UDGET 2020: DELIVERING ON OUR PROMISES TO THE BRITISH PEOPLE
Today’s Budget delivers on our promises to the British people and gets things done. It is a Budget delivered in challenging times, that delivers security today and lays the foundation of prosperity for tomorrow.
Many will be worried about the impact of Covid-19 on their lives. But because the foundations of our economy are strong, today we have been able to set out one of the most comprehensive economic responses of any government anywhere in the world, to date. Though this virus will have a significant impact on our economy it will be temporary.
But this is not the only challenge we face – we have just had an election where people voted for change.
This Budget delivers our promises to the British people – it is the Budget of a Government that gets things done. We promised to:
- let hard working families keep more of what they earn – this gets it done.
- back business and innovate, invest and trade – this gets it done.
- invest in science and research – this gets it done.
- deliver green growth and protect our environment – this gets it done.
- level up, with new roads, railways, broadband and homes – this gets it done.
- record funding for our NHS and public services – this gets it done.
Today’s Budget is the first of this decade, the first in 50 years outside the EU and first of this government. At the election we said that we needed to be one nation, and while talent is evenly spread, opportunity is not.
That election gave a clear verdict. Now the People’s Government is delivering a Budget which delivers on our promises to the British people – it is a Budget of a government that get things done.
The independent OBR has published its outlook for the economy and public finances:
Key points on the economy:
- Growth will be 0.5ppts higher over this year and next thanks to the steps we are taking today.
- Our economy will grow in every one of the next five years: 1.1% in 2020, 1.8% in 2021, 1.5% in 2022, 1.3% in 2023 and 1.4% in 2024.
- Long-term productivity will increase by 2.5% thanks to our “planned increase in public investment.”
- Unemployment will remain historically low and 500,000 more people to be in work since 2025.
- Wages will grow in real terms in every year of the forecast period.
- Inflation is forecast at 1.4% this year and remain on or around target for the rest of the forecast period.
Key points on public finances:
- We were elected on a manifesto that promised to meet a specific set of fiscal rules and today’s Budget delivers on that promise – with fiscal space of nearly £12 billion in the target year of 2022-23. We will also set the amount the government will spend for the rest of this Parliament within these rules.
- We will review our fiscal framework to ensure we stay at the leading edge of macroeconomic thinking.
- A current budget surplus in every one of the next five years
- Borrowing falling by the end of the Parliament. Borrowing will increase slightly from 2.1% of GDP in 2019 to 2.4% in 2020 and 2.8% in 2021. It falls to 2.5% in 2022, 2.4% in 2023, and 2.2% in 2024.
- Debt will be lower at the end of the Parliament than it is today, falling from 79.4% this year to 75.2% in 2024-25.
We promised to let hard working families keep more of what they earn:
- Putting more money in peoples’ pockets with an over £200 tax cut for the typical family. We will increase the National Insurance threshold to £9,500 this April, benefiting 31 million people with a typical employee saving over £100 in 2020 – the first step to reaching our ambition to increase the threshold to £12,500.
- Increasing the National Living Wage to boost the wages of the lowest paid. The National Living Wage will increase by 6.2 per cent to £8.72 from April. The Budget commits to a new ambitious target for the National Living Wage to end low pay and extend this to workers aged 21 and over by 2024.
- Axing the tampon tax now we have left the EU. We will reduce the cost of essential sanitary products for women in the UK, abolishing the tampon tax from 1 January 2021.
- Freezing fuel duty for a tenth year in a row to help with the cost of living. We will freeze fuel duty for the tenth year in a row saving the average car driver a cumulative £1,200 compared to Labour’s plan.
- Freezing duty rates on beer, spirits, wine and cider helping with the cost of living. This will be only the second time in almost 20 years a government has frozen all these duties.
- Creating an entitlement to Neonatal Leave and Pay to support parents with the stress and anxiety of having a baby in neonatal care. For employees whose babies spend an extended period of time in neonatal care we will provide up to 12 weeks paid leave.
- Helping Universal Credit claimants to repay debts in a more manageable way. We will reduce the maximum rate at which deductions can be made from a UC award from 30 per cent to 25 per cent and give claimants 24 months to repay advances. This will benefit 46 per cent of claimants who will see an average increase to their annual income of £324.
