Chancellor Philip Hammond declared “The era of austerity is finally coming to an end” as he announced a raft of measures designed to help households, businesses and the high street.
He said the Office for Budget Responsibility's predictions on the economy and employment for the coming years and the reduction of national debt over the austerity years, meant more money was available. However he warned the country was at a pivotal moment in its history with Brexit negotiations.
As a result, he said he was holding some fiscal headroom in reserve and funding for Government departments’ Brexit preparations increased from £1.5bn to £2bn.
He also said that he reserved the right to make the spring statement a full budget should the Brexit negotiations have significant impact on the economy.
He announced that at the National Living Wage will rise by 4.9 per cent, from £7.83 to £8.21 an hour, from April 2019.
Income tax personal allowance will rise to £12,500 from April 2019, while the higher rate income tax threshold to rise to £50,000 at the same time. Both will be indexed to inflation from 2021/2022.
Tax on beer, cider and spirits will be frozen for a year, but tobacco tax will rise by inflation plus two per cent and wine duty by inflation. Fuel duty too will be frozen with no rises – for the ninth year in a row.
Remote Gaming Duty will increase to 21 per cent for online gambling from 2019.
He said an extra £1bn will be ploughed over five years into the Universal Credit benefit programme to ease transition problems.
On housing, Stamp Duty will be abolished for all first-time buyers of shared ownership homes worth up to £500,000 to bring them in line with ordinary first time buyers.
At the same time he unveiled an extra £500m for the Housing Infrastructure Fund for councils, to promote the building of 650,000 more homes.
To help the high street he said business rates would be cut by a third for two years for shops, pubs, restaurants and cafes in England with rateable value of £51,000 and under.
And he announced a £650m Future High Streets Fund co-funded by the Government to help councils improve high streets.
Tax-avoiding online businesses will be hit with a UK Digital Services Tax from April 2020 targeting the giants with more than £500m in global revenues.
For businesses, smaller firms’ contribution to apprenticeship levy will be cut from 10 per cent to five per cent.
Annual investment allowance will be increased from £200,000 to £1m for two years.
He unveiled a £420m payment to tackle potholes, bridge repairs and other minor road works immediately.
For schools he announced a one-off £400m payment to schools to allow them to buy kit.
On health, NHS funding is to rise £20.5bn over the next five years. And a new mental health crisis service to be included in the NHS 10-year plan, while air ambulance services will get £10m.
The Budget got a guarded welcome from the business community with measures to help
Mike Cherry, Federation of Small Businesses National Chairman, said: “This is the most small-business-friendly budget that this Chancellor has delivered. He has listened to our requests across many areas of tax and public policy, putting him firmly on the side of Britain’s small businesses.
“On the tax front, small firms up and down the country will be pleased to see the VAT threshold frozen for two years. FSB was credited in the speech for our campaign on this, stopping an over-reach which would have created a mountain of bureaucracy and a tax-hike for more than a million businesses.
"Small businesses on our high streets that cannot get Small Business Rate Relief will be delighted with the significant discount for the next two years, which on average will help these businesses to the tune of almost £2,000 each, but potentially up to around £16,000 off small businesses facing the biggest bills.
"The decision to protect and refocus the Employment Allowance means that small firms will use the £3,000 of help to increase staff hours, improve pay and meet the rising costs of the National Living Wage, boosting jobs and productivity.”
Babs Murphy, chief executive of the North & Western Lancashire Chamber of Commerce said: “This is a huge win for the Chamber network. We have campaigned tirelessly on behalf of the business community to ensure the chancellor provides businesses with a strong incentive to invest during the BREXIT process.
“We know the uncertainty around Brexit continues to weigh on business, but we are delighted that the government has recognised better productivity, skills and connectivity are all things that the UK government must invest in regardless of the eventual Brexit deal. Addressing the broken business rates system, Apprenticeship Levy, connectivity, and the steep cost of doing business will help remove many of the domestic barriers to growth. This Budget goes a long way to provide businesses with the support and confidence they need to invest and grow right now”
Tony Medcalf, tax partner at Blackpool-based MHA Moore and Smalley, said: “This was a budget where the chancellor looked to turn the heating back on after years of spending freezes.
“The chancellor sought to back up the prime minister’s ‘austerity is over’ message with spending announcements on road repairs, the NHS, social care, housing, schools and defence.
"In that sense it became a bit of a ‘sticking plaster’ budget for long-starved government departments.
“However, the business community will welcome the increase in the annual investment allowance from £200,000 to £1m for two years.
“That should encourage greater capital investment from businesses in new infrastructure, plant and machinery.
“Small businesses will also welcome moves to lower the contribution towards the cost of apprenticeships, while high street retail businesses will benefit from immediate business rates relief reductions.
“On personal tax rates, the bringing forward to April 2019 of the proposed increases in the personal allowance for basic rate and higher rate tax payers was a surprise.”