Economic gloom overshadows Hammond’s Budget

By Peter Urpeth

Photo Above: Chancellor Phillip Hammond © Secretary of Defence on Wikipedia

Chancellor Phillip Hammond produced a Budget with higher than expected spending and with a raft of new commitments, despite predictions for a slowing of economic growth over the next five years.

In an upbeat statement the Chancellor pledged to “embrace the opportunities of Brexit” and to “follow-through on the pledge for new home building”,  whilst continuing the Tory government’s drive  to see significant declines in public borrowing and debt with debt peaking at over 86% of national income this year before falling.

Brexit preparations will receive an extra £3 billion, and assistance for new home owners came in the form of the abolition of stamp duty for more than 80% of first time buyers in England, and with £1.6 billion in extra funds for the NHS in England.

New measures are to be introduced to reduce the impact of the roll-out of universal credit, with specific measures to protect the payment of housing benefit for new claimants, a speeding-up of the application and payment process, and an increased availability for emergency loans for families claiming the benefit.

The minimum wage for all age groups of workers is set to increase by more than 4% in the coming year.

For Scotland, the Chancellor abolished the VAT on the unified fire and police authorities from April 2018, but made no mention of a back-dating of the exemption which would have brought up to £30 million pounds to Scotland’s fire and police services.

First Minister Nicola Sturgeon respond to the VAT announcement saying: “It’s an absolute disgrace that it has taken so many years for the UK government to do the right thing here.”

The Chancellor also announced and extra £2 billion for the Scottish Government, and announced a new investment for new entry companies in Scotland’s  north sea  oil and tax industry, and extra funding for new city deals for Stirling, the Tay region and the Borders were also backed.

Labour leader Jeremy Corbyn lead opposition responses to the budget, saying:

“The test of this budget is how it affects the reality of people’s lives all around this country.

“I believe as the days go ahead and this budget unravels the reality will be a lot of people will be no better off and the misery that many are in will be continued.”

UK growth has been downgraded by the Office for Budget Responsibility (OBR) to just 1.5%, and the OBR has produced an equally gloomy prediction for slow rises in productivity and a downgrading of the growth of GDP.

The OBR had better news for the Chancellor with predictions of an extra 600 thousand jobs over the life of this government.

Personal tax allowance will rise to over £11,800 and the top rate of tax threshold will increase to £46,000.

Other headlines from the budget say a freeze in duty for beers, wines and spirits, but a new levy on high-alcohol so-called ‘white-ciders’ . Hand-rolling tobacco was singled out for an increase in levy above that for cigarettes.

Fuel duty rises planned for April 2018 have been scrapped.

New start technology companies were singled out for new support and the government pledged to look at how tax could reduce the problem of plastics pollution in the oceans.

The Chancellor committed £400 million to a new network of electric car charging points and raised the duty on higher polluting diesel vehicles – but excluded ‘white van man and women’ from the diesel tax rise.