deal
- £950m for the Scottish Government and £150m for a Tay Cities Deal
- Investment of £12m over the next three years for fisheries technology and safety measures
- £500m additional funding for departments to prepare for Brexit in 2019/2020
- Spring statement next year could be updated to a full fiscal event depending on economic circumstances.
The Brexit 50p Coin:
The coin, engraved with ‘Peace, Prosperity and Friendship With All Nations’, will be available following Brexit day on March 29th. It follows a campaign led by The Sun newspaper for their to be “an enduring gesture” to cement Brexit as a “landmark national moment”. The Sun are reporting that it will “have Brexit’s date on it, enshrined around the monarch’s image”. Similar 50p coins were issued when the UK first joined the EU in 1973 and also in 1998 when the UK had the EU Presidency.