Philip Hammond pledged to build for Brexit today as he trumpeted higher growth forecasts and lower government borrowing.
Delivering his Spring Statement, the Chancellor seized on good news on the economy and tax revenues to insist there is ‘light at the end of the tunnel’ for the UK.
Mr Hammond confirmed that the government’s day-to-day spending is finally back in the black after a decade of belt-tightening following the credit crunch.
He also dropped a major hint that the purse-strings could be loosened over the coming years to prop up public services – while warning against throwing away all the British people’s hard work by splurging money.
Delivering his Spring Statement, the Chancellor seized on good news on the economy and tax revenues to set out an optimistic vision for the UK’s future
The independent OBR has upgrade its economic forecasts for the UK economy next year
Mr Hammond told MPs the government was finally hitting its target for wiping out the deficit
There are not expected to be any firm commitments to boost spending on the NHS, despite calls from across parties.
For the first time in decades the Spring event is not a full fiscal package – as the Budget has been moved to the end of the year.
Instead Mr Hammond is only giving a brief 15-minute update to Parliament on the economy and public finances.
Mr Hammond condemned Labour’s ‘doom and gloom’ about the economy, and made fun of his own ‘Eeyore’ reputation saying he was at his most ‘Tigger-like’ today.
The Chancellor said he had been struck by the resilience of the UK economy since the EU referendum.
Mr Hammond said the government was making ‘solid progress towards building an economy that works for everyone’ with growth every year since 2010.
He accused Labour of ‘relentlessly talking Britain down’ with ‘doom and gloom about the state of the nation’.
Last November, a hole was knocked in Mr Hammond’s plans when the Office for Budget Responsibility slashed its predictions for growth.
But the OBR upgraded its estimates for growth this year today.
Mr Hammond said borrowing was due to fall in every year of the forecast.
Debt is forecast to fall as a share of GDP from 2018-19 and the OBR has revised down debt and borrowing in every year. Borrowing is now forecast to be £45.2billion this year, £4.7billion lower than forecast in November.
The OBR said last month it expected borrowing in 2017/18 to undershoot its previous prediction by a ‘significant’ margin.
Speaking at the weekend, Mr Hammond cautioned that, at 86.5 per cent of GDP, Britain’s national debt remains ‘higher than the safe level’.
Philip Hammond (pictured leaving Downing Street today) said Britain’s economy is set to confound the sceptics during Brexit
Debt is expected to be revealed as below estimates after borrowing came in significantly under predictions
‘There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years,’ said the Chancellor.
‘That is a very important moment for us but we are still in the tunnel at the moment.’
Labour has called on the Chancellor to use the statement to declare a halt to austerity measures and ‘end the financial crisis in our public sector’.
The Chancellor will also confirm that day-to-day government spending is in the black for the first time since the 2008 financial crisis.
Chancellor announces VAT overhaul to help small firms
Entrepreneurs and small business owners look set to benefit from an overhaul in the VAT system which Philip Hammond is due to announce today.
The system would lead to a gradual introduction of VAT on businesses with an annual turnover of more than £85,000.
According to The Daily Telegraph, Mr Hammond has said he wants to introduce 20 per cent VAT above £85,000 in ‘steps’. There is a ‘cliff edge’ in the current system which means that businesses are hit with a sudden bill if their turnover goes over the £85,000 threshold.
It means companies try to stay below the limit because they do not have an incentive to risk narrowing their profit margins.
However, he will warn there can be no easing up on spending cuts while Britain is saddled with a national debt approaching £2trillion.
Nick Timothy, Theresa May’s former joint chief of staff, has urged the Chancellor to announce the ‘end of austerity’.
But Nicky Morgan, chairman of the Commons Treasury committee, said this would be premature.
On the Conservative Home website yesterday, she wrote: ‘If we relax too much then we undermine our criticism of the last Labour Government for not ‘fixing the roof while the sun shines’.’
Mr Hammonnd’s Treasury deputy Liz Truss has said there will be ‘no red box, no rabbits out of the hat and no tax changes’.
Although Mr Hammond will not be making tax or spending announcements, he is set to reveal consultations with far-reaching effects.
These include a review to consider if single-use plastics and chewing gum should be taxed while the long-term impact of an ageing society will be examined.
Tory MPs also want more cash for defence and the Chancellor has acknowledged ‘pressures’ in this area.
He will, however, risk re-opening a row about the treatment of small business when he confirms plans to review VAT rules.
Last year, he axed a bid to slash the threshold from £85,000 to £25,000 after a backlash from Tory MPs.
But the Chancellor will ask officials to look at tapering the need to register VAT to avoid an immediate bill of £17,000 for firms going through the £85,000 barrier.
Prime Minister Theresa May (pictured in the Commons yesterday) is negotiating the Brexit deal with the EU
Hammond to announce consultation on cracking down on environmentally damaging single-use plastics
Michael Gove (pictured in Downing Street in January) has championed environmental lcauses since he was brought back to the Cabinet last year – and picked himself up a reusable coffee cup
Fresh taxes could be imposed to crackdown on the use of single use plastics, Philip Hammond is expected to announce today.
Theresa May has pledged to scrap all avoidable plastic waste by 2042 as part of her mission to transform the Tories into a party which champions the environment.
The Chancellor is expected to announce a consultation which will look at how the taxation system can be used to tackle the widespread use of single-use plastics.
The Tories have said they want to build upon the success of the 5p plastic bag charge, and have plastic cutlery, straws and single-use coffee cups in their sights.
Speaking at the weekend, Mr Hammond said: ‘Single-use plastics waste is a scourge to our environment. From crisp packets to coffee cups, each year the UK produces millions of tonnes of waste which is neither recyclable nor biodegradable.
‘We are determined to create an environment that is fit for future generations. By working with industry, innovators and the public I am confident we can bring about real change.’
Ever since Michael Gove was brought back to the Cabinet as Environment Secretary last year the Tories have championed environmental causes.
But they have faced criticism for not bringing in a latter levy – a charge for single use coffee cups.