Budget to get UK’s broadband up to speed

Boost for rural households and extra cash for defence as Hammond tells Telegraph web giants will face tax ultimatum

HUNDREDS of millions of pounds will be pumped into installing superfast broadband in some of the most remote areas of the country as the Chancellor places technology at the heart of tomorrow’s Budget, The Sunday Telegraph understands.

Philip Hammond is believed to be preparing to announce plans to connect rural schools and libraries to “full fibre” internet with a fund of at least a quarter of a billion pounds.

The plan is designed to make it easier for residents and businesses to extend those connections to their own properties. The announcement would mark a significant victory for The Tele- graph’s campaign for household access to fast internet.

Separately, Whitehall sources said Mr Hammond and Gavin Williamson, the Defence Secretary, were in talks over a cash boost for the defence budget that could amount to as much as £1billion, ahead of a decision over long-term funding next year.

The disclosures come as, speaking to this newspaper ahead of tomorrow’s statement, Mr Hammond:

Describes the economy as “buoyant”, with its “fundamental health … plain to see”

Indicates he would give an ultimatum over a tax on web giants, saying: “We’re going to have to set some deadlines”

Pledges greater action to tackle poor productivity, saying that it was not “acceptable” that German and American workers have significantly more output per hour than British employees

Throws his weight behind Cabinet ministers insisting on an exit mechanism from the EU’s proposed Brexit insurance plan. He described the current proposals as “Kafkaesque”.

The Telegraph understands Mr Hammond will pledge hundreds of millions of pounds of new investment to help connect rural homes and businesses to full-fibre broadband to boost rural economic growth, particularly by enabling people to work from home regardless of where they live.

Sources said the funding would help connect fibre internet to schools, libraries and other publicly-owned buildings. Once the high-speed cables are laid to such local “hubs”, residents and businesses would be able to seek connections to their own homes and premises, ministers believe.

Today Mr Hammond tells this newspaper: “It is the spending on the skills of the next generation, the infrastructure, including the digital infrastructure, the broadband infrastructure. For the 21st-century broadband is to roads in the 20th, railways in the 19th, and canals in the 18th. It’s the network infrastructure that will make this country

work.” Hinting at a cash boost for the defence budget, Mr Hammond said: “I do recognise that, although we will deal with the longer term strategic question in the spending review next year, as we will do for all departments, there is also an immediate challenge in defence, and I will address that in my speech on Monday.”

The additional funding follows intense lobbying by Tory backbenchers and Mr Williamson. But Mr Hammond insists: “You are looking at someone who was defence secretary for three years. I absolutely get the problems and the challenges in defence.”

He adds: “It’s about how we support the men and women of our Armed Forces going forward to ensure we’ve got the configuration that we need to keep Britain safe, to project our power and influence in the future, and there is nobody more committed to that mission than me.”

The funding is likely to help avert a major row with Tory backbenchers over defence this week following a sustained campaign for increased funding to avoid cuts.

Attention is now likely to shift to the spending review next year, which will determine departmental budgets beyond 2020.

Sources also forecast an additional £650million for social care next year, following lobbying by James Brokenshire, the Local Government Secretary.

Addressing a possible UK tax on web giants Mr Hammond said: “We’re going to have to have a timetable for moving forward and we’re going to have to set some deadlines.”

In addition, the Chancellor is also expected in his speech to unveil a new £28.8billion fund to repair arterial roads, including fixing potholes, with funding from vehicle excise duty.

He is also expected to announce plans for a 60-day respite to protect people saddled with debt from bailiffs and legal action, and a review examining the possibility of introducing interest-free loans to families and those on low incomes.

Separately, a £2million fund is expected to be set up for entrepreneurs to find ways to make it “easier and more attractive” for people to borrow from affordable lenders rather than taking out crippling payday loans.

Meanwhile, writing in The Sunday Telegraph on the page opposite, David Davis, the former Brexit Secretary, sets out elements of a “policy suite” he says must be designed “to sharply improve the prospects of young families”.

In a wide-ranging article likely to be interpreted as a pitch for the Tory leadership, he warns Mr Hammond against a raid on pensions tax relief, which he says would be “simply wrong”. He accuses the Treasury of “myopically short-term” thinking.