- Reducing reassessments for Personal Independence Payment to avoid unnecessary anxiety. PIP claimants whose conditions are unlikely to change will have an award period of at least 18 months, reducing assessments for over 100,000 people with disabilities per year.
- Protecting access to cash and supporting alternatives to high-cost credit. We will bring forward legislation to protect access to cash and to allow credit unions to offer a wider range of services and products.
We promised to back business and innovate, invest and trade:
- Increasing the Employment Allowance so businesses can grow and create more well-paid jobs. We will help businesses to take on extra staff by increasing the Employment Allowance to £4,000 (increasing it by a third) benefitting over 500,000 businesses and taking 65,000 businesses which will be taken out of NICs altogether.
- Backing entrepreneurs with start-up funding. We will extend the British Business Bank’s Start-Up Loans programme, supporting up to 10,000 additional loans up and down the country.
- Cutting taxes for businesses to allow them to invest and focus on growing their business. We will increase the annual rate of Structures and Buildings Allowance to 3 per cent providing over £1 billion in additional relief for businesses by the end of the Parliament.
- Increasing R&D tax credits to significantly increase private R&D investment helping to reach our 2.4 per cent of GDP by 2027 target. We will increase the rate of Research and Development Expenditure credit from 12 per cent to 13 per cent and consult on whether to allow additional costs to qualify for both R&D tax reliefs.
- Backing our exporters by increasing the lending capacity of UK Export Finance. We will make permanent the additional £2 billion to UKEF at Budget 2018 as well as a new £2 billion lending facility for projects supporting clean growth and a new £1 billion to support UK defence and security goods.
- Reforming Entrepreneurs’ Relief so that it genuinely works in the interests of small business owners. In response to evidence that Entrepreneurs’ Relief has primarily benefited a small number of very affluent taxpayers and done little to generate additional entrepreneurial activity so we will reduce the limit on eligible gains to £1 million as recommended by the Federation of Small Businesses. Over 80 per cent of those using the relief are unaffected. The Resolution Foundation called Entrepreneurs Relief the “worst tax relief in the UK”.
- Encouraging more businesses to employ veterans. We will introduce a National Insurance Holiday for employers of veterans in the first year of civilian employment.
We promised to invest in science and research:
- Increasing public R&D investment to £22 billion per year by 2024-25. This investment is the largest and fastest ever expansion in support of research and innovation, taking direct support for R&D to 0.8 per cent of GDP and placing the UK ahead of the USA, Japan, France and China.
- Boosting funding for our world leading universities and research institutions to attract the brightest and best. We will provide an immediate £400 million from 2020-21 for world-leading research, infrastructure and equipment – a large share going outside the ‘Golden Triangle’. We will also provide £300 million for maths research, doubling the funding for new PhDs.
- Investing £800 million in a new blue-skies funding agency to fund high-risk high-reward science. Modelled on the extraordinary ‘ARPA’ in the US.
We promised to deliver green growth and protect our environment:
- Doubling the amount, we invest in flood and coastal defence to £5.2 billion over six years. Flooding has had a devastating impact so we will double the current investment better protecting 336,000 homes, we will also provide £120 million to the Environment Agency to repair assets damaged by recent floods.
- Boosting recycling and reducing plastic pollution by introducing a new plastic packaging tax. From April 2022 the plastic packaging tax will incentivise the use of recycled plastic and help reduce the scourge of plastic waste. We will set the rate at £200 per tonne of plastic packaging that contains less than 30 per cent recycled plastic.
- At least doubling the size of the energy innovation programme. Research and innovation will reduce the costs of net zero and put the UK at the forefront of new technologies.
- Establishing a £800 million Carbon Capture and Storage Fund to capture emissions enabling our manufacturing heartlands to become leaders in green industry. The fund will establish CCS in at least two UK sites, one by mid-2020s and a second by 2030 – possible cluster sites include Teesside, Merseyside and St Fergus.
- Helping people to make the transition to cleaner, greener cars. We are consulting on bringing forward the phase-out date for the sale of new petrol and diesel cars and vans from 2040, but meeting this target will require a combination of measures, so to support our transition to zero emission vehicles (ZEVs) we will: exempt zero-emission cars from the Vehicle Excise Duty expensive car supplement and publish a call for evidence on VED, which will include how it can be used to reduce vehicle emissions; extend the 100 per cent First Year Allowance for ZEVs; and provide £533 million to extend to 2023 Plug-in Car Grants for zero emission cars and ultra-low emission vans, taxis and motorbikes.
