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The Guardian - UK
The Guardian - UK
Politics
Andrew Sparrow and Graeme Wearden

Budget 2024 live: Jeremy Hunt cuts national insurance, abolishes non-dom status and raises child benefit threshold – as it happened

Jeremy Hunt Tax Cuts Jack Surfleet ​​Rishi Sunak Sir Keir Starmer Insurance OBR

Early evening summary

And here is an extract from Larry’s piece.

Jeremy Hunt is in favour of delaying the election until the autumn, and it showed. His second budget had all the hallmarks of a holding operation from a government hoping the summer will bring better economic news and leave open the possibility of another package of measures in six or seven months’ time.

Sure, there was the much-heralded cut in national insurance contributions, which formed the biggest chunk of a front-loaded £14bn stimulus package. Certainly, he took every opportunity to have a pop at Labour in a deeply political speech. This will be the last budget before the election, but it did not feel like the last roll of the dice for the government.

Hunt did what all chancellors do on budget day. He accentuated the positive. There was much talk about how the economy had turned a corner, but nothing about how this is on course to be the first parliament in modern times where living standards have fallen. He was keen to say that taxes had been cut by £900 for the average worker as a result of last year’s autumn statement and this year’s budget. He forgot to mention that the long-running policy of freezing thresholds means the Treasury is still sucking spending power out of the economy in this and every year until the end of the decade. The budget tax cuts mean the fiscal tightening for 2024-25 is just over £41bn rather than the £56bn previously planned.

  • Keir Starmer, the Labour leader, used his response to the budget to say that policies implemented by the Conservatives over the past 14 years had left Britain in a “vicious downward spiral”. He said:

The reality is, there is no path to economic stability, no way to a calmer, less chaotic politics, with the party opposite in power.

Because chaos is now their worldview. A mindset that sees Britain’s problems as opportunities they can exploit. Whether, like the chancellor, that’s out of desperation because they can’t solve them. Or whether, like the [Suella Braverman or Liz Truss], they have no intention of solving them whatsoever.

For a party this weak and divided – the end result is always the same. A vicious downward spiral. Chaos feeding off decline. Decline feeding off chaos.

While working people pay the price.

The British people know – this will not stop.

Starmer said little about the specific budget meaures in his speech, although Labour later indicated that it will try to find alternative ways of funding the policy commitments it planned to fund using tax measures now adopted by the Tories. (See 5.57pm.) Starmer ended his speech by challenging Sunak to call a general election for 2 May. But he is unlikely to get his wish. Despite recent chatter about an early election, the consensus at Westminster is that this budget has made that less likely. For a May election, the budget would have needed to function as a springboard. Instead, this one was short on bounce.

On the economic front…

  • Despite Hunt’s various tax cut announcements today, the tax burden will reach a 70-year high of 37.1 per cent of GDP in 2028-29, the Office for Budget Responsibility says. That’s the highest since 1948.

  • The economic outlook has improved slightly since November, even though the UK sank into recession at the end of last year.

    The OBR revised up its forecast for growth this year to 0.8%, up from 0.7% expected before. The OBR then expects growth of 1.9% in 2025, revised up from 1.4%.

  • But according to the Resolution Foundation, the UK’s slow growth means the economy is set to be smaller in real per capita terms at the time of the next election than it was at the previous election in 2019, for the first time ever.

  • The chancellor also has extremely little flexibility to hit his target to have debt falling, as a share of GDP, in five years’s time. His fiscal headroom has shrunk to £8.9bn, which is little more than a rounding error - and arguably just fantasy, as it based on unrealistically tight public spending after the election.

Goodnight! AS and GW

Updated

Budget 2024 calculator: find out if you are better or worse off

Our budget calculator, created with accountancy firm Blick Rothenburg, is now live:

Updated

The two thinktanks with the most clout in budget analysis are the Institute for Fiscal Studies (see 3.50pm) and the Resolution Foundation (see 4.58pm). But here are comments from three other thinktanks.

From Tom Smith, director of economic policy at the Tony Blair Institute

The only sustainable route to lowering the tax burden is to make the investments needed to fundamentally reform the state and the way public services are delivered.

The chancellor’s plans to harness technology to boost public sector productivity are exactly the kind of approach that the UK needs. His new £4.2bn investment over the next 5 years is a good downpayment on realising this potential. But the scale of the investment - equivalent to £840m a year (or 0.03% of GDP) - will not be enough on its own to turn around the UK’s fiscal fortunes.

By contrast, the cuts to national insurance announced today and in the Autumn Statement are worth more than twenty times this amount, and are a stark illustration of where the government’s priorities lie.

The government continues to put the cart before the horse, prioritising pre-election tax cuts over the long-term investment needed to boost growth, transform public services, and create the fiscal space for sustainable tax cuts in the future.

