Philip Hammond ignores Tory tax promise with £145m National Insurance raid on the self-employed as he insists ‘resilient’ economy is Brexit-ready in first Budget as Chancellor
PHILIP Hammond used his first Budget today to bring in a raft of “fair” tax rises and help build a war chest for the UK's exit from the EU.
The Chancellor pledged to create a "resilient" economy for families “still feeling the squeeze” of the 2008 crash.
At the same time he announced a £145million National Insurance raid on the self-employed, equivalent to 60p a week - despite George Osborne's 2015 manifesto pledge not raise taxes.
Delivering the first full Budget in the post-George Osborne era, it was a less overtly political statement than the ones his predecessor used to deliver.
And as well as being significantly shorter than normal, it contained none of the surprise 'rabbits pulled from the hat' announcements we have come to expect in recent years.
The speech was more of a reflection of Mr Hammond's less showy style as Chancellor, which continued to abandon Mr Osborne's tough targets to eradicate the deficit by 2020.
Announcements included £2billion to fix the crisis in adult social care, as well as a £435million package to ease the burden on firms facing huge hikes in business rates.
The reforms will also help nine out of 10 pubs with a £1,000 discount on their rates in 2017, and councils will be given a £300million fund to deliver "discretionary relief" to hard-pressed firms in their areas.
Other announcements from Mr Hammond include:
- The personal allowance will rise for the seventh year meaning the first £11,500 of earnings are tax free
- The National Living Wage will go up to £7.50 in April
- A reduction in the tax-free dividend allowance from £5,000 to £2,000 from April 2018
- On the sugar tax he announced from April 2018 any drink with 5g of sugar per 100ml will pay tax of 18p per litre, and 24p per litre if there is more than 8g of sugar
- He is freezing for another year both the VED rates for hauliers and the HGV Road User Levy
- No changes to tobacco or alcohol duties
- Introduction of quarterly reporting delayed for small businesses for a year, at a cost of £280m
- Introduction of tax-free childcare for up to two million households
- There will be support for 1,000 new PhD places and fellowships, focused on STEM subjects
- On technology there is £270m for biotech, robotic systems and driverless cars, £16m for 5G, and £200m for full-fibre broadband
- On transport there is £690m for local authorities to tackle urban congestion
- A crackdown on auto-renew subscriptions
But he began his first Budget by joking the last Chancellor to announce the end of the Spring fiscal statement - Norman Lamont in 1993 - was sacked 10 weeks later.
It was an uncharacteristically jovial opening from the man ironically known in Westminster as "Box office Phil".
And it turned out to be the first of several jokes which had the Tory benches in stitches, as the Chancellor was able to deliver a much more upbeat assessment of the UK's future than his Autumn Statement.
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He gleefully delivered revised forecasts from the OBR, which said despite uncertainty over our EU exit, the country's economic outlook was rosier than previously thought.
But he resisted the urge to go on a spending spree, as Mr Hammond made it clear he was focused on building up a cushion in case of choppier waters ahead as we navigate out of the EU.
He received a tweet wishing him good luck from his predecessor this morning, but Mr Hammond ripped up Mr Osborne's 2015 Tory manifesto commitment not to raise taxes with a controversial rise in National Insurance payments.
And despite promising to help families feeling the squeeze the changes will earn the Treasury more than £1.5billion.
Instead he insisted he wanted to build on the plan set out in the Autumn Statement, and contention to build "on the foundation of our economic strength, reaching out to seize the opportunities that lie ahead".
He said despite the British economy growing faster than every major country bar Germany, there” is no room for complacency”.
Mr Hammond explained: “As we prepare for our future outside the EU, we cannot rest on our past achievements.
“We must focus relentlessly on keeping Britain at the cutting edge of the global economy. The deficit is down, but debt is still too high.
“Employment is up, but productivity remains stubbornly low.”
The Chancellor added: “And too many families are still feeling the squeeze, almost a decade after the crash.
“So our job is not done.”
Theresa May had claimed he would keep "a strong hand on the fiscal tiller while addressing the key issues facing the country".
And her right-hand man didn't disappoint, resolutely sticking to his "plan to return the public finances to balance in the next Parliament".
He said: "That plan strikes the right balance between reducing our deficit, preserving fiscal flexibility and investing in Britain’s future.
"Some have argued that lower borrowing this year makes a case for more unfunded spending in the future. I disagree."
The Chancellor said Britain has a debt of nearly £1.7trillion, almost £62,000 for every household in the country, and borrowing is set to be £100billion higher than predicted at Budget 2016.
"So the only responsible course of action is to continue with our plan, undeterred by any short-term fluctuations," he added.
"We will not saddle our children with ever-increasing debts."
Delivering his speech on International Women’s day, Mr Hammond also included a package of funding for female-focused projects.
At least £5million will be handed to projects to celebrate this centenary of the Representation of the People Act 1918, which gave women the vote.
There is an £20million of funding to support the campaign against Violence Against Women and Girls.
And there is another £5million to promote ‘returnships’ - helping people back into employment after a career break.
Congratulating him on the package, Mrs May said the Budget will provide "a long-term plan for Britain which puts the wheels in motion for a future of growth and prosperity", according to a Downing Street spokesman.
But Jeremy Corbyn accused the Chancellor of delivering a Budget showing "utter complacency" over the state of the economy.
Responding to the statement the Labour leader claimed Mr Hammond failed to understand the realities of daily life for millions of people and the "crisis" facing public services.
He said: "This was a Budget of utter complacency about the state of our economy.
"Utter complacency about the crisis facing our public services and complacent about the reality of daily life for millions of people in this country.
"Entirely out of touch with that reality of life for millions."
He accused the Government of "cutting services and living standards of the many to fund and continue to fund the tax cuts of the few", and suggested the wealthiest are in line to receive £7 billion in "tax giveaways" over the next five years.
He said: "The Prime Minister came to office talking about fighting burning injustices.
"Less than nine months later she seems to have forgotten all about them because none of them are being fought today."
He said it was a particular "insult" to workers in the public sector, who he said were working harder than ever to make up for cuts to staff.
Mr Corbyn added: "This is a Chancellor and a Government not on the side of the workers, not on the side of the taxpayers, who pick up the bill for low pay and insecure work."
And the creation of a new generation of grammar schools was branded a "vanity project" by the Labour leader.
Mr Corbyn said: "Over the coming years the schools budget is being cut by 8%. Does the Chancellor really want fewer teachers and teaching assistants, larger classes, shorter school days? Which is it?
"I agree with the Prime Minister that every child deserves a decent education, every community deserves decent schools. You do it by working with those communities to provide those schools, not planting into them selective schools which are not being demanded by those communities.
"The money announced by the Prime Minister yesterday for new grammar schools is, frankly, a vanity project. Cancel this gimmick, reject selection and segregation."
