Autumn Budget 2017: key points
Philip Hammond has cut stamp duty for first- time buyers as part of a package of measures to boost the economy, despite a sharp cut in forecasts for economic growth as the UK prepares to leave the European Union.
In the government’s first major economic announcement since Theresa May lost the Conservatives’ majority at the election, the chancellor axed stamp duty for the majority of first-time buyers, pumped an additional £2.8bn into the NHS in England and earmarked £1.5bn to cut waiting times for universal credit claimants.
At the same time, Hammond revealed that the economy would grow much more slowly than he expected at the time of the last budget in March, shaving around half a percentage point a year off his growth forecasts for the coming years.
“We understand the frustration of families where real incomes are under pressure. So, at this budget, we choose a balanced approach,” Hammond said.
To pay for the raft of funding measures announced on Wednesday, the chancellor said he would sacrifice some of the wiggle room he created a year ago to smooth a potential hard Brexit.
Hammond said he would still be able to meet his target to cut the deficit to below 2% of GDP by the end of the parliament, albeit with less room to spare than before his budget measures are taken into account.
“I reaffirm our pledge of fiscal responsibility and our commitment to the fiscal rules I set out last autumn. But now I choose to use some of the headroom I established then,” he said.
But although Hammond said the future was “full of new opportunities” around Brexit, he also set aside an additional £3bn in funding for any unforeseen consequences for the economy. He also said he would allocate more sums if needed.
Set against a backdrop of growing splits between senior cabinet ministers over talks to leave the EU, Hammond had limited political cover for any missteps. Alongside a weakening economic picture amid Brexit, he was not expected to deliver any radical policy announcements on Wednesday but announced a raft of new funding proposals.
The £2.8bn package of measures for the NHS will see £350m immediately allocated to allow trusts to plan for the winter, while £1.6bn will be given in 2018-2019 and the rest coming in 2019-20. The chancellor did not allocate specific funding to raise public sector pay, despite intense pressure to do so. Instead, he said he would allocate additional funding should independent pay bodies say nurses should get a pay rise.
Hammond said he would help to boost the construction of new homes to 300,000 a year on average by the mid-2020s, up from 217,000 last year in the “biggest annual increase in housing supply since 1970”. To do that, he said the government would provide at least £44bn of capital funding, loans and guarantees to support the UK’s housing market over the next five years.
The measures follow calls from MPs across the political spectrum, including some of the chancellor’s senior cabinet colleagues, to make a break with austerity to fund a massive expansion in housebuilding. Sajid Javid, the communities secretary, had previously suggested the government should borrow £50bn to invest in housing.
However, cut in economic growth forecasts will prove troubling to the chancellor as the UK leaves the EU. Growth will slow to 1.5% this year, down from 1.8% in 2016, slowing to 1.4% in 2018.
However, the chancellor said the UK “continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down”.