Philip Hammond has been branded a “dead man walking” after his second Budget this year failed to cut through Tory gloom.
The Chancellor aimed to appeal to voters on both sides of the Brexit divide by claiming he was tackling deep-seated economic challenges “head on”.
He set aside £3bn to prepare for EU withdrawal, adding that he is ready to allocate more cash if needed and that the government would prepare for “every possible outcome”.
He also unveiled lower growth forecasts and said the economy’s productivity remained “stubbornly flat” but that his fiscal targets would be met.
However, his boast that “we are the future” drew howls of derisive laughter and it quickly became clear that his formula means more years of austerity, and public service spending cuts which will continue to hit the most vulnerable – struggling families and the elderly – the hardest.
Hammond has been under pressure in recent months from sections of his party who argue that he is too pessimistic about the UK’s prospects when it leaves the EU. Despite his Remain credentials, he said that Britain after Brexit will be a “prosperous and inclusive economy” which harnesses the power of technological change and innovation to be a “force for good in the world”.
- An increase in the Living Wage to £7.83 an hour from next April.
- A freeze on alcohol duties apart from cheap xtra-strength white cider blamed for a number of deaths.
- Tobacco will rise by 2% above Retail Price Index (RPI) inflation while the minimum excise duty on cigarettes introduced in March will also rise, as will duty on hand-rolled tobacco.
- Vehicle excise duty for diesel cars that do not meet latest standards to rise by one band in April 2018, but will not apply to van owners. Existing diesel supplement in company car tax will rise by 1%, and £220m will be set aside for a clean air fund
- A speed-up in housing developments, giving more help to small builders.
- More money for teacher training in England and extra cash to boost the numbers of students taking maths after the age of 16. And in a nod to younger voters, discounted rail cards will be extended.
- Modest changes to the roll-out of Universal Credit across the UK by abolishing the initial seven-day waiting period and making it easier to claim online, a re-think expected to cost £1.5b.
- Refunds on VAT for Scottish emergency services.
- A further £2.3bn for investment in research and development. Extra cash to boost the numbers of students taking maths after the age of 16.
- Support for electric cars including a £400m charging infrastructure fund, and £300m to connect HS2 with rail improvements in the North of England.
The growth forecast for 2017 was downgraded from 2% to 1.5%, and GDP downgraded to 1.4%, 1.3% and 1.5% in subsequent years before rising to 1.6% in 2021-22. The tax-free personal allowance is to rise to £11,850 in April 2018. And in another gift to the well-paid, the higher-rate tax threshold will increase to £46,350.
Short-haul air passenger duty rates and long-haul economy rates will be frozen, paid for by an increase on premium-class tickets and on private jets. In England only, a £40m teacher training fund will be created, worth £1,000 per teacher.
And £320m will be invested in former Redcar steelworks site, a new devolution deal for the West Midlands, and a £1.7bn transport fund for city regions.
The “dead man walking” jibe was made by both Conservative – off the record, of course – and Labour frontbenchers. Amongst Tories, the question is whether a lacklustre Budget will finally give Theresa May an excuse to sack him if his measures unravel, as they did last time around.
Labour Leader Jeremy Corbyn said that the Budget was a “disaster,” telling Hammond: “This just doesn’t cut it.”
He added: “Hardest hit will by the low-paid, struggling families and women. Shame on him.”