- Providing £500 million over the next five years to support the rollout of a fast-charging network for electric vehicles – ensuring drivers will never be more than further than 30 miles from a rapid charging station. To ensure this money is spent effectively we will complete a comprehensive review into elective vehicle charging infrastructure.
- Making polluters pay by removing the entitlement to red diesel outside protected categories. We will use the tax system to incentivise users of polluting diesel fuel to improve their energy efficiency by removing the entitlement on red diesel from April 2022 except in agriculture, fish farming, rail and non-commercial heating sectors. The harmful emissions from sectors affected are equivalent to over 10m tonnes of CO2 and almost 10 per cent of the most noxious gases polluting the air of cities like London.
- Investing £304 million to enable councils to improve air quality. We will help local authorities to reduce nitrogen dioxide emissions with this investment bringing the total amount that government has provided to affected local authorities to £880 million.
- Announcing a Nature for Climate Fund which will invest £640 million in tree planting and peatland restoration. Our plans will see the rate of tree planting increase by over 600 per cent. The Budget has also announced the Nature Recovery Network Fund to partner with businesses and local communities to restore wildlife.
- Trebling funding for the Darwin Plus programme helping to protect and conserve the globally significant biodiversity found in the UK’s Overseas Territories. This builds on £220 million for bio-diversity conservation in developing nations and the doubling of UK climate finance announced last year.
We promised to deliver the housing people need:
- Setting out an ambitious package to build quality homes this country needs. The Budget announces £9.5 billion for the Affordable Homes Programme helping to prevent homelessness and help people to get on the housing ladder and taking the total funding to £12.2 billion from 2021-22. This will be the largest cash investment in affordable housing in a decade. We will also publish a White Paper on planning in line with our aim to support at least a million more homes
- Creating a new £1 billion fund to remove unsafe cladding so residents feel safe and secure. Having taken expert advice, we will provide this additional funding to remove non-Aluminium Composite Material cladding from residential buildings above 18 meters to ensure people feel safe in their homes.
- Ending rough sleeping in this Parliament with £643 million of targeted support. Most recent rough sleeping stats show a 9 per cent fall on the previous year, this Budget will build on this to provide up to 6,000 beds and a substance misuse treatment services with the full capacity to help 11,000 people a year. This will help the most vulnerable people across England, a key step towards ending rough sleeping. We will fund our rough sleeping policies through the non-UK resident Stamp Duty Land Tax.
- Bringing more brownfield land into use with a new £400 million Brownfield Housing Fund. Pro-development councils and ambitious Mayoral Combined Authorities will be able to bid into this fund enabling them to create more homes.
- Speeding up and improving the planning system to unlock land for the homes people need. We will publish a Planning White Paper setting out how it will bring the planning system into the 21st Century and rethink planning from first principles.
We promised to level up, with new roads, railways and broadband:
- Investing record amounts – triple the average over the last 40 years – to build the railways and roads of the future. A total of £640 billion of capital investment will be invested in roads, railways, communications, schools, hospitals and power networks. Over the Parliament, public sector net investment will be triple the average public sector net investment over the last 40 years.
- Developing the West Midlands Rail Hub and a brand-new station in Cambridge South delivering significantly better rail links in the region. We will invest £20 million to develop the Hub, progressing plans for a major programme of improvements to rail services between the regions’ cities.
- Providing £50 million to improve accessibility for disabled people at train stations, so that our transport network is open to everyone. As part of our £300 million Access for All Fund, we will improve accessibility at 12 more train stations across the country.
- Making an unprecedented investment in urban transport. 12 city regions will share over £1.2 billion through the Transforming Cities Fund to deliver a range of local schemes including in Preston, Plymouth, Tyne and Wear. We will also provide £4.2 billion for longer-term, London-style funding settlements for eight Mayoral Combined Authorities like Tees Valley, Tyne Wear and West Yorkshire.
- Giving the green light to new strategic road schemes helping everyone get around. The Budget confirms the development of 15 local road upgrades across the country helping to reduce congestion. We are investing over £27 billion to 2025 on the Second Road Investment Strategy. To decarbonise the transport sector, we expect 97 per cent of cars and vans to be zero emission by 2050.