Overall, today’s budget has done little to change the UK’s fiscal outlook, which still assumes taxes will rise to a post-war high and includes a severe squeeze on some public services after the election.

From Ryan Shorthouse, executive chair of Bright Blue, a thinktank for liberal conservatism

The chancellor has set the right path for taxation, focussing on cutting national insurance rather than income tax. This is good, both intergenerationally and economically, since it rewards a younger, working-aged population who derive almost all their income from working, rather than from dividends, rents and pensions.

Frankly, however, the measures to mitigate the perverse ‘double taxation’ of work are too little, too late from the Tories. Instead of the chancellor using his fiscal headroom for tax cuts and reliefs to all sorts of special interests, it would have been fairer and more effective to have just cut national insurance – both for employers and employees – more deeply now …

The bottom line is that taxation, public debt and immigration are all at record levels after 14 years of Conservative governments – the very opposite of what the public voted and expected them to do. The government has failed to take the bold steps necessary to fix this.

From Paul Kissack, chief executive of the Joseph Rowntree Foundation

This was a budget for big earners and big owners. Prioritising capital gains tax cuts for owners of multiple properties is an insult to almost four million people facing destitution in the UK today.

The chancellor stood up at the despatch box today and announced a short term patch up of his government’s own failed systems. He was right to extend the household support fund, which has given essential help for some families at difficult times. But extending a temporary support scheme for a paltry six months doesn’t equate to fixing the fundamental problem that made its existence necessary.

The government is right to acknowledge that deductions from Universal Credit which leave 97% of low income families affected by these loans having to go without essentials are driving hardship in this country. They are right to take action on this dire situation, but they must now commit to a fundamental change in our social security system which guarantees that people can always afford the essentials.

Taxpayers paying £15,000 for damages payout to academic libelled by Michelle Donelan, science department reveals

It cost taxpayers £15,000 to cover damages to an academic science secretary Michelle Donelan had falsely accused of supporting Hamas, her department has said.

The sum was paid “without admitting any liability”, according to the Department for Science, Innovation and Technology (DSIT).

Daisy Cooper, the Liberal Democrats’ deputy leader, said it was a “scandal” that Donelan was not paying the damages herself. Cooper said:

This is nothing short of a scandal and we still don’t know the full legal costs.

If Michelle Donelan had a shred of integrity left, she would pay for this bill out of her own pocket instead of asking taxpayers to pick up the tab.

If she refuses to do so, Rishi Sunak should dock her pay.

Updated

Today’s net giveaway of £13.9bn in the current financial year may help end the recession before an election later this year, City consultancy Capital Economics predict.

But… they also warn that there are likely to be new tax hikes after the election.

The resulting drag on the economy may contribute to more interest rate cuts next year than most expect, bringing Bank of England base rate down from 5.25% now to 3.00% in 2025, they add.

Labour's Jonathan Reynolds says Labour will find 'alternative way' of funding its policies reliant on non-dom revenue

Jonathan Reynolds, the shadow business secretary, has just told Radio 4 that Labour will find “an alternative way” of funding the policies it had planned to fund with revenue from the abolition of non-dom status. He said the money was going towards the NHS, and dentistry in particular. Evan Davis asked him in particular about the non-dom policies, but Reynolds answer implied that Labour would also apply this approach to the policies funded by the extension of the windfall tax on energy companies.

But Reynolds also said it might take the party a few days to find a precise way of funding these policies.

The Tories published a list of the Labour policies they now think are in jeopardy earlier. (See 3.40pm.)

Osborne says Hunt's plan to assess child benefit eligibility on household basis booby trap for next government

Jeremy Hunt announced significant changes to the rules affecting higher earners who want to claim child benefit. Child benefit is worth £24 per week for the oldest child, and £15.90 per week for other children, and overall the new system is going to be significantly more expensive than the current one, costing the Treasury more than £500m per year. This is how Hunt explained it in his speech.

The way we treat child benefit in the tax system is confusing and unfair.

It’s a lifeline for many parents because it helps with the additional costs associated with having children.

And when it works, it’s good for children, it’s good for parents, and it’s good for the economy because it helps people into work.

But we currently withdraw child benefit when one parent earns over £50,000 a year.

That means two parents earning £49,000 a year receive the benefit in full but a household earning a lot less than that does not if just one parent earns over £50,000.

Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system including allowing HMRC to collect household level information.

We will therefore consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.

But because that is not a quick fix, I make two changes today to make the current system fairer …

I confirm that from this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000.

And we will raise the top of the taper at which it is withdrawn to £80,000.

That means no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether.

And because of the higher taper and threshold, nearly half a million families with children will save an average of around £1300 next year.

But some families are set to lose out badly. For example, a couple with one parent earning £45,000 a year, and the other earning £40,000 a year currently qualify for child benefit at the full rate. Under the new system, where a household threshold, not an individual threshold applies, they would get nothing.

