Philip Hammond has said the “era of austerity is finally coming to an end”, in his final Budget before Brexit.
He promised measures to help “strivers, grafters and the carers”.
The chancellor is under pressure to spell out in the House of Commons how Theresa May’s pledge to end austerity will be paid for – and to pump more money into universal credit reform.
He has said an emergency Budget will be needed if Britain leaves the EU in March without a deal.
But Downing Street has said all spending plans in this Budget will go ahead “irrespective” of Brexit.
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The Budget is the government’s annual announcement about how it will impose taxes and spend public money – and what state the nation’s finances are in.
Most of it is kept under wraps until the chancellor presents it to MPs, but some things have been announced ahead of the speech, including:
- An increase in spending on mental health services in England by at least £2bn a year
- A £30bn package for England’s roads, including repairs to motorways and potholes
- £900m in business rates relief for small businesses and £650m to rejuvenate high streets
- £60m on planting trees in England
- Plans to cut the cost of weddings in England and Wales
- Another freeze in fuel duty
Mr Hammond has said his Budget will be based on the assumption of an “average-type free trade deal” being agreed between the UK and the EU.
Downing Street said he would set out a new economic plan if Britain leaves the EU without a deal, using his “fiscal firepower” – which could be tax or borrowing measures – to shore up the economy, if necessary.
Monday’s spending announcements would stand “irrespective” of any deal with Brussels – and the Budget would set the UK “on a path” to the ending of austerity, No 10 said.
But the big, long-term spending decisions will not be made until next year, after Britain’s scheduled departure from the EU.
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The chancellor’s motivation for holding the Budget in October was to get it out of the way, before the last moments of the Brexit process create a Parliamentary rollercoaster.
It was – in a period of political peril for the government – meant to be non-controversial, “slimline”, almost a “holding Budget”, according to senior government figures.
So far, so non-controversial. Except at the Tory conference the prime minister decided to charge the politics around the Budget by suggesting that the era of the squeeze on public spending was at an end.
The chancellor has a number of competing challenges.
Some of them are economic – can he really “end austerity” by spending more and at the same time keep his promise to control the government’s £1.8tn debts?
Some of them are political – don’t forget the government does not have a majority and pushing any big tax rises, for example, through Parliament would be very difficult. Mr Hammond is also being lent on to be “more positive” on the economy by his next door neighbour at Number 10, Theresa May.
The chancellor has been under growing pressure – including from some Tory MPs – to provide more money to protect people losing out from the switch to universal credit, which merges six working-age benefits.
Labour said the entire Budget should be voted down unless the government agrees to halt the roll-out of universal credit. with shadow chancellor John McDonnell attacking the “callous complacency” of a chancellor “who has refused to make good on the Tories’ promise to end austerity”.
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The chancellor is expected to announce an extra £2bn for mental health services in England.
The pledge is included in a £20bn boost to the NHS announced by the government in June. The current annual mental health spend is about £12bn.
Labour said: “If this announcement is simply money that’s already been promised, it will do little to relieve the severe pressures on mental health services that have built up because of this Tory government’s relentless underfunding of the NHS.”
Lib Dem MP Norman Lamb, a former mental health minister, said Mr Hammond was “investing the bare minimum” and was recycling commitments made by the coalition government on children’s mental health which the Conservatives had failed to deliver “nearly five years on”.
Budget 2018: Austerity finally coming to an end, says Hammond}