Budget 2017: What to expect from new economic plans

Philip Hammond has presented his Budget plans to Cabinet at an early-morning meeting in Downing Street ahead of a statement which Treasury sources said would provide an 'upbeat' assessment of the UK's economic prospects after Brexit.

Chancellor Philip Hammond will deliver the Spring Budget later today. Picture: PA

Mr Hammond’s first Budget as Chancellor is expected to include help for companies facing hikes in their business rates, as well as additional money for social care, schools and science.

But the Chancellor will admit more austerity is in the pipeline, making clear he is ready to take further “difficult decisions” on tax hikes and spending cuts, despite acknowledging many voters are still feeling the pinch 10 years on from the financial crash of 2007/08.

What the opposition are saying

Chancellor Philip Hammond will deliver the Spring Budget later today. Picture: PA

Labour is putting pressure on the Chancellor to provide additional money for the NHS after a winter of crisis in the service.

And, with the Budget falling on International Women’s Day, shadow chancellor John McDonnell said Mr Hammond should put an end to policies which have seen women bear the burden of 86% of austerity cuts over the past seven years.

Mr Hammond received an eve-of-Budget boost from the Organisation for Economic Co-operation and Development, which upgraded its growth prediction for the UK from 1.2% to 1.6% for this year, a judgment expected to be repeated in official forecasts from the Office for Budget Responsibility.

He had a message of encouragement from his predecessor George Osborne, who tweeted: “Good luck Philip with the first of what I hope will be many successful budgets. Standing there with that red box is quite a moment. Enjoy it!”

Chancellor Philip Hammond will deliver the Spring Budget later today. Picture: PA

Mr Hammond responded: “Thanks, George. I’m looking forward to it.”

What we can expect

The Chancellor is expected to tell MPs the Government’s economic programme is laying the foundations for a “stronger, fairer, better Britain” outside the EU.

He will highlight plans to invest in new schools, including free schools and grammars, as a mark of determination to do everything he can to help ordinary working families.

But while some analysts have calculated higher tax receipts could give him a £45 billion windfall over the next five years, the Chancellor has insisted there will be no Budget giveaway, with any new spending expected to be funded through limited tax rises.

Speaking at the weekend, Mr Hammond made clear his priority was to build up a war-chest to deal with the uncertainties surrounding Brexit, saying he wanted to ensure there was enough “gas in the tank” for the coming years.

The potential for turbulence was underlined by the OECD which, despite raising its UK growth forecast for this year, left its prediction it will fall back to just 1% in 2018 unchanged.

Mr Hammond is reported to be preparing to announce an additional £1 billion for social care in England over the next two years, but is expected to resist demands from Labour and the British Medical Association for a large cash injection for the NHS.

Faced with a threatened revolt by Conservative MPs, ministers have already indicated there will be measures in the Budget to mitigate the impact on firms facing large rises in business rates as a result of the latest revaluation.

While the Government argues the majority of companies will see their rates fall or remain unchanged, the Institute for Fiscal Studies has estimated firms in London will see an average rise of 11%, taking £800 million a year out of the capital.

One option said to have been under consideration for increasing taxes to pay for the measures is raising the national insurance class 4 rate, paid by the self-employed, by 3p in the pound, bringing it in line with the 12% tax rate paid by employees, which could bring in about £1 billion.

In what will be his first and last spring Budget, having announced last November that he intended to move the annual parliamentary setpiece to the autumn, Mr Hammond is also reported to have been looking at a possible increase in duties on alcohol.

Ahead of Wednesday’s statement, Mr Hammond has already set out plans for £500 million for additional spending on schools in England, with £320 million for 140 new free schools, including new grammar schools promised by Theresa May.

Mr McDonnell said the Chancellor should tackle chronic low pay and guarantee funding for the NHS and social care, to make the Budget “a break from the past, and not a continuation of the same failed economic policies of the last seven years.”