And this change (the bit that saves the Treasury money) is not due to come into force until April next year, while the other changes (which cost the Treasury money) come into force this spring.

In his Political Currency podcast, which he co-hosts with Ed Balls, the former Tory chancellor George Osborne says this is a booby trap for the next government. He says:

This whole thing [of] ‘we’re going to have a brand new system for high earners in our country where we’re going to assess their entire household income in order to calculate this child benefit charge. We can’t do it now. But we’ll be bringing it in 2026’. That, I promise you, is a mine placed in the minefields for the future.

Updated

The Office for Budget Responsibility has trimmed its forecst for house price falls this year.

The OBR’s central forecast is for a 2% in average house prices in 2024, slightly under half of the 5% it expected in November.

This is mainly because the OBTR has revised down its forecast for mortgage rates in the next few years.

The average house price in the UK is forecast to fall to slightly under £275,000 in the final quarter of 2024. Supported by falling new mortgage rates, we then expect house prices to grow around 2 per cent in 2026, and around 3½ per cent in 2027 and 2028.

That would see nominal house prices surpass their historical peak in the first quarter of 2027.

What opposition parties are saying about budget

Here are some of the comments from opposition parties about the budget.

From Labour’s Rachel Reeves, the shadow chancellor

The chancellor’s budget has lifted the lid on 14 years of Tory economic failure.

Taxes are still rising, prices are still going up in the shops, and mortgages are higher.

Nothing Jeremy Hunt has said today changes that. It’s time for change. It’s time for an election.

From Ed Davey, the Lib Dem leader

This is a bottom-of-the-barrel budget from a Conservative government that has given up on governing.

Rishi’s recession is being followed by Hunt’s hangover, with years of unfair tax hikes while local health services are stretched to breaking point.

This udget had nothing to offer for people seeing their mortgage soar due to Conservative chaos or being left waiting for months in pain for NHS treatment.

The public will see this for what is: a desperate last throw of the dice by a Conservative government that has neglected the NHS, trashed the economy and overseen a record fall in living standards. It couldn’t be clearer that we need a general election now so voters can finally kick this tired and out-of-touch government out of office.

From Drew Hendry, the SNP’s economy spokesperson

The Tories trashed the economy, and now they’re taking the axe to public services - showing why it’s essential to vote SNP at the general election to make Scotland Tory-free and have the choice of a better future with independence.

Scotland’s budget has already been slashed by the UK government - and now they are cutting public services to the bone.

Worse still, there is no alternative on offer from Sir Keir Starmer’s Labour Party, who support Brexit and want to impose the same damaging Tory fiscal plans, which will slash services and starve the economy of the investment needed to secure growth.

The UK economy is broken - and the damaging cuts in today’s budget will make it even worse by failing to properly invest in the green energy gold rush, choking off economic growth, and putting up to 100,000 jobs at risk in Scotland’s energy sector.

With the UK cost of living soaring, it’s a scandal that Tory tax breaks will benefit the richest most - with any benefit for working families completely wiped out by the cost of rising rents, mortgages, bills and food prices.

From Carla Denyer, the Green party’s co-leader

People are crying out for investment in social care, in our NHS and in dentistry. We needed a ‘care full’ budget but have ended up with a careless, reckless Budget.

Chancellor Jeremy Hunt is attempting to bribe the electorate through tax cuts, which can only mean more pain for public services that are already on their knees.

People won’t be richer, healthier or happier because of this Budget. People know a con when they see one.

From Richard Tice, the Reform UK leader

They had one last chance to try and fix the economy they’ve broken…

Instead, all they offered was lies, spin and taxes via the back door.

There is an alternative. The alternative is @reformparty_uk.

From Plaid Cymru’s Ben Lake

The Chancellor’s Budget confirmed suspicions that the Government has little intention to address the many pressing issues facing society.

People are fed up of seeing public services crumbling around them due to a lack of public investment.

The Chancellor rightly pointed out that a strong economy depends on strong public services, and yet public investment in the UK’s social and economic infrastructure has remained at around half the average for OECD advanced economies for decades.

Today’s Budget does nothing to close that gap. Rather than tackling this long term weakness in the UK’s economy, the Chancellor prioritised the short term electoral fortune of the Government.

Pensioners lose out in ‘sweet and sour’ budget, says Resolution Foundation

The Resolution Foundation says Hunt’s budget will leave “a sour taste” for whoever wins the next election, with £19bn of post-election tax rises and another £19bn of public service cuts inked in.

That takes away from the “pre-election sweetener” of further National Insurance rate cuts, taking total net personal tax cuts this election year to £8bn, Resolution say.

They also point out that the winners from today’s decisions are middle earners, while the cash losers are Britain’s eight million taxpaying pensioners...