- Delivering £2.5 billion to fill millions of potholes over the next five years – speeding up journeys, reducing vehicle damage and making our roads safer. We have set up a new Potholes Fund, which will provide £500 million a year (a 50 per cent increase) fund to fix 10 million potholes a year.
- Delivering next generation broadband to the most difficult to reach areas of the UK with a record £5 billion of funding. This funding will support gigabit-capable broadband which is 40 times faster than standard superfast broadband benefitting 5 million premises and the hardest to reach parts of the country.
- Improving phone reception in rural places with a £1 billion investment in the Shared Rural Network. We will ensure rural areas are not left behind and will provide £510 million of funding – which will be more than matched by industry so 95 per cent of the UK will have high quality 4G mobile coverage.
- Setting up a new economic campus in the North and review the Green Book on government investment. We will establish a new economic campus in the north of England, representatives in every nation and review the Green Book, the manual for investment to ensure we invest across the UK.
- Launching a £30 million Changing Places Fund, to build more accessible toilets and ensure that no one is disadvantaged because of a disability. We will ensure that Changing Places toilets are installed in new public buildings, and launched a £30 million fund to identify sectors where we most need to accelerate the provision of such facilities.
- Providing an additional £242 million for four City and Growth across the Devolved Nations. This builds on the £2.5 billion already allocated to existing deals and ensures that all areas of Scotland, Wales and Northern Ireland are covered by a deal.
- Agreeing a devolution deal with West Yorkshire and a directly-elected Mayor from 2021. This deal will provide £1.2 billion of investment for the area over 30 years as well as developing significant new powers to the area on transport planning and skills.
We promised to invest in better public services:
- Delivering on our promises with £5.4 billion more for the NHS and health service– writing the cheque for 50,000 more nurses and 50 million more GP surgery appointments per year. We will enshrine into law cash boost of £33.9 billion by 2024. But this Budget goes further by investing £5.4 billon in this Parliament to support the recruitment, retraining and retaining of 50,000 more nurses including a new nursing maintenance grant for all nursing students.
- Providing nearly £700 million of new funding in 2020-21 to improve hospitals across England. Alongside our plan to build at least 40 new hospitals – the largest hospital building program in a generation – we will increase DHSC’s capital budget to allow more vital improvements to hospitals.
- Addressing the ‘taper problem’ in doctors’ pensions, which causes many to turn down extra shifts for fear of high tax bills. Delivering on our manifesto commitment, we are taking the vast majority of doctors out of the tapered annual allowance, including up to 98 per cent of senior medical consultants– a £2billion commitment that supports hard-working doctors.
- Investing in further education, the arts and sports in schools to ensure everyone gets the best start. We will invest £1.5 billion over five years to refurbish further education colleges. The Budget also provides £29 million a year by 2023-24 to support primary school PE teaching, ensuring children are getting an active start to life and £90 million a year to introduce an Arts Premium to secondary schools in England – averaging out as £25,000 per secondary school for three years.
- Confirming every region in the country will have funding for specialist 16-19 math schools. This will get more young people learning form the best mathematicians.
- Investing £8 million in local football facilities to provide quality football facilities in areas with the greatest need. This funding will be matched by the Premier League and Football Association.
- Committing to a new £3 billion National Skills Fund to ensure people gain the skills they need for rewarding well-paid jobs. We will consult with people and employers on how to target the fund in the best way.
- Increasing funding for counter-terrorism and our intelligence community to keep people safe. This includes £83 million for counter-terrorism policing and £31 million for the UK intelligence community. We will also provide an additional £67 million so our intelligence agencies can build on their world-leading technological capabilities and protect the UK’s security.
- Supporting veterans with £10 million for Armed Forces mental health charities. We will commit £10 million to Armed Forces Covenant Fund Trust to support veterans with mental health needs.
We promised to strengthen our United Kingdom…
- Scotland. An additional £640 million in Barnett consequentials. £10 million for R&D to decarbonise UK distilleries including the Scotch Whisky sector. GREAT will fund a £1 million campaign to promote the Scottish food and drink sector.
- Wales. An additional £360 million in Barnett consequentials. Building the Pant-Llanymynech bypass. Legislate to allow S4C to recover any VAT it pays in full.
- Northern Ireland Northern Ireland an additional £210 in Barnett consequentials.