Chancellor Philip Hammond presented a Budget today (22 November) that promised to protect Britain’s finances from a short-term Brexit shock and boost the sluggish growth rate.
In his first set piece Autumn Budget – which is now the central fiscal event of the year – Mr Hammond said the UK’s tax system had to stay competitive, and in a bid to win over young people he axed stamp duty for first-time buyers purchasing a property for up to £300,000.
He kicked off his hour-long speech by talking about getting the nation ready for Brexit.
With the UK preparing for a future outside the European Union, Mr Hammond said the government will "express its resolve to look forwards not backwards".
The chancellor said the UK was working "to achieve a deep and special partnership" with Europe and to ensure the country was ready for every outcome of Brexit negotiations.
Therefore, he said he was setting aside another £3bn for Brexit preparations over the next two years, in addition to the £700m that has already been invested in getting the UK ready to leave the European Union.
He added no-one should doubt the government’s resolve in pushing ahead with Brexit.
However, Mr Hammond said the Autumn Budget was about "much more than Brexit."
It also turned out to be about a huge downgrade to the UK’s growth prospects.
After having to pause while the House of Commons laughed at his quip about prime minister Theresa May's ill-fated conference speech and remark that he had brought a packet of cough sweets "just in case", Mr Hammond announced the Office for Budget Responsibility had cut its forecasts for UK economic growth.
The UK economy is now expected to grow by 1.5 per cent in 2017, a downgrade from the 2 per cent forecast made in March.
In a bid to boost the nation’s growth prospects, Mr Hammond spoke about the National Productivity Investment fund, which provides an additional £23bn of investment over five years to upgrade the UK's economic infrastructure for this century.
The fund will be extended for another year and expanded to be worth more than £31bn.
A further £2.3bn was allocated for investment in research and development and the main tax credit for this was increased to 12 per cent.
Mr Hammond promised a new £2.5bn fund to unlock investment in emerging UK businesses.
He promised the government would facilitate access to this fund for pensions and doubled enterprise investment scheme (EIS) investment limits.
However it wasn’t all good news for EIS as Mr Hammond confirmed the type of companies that could be invested in will be restricted.
Recognising the criticism the government has received for the delivery of universal credit, he announced a £1.5bn package to address concerns about the operation of the system.
He said the seven day waiting period will be removed and the advances system can be accessed within five days.
Housing benefit will be extended for two weeks to cover the overlap, he added.
On tax thresholds, he raised the basic rate income tax threshold to £11,850 in April next year and announced the higher rate threshold will increase to £46,350.
He maintained the VAT registration threshold at £85,000 for the next two years.
But in a possible blow to IFAs currently who don’t have to pay this levy he said the VAT registration threshold was by far the highest in the OECD and while he does want to keep most small businesses out of paying it he will look at reform.
Mr Hammond said he had listened to concerns about the costs of uprating business rates and will bring forward the uplifting of this by the consumer prices index (CPI) not retail prices index (RPI).
It will switch to CPI in April 2018, two years earlier than planned and he claimed that will save business £2.3bn.
Future business rate revaluations will now take place every three years rather than five years, he added.
The chancellor had faced pressure to tackle offshore tax avoidance after the Paradise Papers were leaked earlier this month.
Mr Hammond says HM Revenue & Customs would start to charge more tax on royalties relating to UK sales when those royalties are paid to a low tax jurisdiction, raising about £200m a year.
Turning to housing, on empty property, Mr Hammond said local authorities will be able to charge 100 per cent council tax premium on these abodes.
As widely trailed, Mr Hammond said successive governments have failed to assist with building enough homes to allow young people to climb onto the property ladder and pledged to increase the supply of property.
He said: “When we say we will revive the home owning dream of Britain we mean it.”
Mr Hammond said over the next five years £44bn will be committed to help the housing market and by the mid-2020s there should be 300,000 homes being built every year - the highest level since the 1970s.
Oliver Letwin was tasked with chairing a review of how land is being used for housing.
His review will report by the spring of next year, in time for the financial statement.
If necessary, Mr Hammond said the government will take powers to intervene to ensure land is used for housing.
He pledged one million homes for the Cambridge-Milton Keynes-Oxford corridor.
Finishing his speech, in a bid to help those struggling to buy their first home, Mr Hammond said from today there is no stamp duty for such individuals buying a property up to £300,000 and will be available for up to that amount on homes valued up to £500,000.
emma.hughes@ft.com