Torsten Bell, chief executive of the Resolution Foundation, said:

“The Chancellor has delivered a second dollop of pre-election tax cuts, borrowing more and taxing the likes of non doms, vapes and energy companies to do so.

“When combined with big previously announced tax rises, this leaves a complex pattern of winners and losers. Middle earners make up the bulk of the former, while low or high earners will still see their taxes rise.

“The biggest choice Jeremy Hunt made was to cut taxes for younger workers, while allowing taxes to rise for eight million pensioners. This is a staggering reversal of the approach taken by Conservative governments since 2010. It is undoubtedly good economics, even if the politics are a harder sell.

“The tax cuts announced today to sweeten the Government’s election pitch rely on the prospect of a sour £19 billion of post-election tax rises, and the fiscal fiction that another £19 billion of cuts to public services can be delivered in a spending review that the Treasury today confirmed will not take place until after polling day.

“For all that, the big picture has not changed at all with this Budget. Britain remains a country where taxes are heading up not down – rising by the equivalent of £3,900 per household – and where incomes are set to remain below their level at the last general election when voters return to the polls.”

Updated

National insurance cuts won't stop tax-to-GDP ratio rising by 4 percentage points this decade, OBR says

The OBR says that by 2028-29 tax as a percentage of GDP will be about 4 percentage points higher than it was in 2019-20. It was 36.9% and it is going up to 40.3%. As this chart in the OBR report shows, the cuts to national insurance will only cut the tax-to-GDP ratio by about half as much as tax rises have put it up.

The report says:

The direct impact of major tax increases raises the tax take by 2.0 per cent of GDP. This includes the threshold freezes for income tax and NICs, which increases the tax take by 1.3 per cent of GDP, and the increase in the corporation tax rate from 19 to 25 per cent, which increases the tax take by 0.6 per cent of GDP.

The direct impact of major tax cuts reduces the tax take by 0.9 per cent of GDP. Personal tax cuts in the form of the reductions in (NICs) employee and self-employed main rates announced in November 2023 and in this budget reduce the tax take by 0.7 per cent of GDP. Corporate tax cuts in the form of the super-deduction announced in March 2021, the temporary full-expensing announced in March 2023, and the permanent full-expensing announced in the November 2023 reduce the tax take by a further 0.2 per cent of GDP.

OBR: Hitting military spending target would wipe out fiscal headroom

The government is on track to break its fiscal rule, if it pushes on with its plan to raise defence spending, the OBR says.

The watchdog was asked about the UK’s fiscal headroom at their press conference in London today, given various tax and spending challenges.

The OBR estimates that increasing military spending to 2.5% of GDP, from 2%, will cost £15bn-£16bn. That’s roughly double the remaining (rather small) fiscal headroom of £8.9bn that remains, before debt is not falling as a share of GDP in 2028-29.

Continuing to freeze fuel duty (as happens every year since 2011), would cost around £4.5bn, or over half the remaining threshold (which is also subject to uncertainty, as small outcomes compared to the underlying forecasts would affect it).

There’s a third issue too – the financial markets’ expectations of interest rates in future have risen since the OBR’s forecasts were drawn up. Those movements would eat £3bn to £4bn out of the headroom.

How national insurance cut will compensate some of Scotland's higher earners for extra income tax they pay

Jeremy Hunt’s decision to use national insurance rates as the vehicle for cutting employment taxes will cut the tax bill for Scottish workers by up to £1,330, but only partly offset higher tax policies being pursued by ministers in Edinburgh.

The chancellor’s measure could have greater political impact in Scotland than in other parts of the UK because it is the only UK-wide tax on jobs that he controls following the devolution of income tax rates to Scotland in 2016.

It allows the Scottish Tories to present their party as the only one lowering taxes at the next general election, but the key question is whether Scottish tax payers will be impressed or indifferent.

The Chartered Institute for Taxation has calculated that every Scot earning between £15,000 and £28,867 will benefit overall – their total tax bill will fall. But the effects over £28,867 will be mixed: their overall tax bill will still fall by more than it would have before Hunt cut NI, but for many, the Scottish wages tax bill will still remain higher.

For instance: someone in Scotland earning £35,000 will be £795 better off due to the NI cut, but will stay pay £61 more overall than someone in the rest of the UK because of the higher Scottish income tax rates. Someone earning £50,000 will be £1,320 better off due to the NI cut, but still pay £1,542 more overall.

Only the wealthiest affected by Scotland’s new highest income tax rate of 48p levied on those earning £125,140 or more, will still pay more from 6 April, ranging from a modest £550 a year to £9,300 a year more for those on £1m a year.

Moody's: Budget perpetuates UK's problems

Ratings agency Moody’s is not too impressed by today’s budget announcement.

Evan Wohlmann, Moody’s lead analyst for the UK sovereign, says Hunt’s plans will ‘perpetuate’ the UK’s fiscal challenges.

