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Budget 2018: What Philip Hammond will announce for the economy


Philip Hammond will announce his Budget later today where he is expected to focus on benefits, pensions and the NHS.

After weeks of turmoil within the Conservative party over Brexit, Tory MPs will be looking to the Chancellor to raise party morale.

Among the measures already leaked by the treasury is extra money going into mental health services, more money for green spaces with plans to plant more trees as well as a £30 billion pledge to improve roads.

Philip Hammond will deliver his Budget on Monday afternoon (Picture: Getty)

And Mr Hammond is expected to respond to Theresa May’s declaration in her Conservative Party conference speech that the era of austerity was finally ending.

It is expected to be his final Budget before Brexit, however on the eve of the announcement, the chancellor revealed that in the event of a no-deal break with the EU, he would be forced to tear up his plans and institute an emergency budget, while setting the economy on a ‘new direction’.

Here are the main things to look out for in Philip Hammond’s annual financial statement today:

The NHS

Mr Hammond will have to find a way to fund the £20 billion NHS boost promised by Theresa May in June (Picture: AFP/Getty)

Mr Hammond has to fund the £20 billion-a-year increase in NHS funding in England over the next five years that Theresa May promised in June.

This suggests taxpayers will need to contribute a ‘bit more’ to pay for it, but ministers have yet to say where exactly the money will come from.

Mr Hammond was handed a windfall of some £13 billion due to better-than-expected borrowing figures, easing some of the pressure to put up taxes.

However his statement will be closely watched to see where he does decide to apply the pain.

Among pledges to improve the NHS expected to be announced today is a £2 billion increase in funding for mental health services.

The additional funding for mental health will be used to pay for the provision of support in every major A&E department, as well as more specialist ambulances and school mental health teams.

Pensions tax relief

Stopping tax reliefs to wealthy pensioners is one way the Chancellor could get more funding for the NHS (Picture: Getty)

One option for getting more money to fund the NHS could be a raid on the tax reliefs given to pensions savers, although that would be likely to provoke a fierce backlash from Tory MPs.

Tax breaks for pensions savings predominantly benefit millions of middle and high earners.

Mr Hammond suggested he had them in his sights at the recent IMF meeting in Bali when he described the £39 billion-a-year cost to the Treasury as ‘eye-wateringly expensive’.

But with the party already at war over Brexit, it’s likely Mr Hammond will be hoping to avoid any opposition from his own MPs.

Universal Credit

MPs are calling for the Department for Work and Pensions to stop the roll-out of Universal Credit (Picture: PA)

MPs yesterday called for the Government to stop the national Universal Credit roll-out because they think it will be ‘woefully inadequate’.

The cross-party Commons Work and Pensions Committee want a delay on the new system until mid-2019 in order to ensure claimants are not pushed ‘over the edge’ and into debt.

The committee does not think support offered to people transferring to UC, which will merge six benefits into one, is adequate and want this to be fixed.

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Conservative MPs are among those growing increasingly concerned after repeated complaints from low-income families in areas where UC has already been introduced who are being driven into debt because of delays in issuing the new payments.

The Department for Work and Pensions said it had already tried to address the concerns of the committee by creating of a new £51 million partnership with Citizens Advice to deliver universal support.

But shadow chancellor John McDonnell called on Tory MPs to join Labour in voting down the Budget if the chancellor fails to halt the UC roll-out, which he said would ‘forcing people into poverty’.

Philip Hammond has signalled he is ready to find extra cash to ease the transition but it is not clear whether it will be the £2 billion that Tory rebels, including Iain Duncan Smith, are calling for to protect the hardest hit groups.

Digital tax

It’s time Facebook and Google paid their fair share in taxes, Hammond will say (Picture: Getty)

Mr Hammond has been talking tough about the need for Facebook and Google to pay their ‘fair share’ of tax in the UK.

He signalled his determination to pursue a digital tax to ensure the internet giants pay a greater share of their profits into the Exchequer.

While he acknowledges concerted international action is the best way to get them to cough up, he has expressed frustration at the slow rate of progress on reaching an agreement.

Defence

Mr Hammond has clashed with Defence Secretary Gavin Williamson over funding for the Armed Forces in the past (Picture: PA)

The Chancellor was involved in a series of clashes with Defence Secretary Gavin Williamson over funding levels for the armed forces, but recently things appear to have gone quiet on that front.

Mr Hammond recently indicated there would be extra cash in the Budget for the armed forces.

‘You are looking at someone who was defence secretary for three years. I absolutely get the problems and the challenges in defence,’ he said.

A long-term settlement will have to wait until the spending review next year but Tory MPs are hoping he will find some short-term cash to help them through.





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