TAX CUTS FOR 32 M
He finally said it! The Chancellor announced the end of austerity is nigh with a blockbuster Budget. We urged him to ‘splash the cash’ and now everyone’s a winner with...
PHILIP Hammond yesterday signalled the end of austerity by slashing income tax for 32 million earners and launching a £100billion spending spree on public services.
In a Budget marking a major shift in the Government’s priorities, the Chancellor declared that a surprise tax windfall from Britain’s surging economy allowed the biggest cash injection to the NHS in history while the tax burden on hardworking households could be eased rather than raised.
And he promised that even better times are ahead from a “double deal dividend” if Theresa May secures a trade agreement with the EU.
He told the Commons: “I can report to the British people that their hard work is paying off and the era of austerity is finally coming to an end.”
His 70-minute speech to MPs announced the freezing of fuel and most alcohol duties as well as bringing forward expected hikes in the income tax personal allowance
threshold a year earlier than planned.
The income tax personal allowance will rise to £12,500 and the higher rate threshold will rise to £50,000 from April, meeting the Tory manifesto pledge to hit the targets before the next general election due in 2022.
It will put £130 a year into the pocket of a typical basicrate taxpayer.
Ahead of next year’s departure from the EU, Mr Hammond set out “a Budget for Britain’s future” to prepare for “a new chapter in our country’s economic history”.
“We can look confidently to the future and set our course for where this remarkable country will go next,” the Chancellor said.
He also insisted his financial measures would help “the strivers, the grafters and the carers who are the backbone of our communities and our economy”.
More support was coming for “people who get up early in the morning to open up factories, shops and building sites to drop their kids off at school to check on elderly relatives and neighbours”, the Chancellor said.
Target
A £400million-a-year raid on the profits of internet giants including Google, Facebook, Twitter and eBay was also announced.
Yesterday’s Budget announced that Government spending on public services will rise by around 1.2% above inflation every year for the next five years.
The target will mean more than £100billion more is spent on the public sector over the period.
The cash surge will go towards the NHS with an extra £21.4billion a year to be spent by 2022-23.
Mr Hammond cheered Tory MPs by confirming that the Treasury can meet the massive spending commitment without raising taxes.
Far better than expected economic growth – detailed in Budget documents from the Office for Budget Responsibility yesterday – provided the financial leeway for the extra spending.
Tough financial restraint by Tory-led governments since 2010 had transformed the public finances from crisis to health.
“Our economy continues to confound those who talk it down and we continue to focus resolutely on the challenges and opportunities that lie ahead as we build a new relationship with our European neighbours, a new future outside the European Union,” Mr Hammond said.
He praised the “remarkable achievements of the “British people” rebuilding the economy after the 2008 financial crash and the mismanagement of the last Labour government.
“After eight years, the hard work of the British people is paying off, and we will not squander their efforts,” the Chancellor said.
Budget documents forecast that the UK’s gross domestic product will continue to surge by more than 1.4 per cent a year over the next five years. Around 800,000 more jobs would be created in the country as a result, leading the Chancellor to hail a “job miracle”. Government borrowing was £11.6billion lower than forecast last spring, allowing the Treasury to hit key deficit targets three years earlier than expected and stopping billions being wasted every year on debt repayments. Economic growth and falling Government debt meant Treasury tax receipts were booming, allowing more cash for spending on public services. Mr Hammond vowed to continue a “balanced approach” that continued reducing the Government’s debt mountain while increasing spending and allowing taxpayers to keep more of the money they earn.
The Chancellor also unveiled £1billion more for defence, £400million for schools, £160million for counter-terrorism police and billions more for roads. He also found £1.7billion for increasing benefits handed out under the universal credit welfare system.
Mr Hammond promised an extra £500million for Whitehall preparations for a “nodeal” exit from the EU. He insisted the country could cope from such a scenario while pointing out that achieving a deal would further boost the economy.
“We are at a pivotal moment in our EU negotiations and the stakes could not be higher,” he said.
“Get it right, and we will not only protect Britain’s jobs, businesses and prosperity but we will also harvest a double deal dividend.”
Britain could be boosted by an end to business uncertainty and releasing extra cash held in reserve for if a deal was agreed.
Labour leader Jeremy Corbyn described it as a “broken promise Budget”.
He told MPs: “Whatever the Chancellor claims today, austerity is not over.” Kevin Nicholson, head of tax at PwC, said: “If this was a Budget that sought to give a little something for a lot of people then you could say that the Chancellor has gone a long way to meeting his objective. This was a Budget that was sprinkled with giveaways and minicrowd pleasers.”