Wohlmann also says the implied spending cuts after the election are “unlikely to materialise”, saying:

“The UK chancellor’s announcement of pre-election tax cuts while maintaining restrained spending plans will perpetuate the UK’s fiscal challenges.

The government’s plans imply real spending cuts for unprotected departments which in Moody’s view are unlikely to materialise given long-term spending commitments on health and defence. Together with high interest costs, these pressures limit the UK’s flexibility to leverage fiscal policy to foster credit positive policymaking and create fiscal space to absorb shocks.

That rather echoes what the IMF warned in January:

Last October, Moody’s lifted its outlook on the UK credit rating to ‘stable’, thanks to the restoration of policy predictability.

And it seems unlikely to change that view soon.

Wohlmann says UK debt levels are on a par with the likes of France and Belgium:

That said, the government’s demonstrated commitment to set policy within its fiscal rules framework underpins the stable outlook on the UK’s Aa3 rating, with government debt projected to remain at around 100% of GDP in line with similarly rated peers such as France (Aa2 stable) and Belgium (Aa3 stable).”

Updated

How almost 7m people will pay tax for first time, or join higher tax band, as result of 6-year allowance/threshold freeze

The OBR says that 3.7 million people will be brought into paying tax as a result of the freeze in the value of the personal allowance by 2028-29. And 3.2 million people will end up paying the higher rate (2.7 million) or the top rate (600,000) for the same reason, it says.

This effect is known as fiscal drag, and it has been particularly pronounced this decade because Rishi Sunak, when he was chancellor, said he was freezing allowances and threshold for four years from April 2022. Later Jeremy Hunt said the freeze would extend for another two years.

Here is the chart in the OBR report showing the impact of these decisions.

The Office for Budget Responsibility has been presenting its economic and fiscal outlook to reporters in London.

OBR chief Richard Hughes points out that four of the five years of its forecast are not based on any detailed plans from the government.

This is because the last spending review took place in October 2021, and another is not planned until after the election. All that we know is that the Treasury expect to raise day-to-day spending by 1% per year in real terms; while capital spending (CDEL) is broadly flat in cash terms.

That implies that total department expenditure limites (DELs) falls as a share of GDP by 1.0 percentage points over the final four years of the forecast, the OBR says – but it’s not clear how this will be achieved (some experts say its simply not plausible).

Back in January, Hughes let rip with his frustration about this issue – telling MPs that forecasts on the outlook for the public finances were beyond “a work of fiction”.

Rishi Sunak has repeatedly said immigration is too high. But the OBR says that it has revised up its estimate for annual net migration over the next five years. In November it was assuming an annual figure of 290,000, but it has increased that figure to 350,000 (net migration per year, not total immigration).

The OBR says that, taking into account emigration, this suggests the adult UK population will grow by 300,000 over the next five years.

IFS: post-election spending plans look 'devilishly difficult to deliver'

The IFS also fear that the government’s plan to raise department spending by just 1% will require painful cuts to public services.

Paul Johnson says:

The Chancellor left his provisional post-election spending plans effectively unchanged, despite reports that he would cut them back to ‘fund’ tax cuts.

Those plans still look devilishly difficult to deliver. Sticking to them would require cuts to unprotected services (those not lucky enough to be covered by existing commitments and promises) of around 3.3% per year, under a plausible set of assumptions.

This compares to cuts of 6.1% per year to those areas between 2009–20 and 2014–15, and increases of 5.2% per year over this parliament.

Scottish Tory leader Douglas Ross says national insurance cut 'can't be stymied by SNP'

Jeremy Hunt’s decision to cut national insurance rates by two percentage points for a second time has been “strongly supported” by Douglas Ross, the Scottish Tory leader, because it is a Conservative party cut which offsets higher income tax rates levied by Scottish National party ministers in Edinburgh.

The chancellor’s measure highlights a growing gulf in taxation policies between the two administrations.

The SNP and Green administration has used their devolved powers over income tax to slightly cut rates for those earning under £28,867 but increased them again for everyone earning above it, bringing in a new 45p “advanced” rate for salaries above £75,000 and raising the highest rate to 48p in the pound.

The Scottish Tories hope the national insurance cut will boost their chances of defending their seven Westminster seats at the general election.

Ross said:

A second national insurance cut in the space of four months is a huge boost to families and because national insurance is a reserved tax it can’t be stymied by the SNP.

Freezing duty on fuel and whisky is another boost for hard-pressed Scots – particularly in rural areas, where people rely on their cars and many of our distilleries are based. The VAT cut for small businesses is equally good news.

Updated

IFS: Hunt taxes the smoke and mirrors Labour's plans

Paul Johnson, director of the Institute for Fiscal Studies, is in witty mood as he analyses the budget:

“We’ve learned to expect some degree of smoke and mirrors in the Budget. Today was no different, only on this occasion Mr Hunt decided to tax the smoke and to mirror the Labour party’s tax pledges on non-doms and North Sea oil.

