“Austerity is finally coming to an end”, Philip Hammond has pledged in a budget that brings forward tax cuts and ploughs the government’s spare cash into the NHS.
Mr Hammond said his Budget was aimed at helping “the strivers, the grafters and the carers” and would pave the way for a “brighter future”.
And he hinted that an emergency Budget could take place in the Spring, adding: “If the economic or fiscal outlook changes materially in-year I reserve the right to upgrade the Spring Statement to a full fiscal event”.
NHS spending in England will rise by £20.5bn over the next five years, with Scotland getting a £950m windfall from new spending announcements.
The Office for Budget Responsibility (OBR) said the budget represents the biggest government giveaway since 2010.
There had been speculation that a Conservative manifesto pledge to cut taxes by raising income thresholds would have to be put off in order to afford the extra spending on the NHS.
But in a surprise announcement, the Chancellor brought the tax cuts forward, meaning that from April next year, the first £12,500 earned will ba tax free.
The threshold for the 40p tax rate will rise to £50,000 in a tax cut worth at least £130 for 32m workers across the UK.
Speaking in the Commons Mr Hammond said he was promising a “Budget for hard-working families” and told MPs “we have reached a defining moment on this long, hard journey” after repairing the damage to the public finances caused by the financial crash.
But there were signs of a rift on the horizon, with Downing Street insisting that the spending boost would take place regardless of the outcome of Brexit talks, while Mr Hammond referred to a “deal dividend”.
While the Treasury said its spending commitments were fully costed, the Chancellor confirmed that there could be an emergency budget if the UK leaves the EU without a Brexit deal in March next year.
“If the economic or fiscal outlook changes materially in-year I reserve the right to upgrade the Spring Statement to a full fiscal event,” Mr Hammond said.
An additional £500m has been put aside for no-deal preparations, bringing the total government contingency fund to £2bn.
In a bid to encourage company spending in the year after the UK leaves the EU, the tax-free threshold for business investment will shoot up from £200,000 to £1m in the 12 months from April 2019.
Mr Hammond responded to cross-party concern at the impact of welfare reforms on the poorest benefits claimants, committing an extra £1bn over five years to ease the transition to Universal Credit, on top of £1.7bn to reverse cuts to the benefit announced by George Osborne.
The chancellor also announced a new £400m a year tax on tech giants that shift their profits overseas.