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Philip Hammond’s focus of his first Budget of the new parliament was an ambitious pledge to fix Britain’s housing market. But an investment package combined with the promise of planning reform stamp duty cuts for first-time buyers were overshadowed by the biggest downgrade in the UK’s economic prospects since the financial crisis.
Here are the key points at a glance:
The Office for Budget Responsibility has revised down the outlook for productivity growth, business investment and GDP growth over the next five years.
2017: 1.5% (down from 2% forecast in March)
2018: 1.4% (1.6%)
2019: 1.3% (1.7%)
2020: 1.3% (1.9%)
2021: 1.5% (2%)
The fiscal forecasts look better in the short term but worse in the longer-term:
2017-18: 2.4% of GDP (down from 2.9% in March)
2018-19: 1.9% (1.9%)
2019-20: 1.6% (up from 1%)
2020-21: 1.5% (up from 0.9%)
2021-22: 1.3% (up from 0.7%)
Property and housing
Mr Hammond promised to use a £44bn package of investment, loans and guarantees to increase the annual amount of new homes to 300,000 in the middle of the next decade, from 217,000 last year, aided by planning reforms designed to encourage homebuilders not to sit on permissions already granted.
Stamp duty changes to help home buyers
Stamp duty land tax is to be abolished for first-time buyers purchasing a UK home worth up to £300,000, in a reform that official forecasts said would also trigger a rise in house prices.
Higher taxes on second homes
Local authorities in Britain will be able to double council taxes on empty properties, in a move announced by UK chancellor Philip Hammond on Wednesday that will hit people with second homes.
The government promised an additional £2.8bn in funding over the next three years, including a tranche of £350m that would be given immediately to allow trusts to plan for winter. A further £1.6bn will be allocated in 2018-19, with the balance in 2019-20. The chancellor presented it as an exceptional move to help the service cope with an ageing population and technological advances.
The extra cash for 2018-19 is less than half the sum Simon Stevens, head of NHS England, asked for in a high profile appeal earlier this month. Hospital leaders said it would be insufficient to tackle lengthening queues for treatment.
Nor did the chancellor announce any additional funding for social care where gaps in provision are increasing the pressure on hospitals.
Income tax allowance
The personal income tax allowance will rise from £11,500 to £11,850 in April 2018, while the threshold at which the higher rate of tax of 40 per cent applies will rise from £45,000 to £46,350. The changes will save the average basic rate taxpayer £1.35 a week.
Minimum wage increase
Britain’s minimum wage workers will receive an inflation-busting pay rise next April, with the hourly rate going from its current £7.50 an hour to £7.83. However, plans to raise the rate for the over-25s to £9 an hour by 2020 has been derailed by the weaker economy.
Pensions tax relief remained unchanged. The Budget also confirmed the annual allowance for pensions is to increase to £1.03m from next April.
Small businesses applauded a decision to base the annual increases to business rates on the consumer price index, rather than the higher retail price index, which comes after a fierce lobbying campaign. The change was planned for 2020 but will be brought forward to 2018
Enterprise Investment Scheme
The chancellor doubled the investment limit in the Enterprise Investment Scheme (EIS) for knowledge-intensive companies, but said he would ensure that the tax-efficient schemes were not used “as a shelter for low-risk capital preservation schemes”.
Money for the regions
The chancellor said the Budget would result increased spending power for devolved governments, equal to £2bn in Scotland, £1.2bn in Wales, and £660m in Northern Ireland.
He also committed more than £2bn to transport schemes in the north of England and the Midlands as he promised to “get all parts of the UK firing on all cylinders”
The government will provide £600 for every additional pupil taking A-level maths, further maths or core maths at either school sixth forms or further education colleges.
Alongside this “maths premium”, funding will be provided to expand so-called maths mastery (or Singapore-style maths teaching) into another 3,000 primary schools at a cost of £27m.
A tax raid on diesel car buyers, estimated to be worth close to £500m, led a suite of measures to encourage motorists to switch to electric vehicles amid efforts to improve Britain’s air quality.
Despite this the chancellor chose to freeze fuel duty again, a popular measure that costs more than £800m a year to support.