Alongside a new tax on vaping and an increase in tobacco duty, this was enough to allow Mr Hunt to announce another, well-trailed cut to National Insurance.

Johnson welcomed the 2p cut in national insurance, which – when combined with the 2p cut from November’s Autumn Statement – means those on just above average earnings will gain around £1,000 a year.

Changing the non-dom system, and reforming the child benefit tax credit, are also welcome, he says.

But overall, Johnson says “this remains a parliament of record tax rises.”

He explains:

Some bright spots, then, though the big picture on tax remains much the same. Come the election, tax revenues will be 3.9% of national income, or around £100 billion, higher than at the time of the last election. This remains a parliament of record tax rises.

Updated

Tories challenge Labour to say what will happen to policies it planned to fund through tax measures Hunt has adopted

Governments don’t like performing U-turns, but for Jeremy Hunt there were two bonuses from lifting two of Labour’s tax plans; it funded his tax cuts, and might force Labour to drop some of its more attractive spending plans.

To emphasis this point, CCHQ has just sent a briefing note to journalists saying Labour must now explain whether it is going to abandon these policies, or find another way of funding them.

The Tories say these are the policies Labour was planning to fund with £1.6bn from the abolition of non-dom status.

  • More NHS appointments (£1.1bn per year)

  • Breakfast clubs in schools (£186m per year)

  • More NHS equipment (£171m per year)

  • More NHS dental appointments (£111m per year)

And the Tories says these are the policies that Labour plans to fund with £4.9bn from the extension of the windfall tax.

  • Home insulation programme (£1.32bn a year)

  • Green-related jobs (£500m per year)

  • Setting up GB Energy (£1.66bn a year)

  • Creating a sovereign wealth fund (£1.46bn a year

Labour is holding a briefing this afternoon, so we should get some sort of response then.

The Tories expect to raise more from the abolition of non-dom status than Labour said it expected to raise. But Labour’s version of the extension of the windfall tax is forecast to raise more than the Jeremy Hunt version, which he says will raise £1.5bn by 2029, and so not all the Labour revenue has been spent.

Yael Selfin, chief economist at KPMG UK, predicts that “the majority” of recent tax cuts may need to be reversed after the next election, to provide “adequate” public services levels:

The Government’s plans for the overall spending envelope imply that funding on unprotected departments would have to fall by over 3% a year in real terms, which is unrealistic in the absence of sustained productivity growth.

The majority of recent tax cuts may need to be reversed in the next Parliament in order to maintain an adequate provision of public services after the current Spending Review period.

Updated

Economists are warning that Jeremy Hunt is sailing very close to breaking his fiscal rule, to have debt falling as a share of the economy in five years.

Barret Kupelian, chief economist at PwC, says the chancellor is within a “rounding error” of missing the rule.

As his starting headroom was limited, he did what most Chancellors are famous for - take with one hand and give with the other - to further fund his tax cuts. The most notable revenue raising measures he announced were around taxing on non-domiciled individuals, tobacco and vaping products, extending the energy profits levy and adjusting the Air Passenger Duty.

“On balance though, this means that the Chancellor’s headroom at the end of the fiscal period is very limited and thus is dangerously close to breaking his own rules. The OBR expects around £9 billion of headroom to remain - if fuel duty remains frozen, this would get it down to £4.5 billion, which is virtually a rounding error.

The OBR point out that Hunt’s margin is much narrower than previous chancellors have judged wise:

Michael Saunders, the former Bank of England policymaker who is now senior economic advisor at the consultancy Oxford Economics, points out that the current forecasts are based on "“fiscal fantasies” – including that fuel duty will rise.

Saunders says:

On paper, the Chancellor will just about meet his fiscal rules, and the OBR forecast that the public debt/GDP ratio will fall in five years. But these forecasts rest on fiscal fantasies. They assume that petrol taxes will rise in line with inflation, even though the government has decided against doing that for fourteen consecutive years.

What’s more, they assume that the government will deliver a painful public spending squeeze – with little or no growth in real spending per head in the next few years – even though it lacks any credible plans to achieve this. The government has learnt to game the OBR framework by pencilling in future fiscal restraint without appearing to be serious about delivering it.

Households still £870 worse off on average, Labour claims, because NI cuts don't compensate for freezing allowances

Labour claims that, despite the cut in national insurance in the budget, households are still £870 worse off on average as a result of the tax measures taken by the Tories. Labour has calculated this figure on the basis that the cuts worth £21.4bn (by 2028-29) need to seen alongside the the impact of the extra £41.1bn raised by the freeze in thresholds and allowances for tax and national insurace.

Those two figures from from this chart in the OBR’s report.

