Chancellor Philip Hammond delivered another squeeze on public spending with no real-term increases in NHS, social care and education.
In his Budget, Hammond promised no “spending sprees” with any surplus cash used to ensure the UK had enough “gas in the tank” for the coming year, even though .higher-than-expected tax receipts gave him a windfall of almost £10 billion.
Labour said the government was putting money aside to prepare for Brexit which should instead be spent on the NHS.
Shadow Chancellor John McDonnell said: “The Tories say they are on the side of working families, but they are going ahead with cuts to in-work benefits, and presiding over an economy where six million people earn less than the living wage, and four million children are in poverty.”
And Labour leader Jeremy Corbyn said it was “a Budget of utter complacency about the state of our economy”.
Hammond’s much-trailed £2 billion extra for under-pressure social care quickly unravelled as it became clear that the money would be raided from local government budgets.
Other measures included:
+ A one-off payment of £320m for 140 new free schools, on top of the 500 already pledged to be created by 2020, even though schools overall face a £3i billion cut in spending. Hammond also promised £216m to rebuild and refurbish existing schools, but there have been warnings of four-day weeks and cuts in staffing and subjects – and the National Audit Office has warned of an 8% real-terms funding gap for schools up to 2020.
+ A £5m fund to mark the centenary of female suffrage next year.
+ Cash to alleviate the impact of increased business rates on firms – but increased national insurance bills for many self-employed people.
+ £500m support for electric vehicles, robotics and artificial intelligence
+ The public sector net borrowing numbers showed a surplus in January, a month when the government receives a significant proportion of its tax receipts. With those receipts higher than expected and economic growth stronger than expected, the government earned more than it spent to the tune of £9.4bn.
+ Plans to help the North Sea oil and gas industry, including an investigation into the use of tax incentives to make it easier for operators to sell oil and gas fields, helping to keep them productive for longer. A panel of experts will be set up to examine the issue.
+ Transport spending of £90m for the north of England and £23m for the Midlands to address “pinch points” on roads.
+ Additional funding of £350m for the Scottish government, £200m for the Welsh government and almost £120m for the Northern Ireland Executive.
+ No change to previously-planned upratings of duties on alcohol and tobacco.
+ Class 4 National Insurance contributions will go up to 10% from 9% and to 11% in April 2019.
McDonnell said the National Living Wage should be increased to give workers a pay rise, along with reversing changes to disability benefits and a real cash injection for the NHS, could be funded by reversing £70bn in corporation, capital gains and inheritance tax cuts. He also said Labour wanted to abolish university tuition fees and was looking at how this could be afforded.
Corbyn said the Budget ignored the “crisis facing our public services and the reality of daily life for millions of people in this country”.
Aside from the Budget, several previously-announced changes come into force in April, including an increase in the personal tax allowance to £11,500, a new inheritance tax allowance, a rise in the annual ISA limit to £20,000 and the introduction of a levy to fund apprenticeships.