Budget summary

By staff writers
November 22, 2017

The Chancellor, Philip Hammond, delivered his second budget today (22 November 2017) The main points are summarised below.

Growth and the economy

  • Growth revised down to 1.5 per cent in 2017 from two per cent.
  • Forecasts are: 1.4 per cent in 2018, 1.3 per cent in 2019, 1.3 per cent in 2020, 1.5 per cent in 2021 and 1.6 per cent in 2022.
  • In March the forecasts were 1.6 per cent in 2018, 1.7 per cent in 2019, 1.9 per cent in 2020 and two per cent in 2021.
  • GDP downgraded to 1.4 per cent, 1.3 per cent and 1.5 per cnet in subsequent years, rising to 1.6 per cent in 2021-22
  • Productivity growth and business investment also revised down
  • Annual rate of CPI inflation forecast to fall from peak of three per cent towards a two per centt target later this year
  • Another 600,000 people forecast to be in work by 2022
  • £3 billion to be set aside over next two years to prepare UK for every possible outcome as it leaves the  EU

Government borrowing

  • £49.9 billion this year, down by £8.4 billion from the previous forecast.
  • Down from £39.5 billion next year to £25.6bn in 2022-23.
  • Public sector net borrowing forecast to fall from 3.8 per cent of GDP in 2016 to 2.4 per cent this year, then 1.9 per cent, 1.6 per cent, 1.5 per cent and 1.3 per cent in subsequent years, reaching 1.1 per cent in 2022-23.
  • Debt will peak at 86.5 per cent of GDP this year, fall to 86.4 per cent in 2018; then to 86.1 per cent, 83.1 per cent and 79.3 per cent in subsequent years, reaching 79. per cent in 2022-23.

Housing

  • Stamp duty is abolished immediately for first-time buyers on properties worth up to £300,000
  • To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, with the remaining £200,000 at  five per cent.
  • 95 per cent of all first-time buyers will benefit, with 80 per cent not paying stamp duty
  • This will apply immediately in England, Wales and Northern Ireland, although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018
  • It will not apply in Scotland unless the Scottish government decides to follow suit
  • £44 billion in overall government support for housing to meet target of building 300,000 new homes a year by the middle of the next decade
  • Councils given powers to charge 100 per cent council tax premium on empty properties
  • Compulsory purchase of land banked by developers for financial reasons
  • £400 million for regeneration of housing estates and £1.1 billion to unlock strategic sites for development
  • Review into delays in developments given planning permission being taken forward
  • £28 million for Kensington and Chelsea council to provide counselling services and mental health support for victims of the Grenfell fire and for regeneration of surrounding area
  • New homelessness task force
  • £28 million for three new housing pilot schemes: in the West Midlands, Manchester and Liverpool,  to halve rough sleeping by 2022 and eliminate it by 2027.
  • New money for homebuilders fund.
  • £630 million ‘small sites fund’.
  • £8 billion in financial guarantees to support private housebuilding.
  • £2.7 billion housing infrastructure fund.
  • £34 million to train construction workers.
  • A review looking at ways to speed up planning permission.
  • Five new garden towns.
  • One million new homes on the Cambridge-Milton Keynes-Oxford corridor by 2050.
  • Rent: £125 million of funding over the next two years, targeted at those on low incomes and receiving housing benefit in areas where rents are rising the most.

Wages and personal taxation

  • The tax-free personal allowance on income tax  will  rise to £11,850 in April 2018
  • Higher-rate tax threshold to increase to £46,350
  • Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets
  • National Living Wage (in reality the Minimum Wage) to rise in April 2018 by 4.4 per cent, from £7.50 an hour to £7.83.(The official National Living Wage as claculated by the Living Wage Foundation, is £10.20 in London and £8.75 outside the capital)

Welfare and pensions

  • £1.5 billion package to address concerns about delivery of Universal Credit
  • Seven-day initial waiting period for processing of claims to be scrapped
  • Claimants to get 100 per cent advance payments within five days of applying from January 2018
  • Typical first payment will take five weeks rather than the current six
  • Repayment period for advances to increase from six to 12 months.
  • New universal credit claimants in receipt of housing benefit will continue to receive it for two weeks

Education and health (England)

  • £40 million  teacher training fund for underperforming schools in England. (Worth £1,000 per teacher)
  • 8,000 new computer science teachers to be recruited at cost of £84 million and new a National Centre for Computing to be set up
  • £40 million for maths teachers; £600 premium for schools for each student taking A-level maths.
  • Secondary schools and sixth-form colleges to get £600 for each new pupil taking maths or further maths at A-level and core maths at an expected cost of £177m
  • £2.8 billion in extra funding for the NHS in England
  • £350 million immediately to address pressures this winter, £1.6 billion for 2018-19, the remainder in 2019-20
  • £10 billion capital investment fund for hospitals up to 2022
  • No extra funding for nurses pay but a guarantee that if future pay rises are recommended by independent body, there will be new money

Infrastructure, regions and transport

  • £320 million to be invested in former Redcar steelworks site
  • Further devolution of powers to Greater Manchester
  • £1.7 billion city region transport fund, to be shared between six regions with elected mayors and other areas
  • £30 million to improve mobile and digital connectivity on TransPennine rail route.
  • £2 billion for the Scottish government, £1.2 billion for the Welsh government and £650 million for the Northern Ireland executive
  • Scottish police and fire services to get refunds on VAT from April 2018
  • Young person's railcard extended to 26-30-year-olds, taking a third off rail fares

Business

  • VAT threshold for small business to remain at £85,000 for two years
  • Rises in business rates to be pegged to CPI measure of inflation, not the higher RPI: a cut of £2.3 billion
  • Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200 million a year
  • Charges on single-use plastic items to be considered
  • £30 million to develop digital skills distance learning courses

Research and development

  • £2.3 billion of investment.
  • Tax credit increased to 12 per cent
  • £500 million support for 5G mobile networks, full fibre broadband and artificial intelligence.
  • £20 billion of new investment in UK knowledge-intensive industries.
  • £2.5 billion for British Business Bank.
  • Encourage pension fund investment.
  • Boost to Enterprise Investment Scheme.
  • Replace European funding

Fuel

  • A fuel duty rise for petrol and diesel cars scheduled for April 2018 has been scrapped
  • Vehicle excise duty for new diesel cars not meeting latest standards to rise by one band in April 2018
  • Tax rise will not apply to van owners
  • Existing diesel supplement in company car tax to rise by one per cenr
  • Proceeds to fund a new £220 million clean air fund
  • £540 million to support the growth of electric cars, including more charging points
  • Tax changes to encourage investment; 'Transferable Tax History’ for oil and gas fields in the North Sea.

Alcohol and tobacco

  • Tobacco will continue to rise by two per cent above RPI inflation, equivalent to 28p on a pack of 20 cigarettes, while the minimum excise duty on cigarettes introduced in March will also rise
  • Duty on hand-rolling tobacco will increase by additional one per cent
  • Duty on beer, wine, spirits and most ciders will be frozen, equating to 12p off a pint of beer and £1.15 off a bottle of whisky by April 2018, but duty on high-strength 'white ciders'  will be increased in 2019 via new legislation

[Ekk/4]

Keywords:budget 2017
Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.