Updated

Vaping tax could double cost of highest nicotine products

The government’s planned tax on vaping liquids could double the cost of the strongest e-liquids from 2026.

The Office for Budget Responsibility say they expect it will raise £500m per year by the 2028-29 financial year, although there are “several uncertainties in the costing”.

The OBR explains:

The new tax applies a specified fixed amount of duty to a defined quantity of e-liquid and will be charged to UK manufacturers or importers. There are three rates that are differentiated according to the amount of nicotine content in the e-liquid.

It means that a vaping product that falls within the highest nicotine category and currently retailing at £3.00 (for 10 millilitres of e-liquid) will be subject to a £3.00 rate of duty (in 2026-27), raising its post-tax price to £6.60 (since we assume all of the duty will be passed through to consumers).

The budget documents released by the Treasury have more details:

The government will introduce a new duty on vaping products from 1 October 2026, with registrations for the duty opening from 1 April 2026.

The rates will be £1.00 per 10ml for nicotine free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg or more per ml. A 12-week consultation will be published on the policy design and technical details alongside the Spring Budget.

Updated

Energy minister Andrew Bowie says extension of windfall tax on energy firms 'deeply disappointing'

Normally ministers are meant to promote the budget on social media. But Andrew Bowie, an energy minister, has posted a message on X saying the extension of the windfall tax on energy companies (EPL – energy profits levy) is “deeply disappointing”.

I agree with Douglas.
There is much in this budget to welcome. Much that is good for Scotland and our United Kingdom. And only the Conservatives have a plan.
However, the extension of the EPL is deeply disappointing. I will be working with him to resolve this.

Bowie is MP for West Aberdeenshire and Kincardine. The Douglas he mentions in his tweet is Douglas Ross, the Scottish Tory leader. All Scottish Tories feel strongly about this issue (see 2.20pm) and minister may be assuming that, as a Scottish MP, he has some licence to speak out about this not available to English ministers.

Hunt says ending employee national insurance 'long-term ambition' for Tories

With the 2p cut in national insurance being widely trailed, it was not clear this morning whether or not Jeremy Hunt had a surprise “rabbit” to pull out of the hat at the end of his speech. In so far as there was a “rabbit”, it was “the abolition of national insurance”.

This is what Hunt said about employee national insurance, and about the fact that it in effect duplicates income tax.

This is the second fiscal event where we have reduced employee and self-employed national insurance.

We have cut it by one third in six months without increasing borrowing and without cutting spending on public services. That means the average earner in the UK now has the lowest effective personal tax rate since 1975 – and one that is lower than in America, France, Germany or any G7 country.”

Because Conservatives believe that making work pay is of the most fundamental importance, because we believe that the double taxation of work is unfair, our long-term ambition is to end this unfairness.

The Telegraph’s website currently has “Hunt signals the end of national insurance” as its lead headline on its budget coverage.

But the end of national insurance seems unlikely. According to the budget red book, the Treasury raises £168bn from national insurance contributions. This figure includes the revenue from employer national insurance contributions, but that is still a huge amount of money that would have be funded by cuts or “productivity savings” in the public sector.

Updated

Experts voice doubts about Brit ISA

Hunt’s plan for a British ISA is getting a rather lukewarm reaction from the City.

As covered at 1.02pm, it will give savers an extra £5,000 tax free allowance, to be spent on UK assetts. That’s on top of the £20,000 you’re allowed to put into your ISA each year.

Claire Trott, divisional director of retirement and holistic planning at wealth manager St. James’s Place, fears that a British ISA will create more complexity.

Trott says:

“We welcome all opportunities for tax free investment with the ‘British ISA’ increasing the overall ISA allowance. However, it comes with restrictions on where you can invest which may be a turn off for some.

It also adds to the complexity of something that used to be simple, we now have multiple ISAs with various restrictions, which will probably mean more need for financial advice.”

Nimesh Shah, CEO of accountancy firm Blick Rothenberg, also has questions:

Introduction of the British ISA could give someone up to £26k in ISA savings per annum if they are also eligible for the Lifetime ISA.

I question whether we need another form of ISA - wouldn’t it have been easier to increase the £20k ISA allowance which has remained stuck at this level since 2017/18.

Bloomberg’s Merryn Somerset Webb points out that few people manage to put aside £20,000 each year (in this economy?!), so it’s a symbolic gesture really:

And Victoria Scholar, head of investment at interactive investor, points out that the UK stock market has lagged behind rivals

UK stock markets have underperformed their rivals in the US, Europe and elsewhere since Brexit. International investors have shunned the FTSE 100 amid concerns about increased perceived risk and weaker prospects for the UK economy.

The Treasury’s goal with this announcement is to try and drum up support for UK markets which are in the doldrums. Along with Brexit, the so-called Jurassic Park FTSE 100 has suffered from a heavy lack of exciting new tech success stories, in stark contrast to US markets where tech giants from Silicon Valley have largely been responsible for the major outperformance stateside.

What you need to know about the new economic forecasts

The Office for Budget Responsibility have released a video to explain their new forecasts.

Key points include:

  • Inflation has fallen faster than expected, and should drop below the UK’s 2% target later this year.

  • Markets expect interest rates to fall faster.

  • The medium-term outlook for growth is little changed, compared to November, partly due to higher economic inactivity.

  • The fiscal forecast is also little changed – lower inflation means that debt servicing costs are lower than expected, but also means lower growth from tax revenues

  • This has given the chancellor a net fiscal boost of £10bn per year over the next two years, but borrowing is largely unchanged by the end of the forecast period.

OBR chief Richard Hughes says:

In his spring budget, the chancellor spends all of this windfall on another 2p cut to national insurance, and another freeze in fuel duty, whose cost is partly recouped by new taxes on vapes, carbon imports and non-doms.

There are no significant changes to the planned level of spending on public services, Hughes adds:

Sunak faces rebellion from Scottish Tory MPs over plan to extend windfall tax

Jeremy Hunt faces a rebellion from Scottish Tory MPs over his decision to extend the windfall tax on energy profits until 2029, with one energy minister, Andrew Bowie, reportedly considering resignation.

The chancellor has been under intense pressure to end the levy from vulnerable Scottish Tories, including Douglas Ross, the party’s Scottish leader and the MP for Moray, a north-east seat close to Aberdeen, the UK’s oil and gas industry capital.

Ross confirmed he will not vote for the measure, even though Hunt did listen to his pleas for a second cut to national insurance rates – a move which benefits Scottish employees who pay higher income tax rates levied by ministers Holyrood. (See 12.01pm.)

The Tories are defending three Westminster seats in north east Scotland at the next general election, including Bowie’s seat in West Aberdeenshire and Kincardine, which he holds with a wafer thin 843-vote majority over the Scottish National party.

With Scottish opinion polls putting them as low as 15%, the Scottish Tories believe championing North Sea oil and gas jobs is their strongest suit – a position undermined by Hunt’s decision to extend the levy.

To their embarrassment, the Scottish Tories also have an opposition day debate at Holyrood later on Wednesday on the sector. It was intended to highlight Rishi Sunak’s boast at the Scottish Tories’ conference in Aberdeen last Friday “we have consistently been the only major party that has backed the North Sea oil and gas industry.”

Starmer accuses the government of ducking its responsibility to the victims of the infected blood and Horizon IT scandals.

Chaos is the Tories’ world view, he says. They see Britain’s problems as an opportunity to exploit.

He says they have left the UK a nation in limbo, and “maxed out the nation’s credit card”.

Britain needs an alternative government, he says. And he ends challenging Sunak to call a general election on 2 May.

Starmer says it is only the record levels of immigration that have prevented an even deeper decline.

That is all the government has to promote growth, he says.

There is no ambition for cheaper, greener power, and no inclination to strenghten employment rights.

And where is the urgency on housing, he asks.

Starmer says Hunt has been taking lesssons in marketing from the Willy Wonka experience in Glasgow.

Tax as a share of GDP to hit the highest level since 1948

The UK tax burden is heading towards its highest level since Clement Attlee was prime minister, when Britain was starting to pay down its war debts.

The Office for Budget Responsibility reports that tax as a share of GDP will fall slightly this year (due to the cut in national insurance in January).

But it then rises gradually in every year of its forecast, rising to 37.1% of GDP in 2028-29.

That, the OBR says, which would be the highest level since 1948, and four percentage points above the pre-pandemic level of 33.1% of GDP in 2019-20.

This rather clashes with the Treasury’s claim that the chancellor is “delivering lower taxes”.

But it’s a lower figure than last November, when the OBR forecast the tax take would hit a post-war high of 37.7% of GDP by 2028-29.

Updated

Starmer accuses the government of complacency. Britain deserves better than 14 years of stagntion, he says.

But all it got was the same old formula, party first and country second.

He says Hunt said the UK had grown more quickly than countries like Germany over the past 14 year.

In per capita terms, the figures are different. The UK has not grown in per capita terms since the first quarter of 2022, he says.

Starmer says Labour supports cut to national insurance in budget

Starmer confirms that Labour supports the cut to national insurance.

But he points out that Rishi Sunak, as chancellor, promised the basic rate of income tax would be cut in 2024.

And, on the NHS, he says Jeremy Hunt as health secretary promised a paperless NHS by 2018.

Updated

In the Commons Starmer says the Tories have finally accepted Labour’s idea on non-doms. Has there ever been a better example of a party bereft of ideas?

And why did they do not it earlier?

If they had, there would have been more than 3m hospital operations, and 1.3m more dental appointments, he says.

And he tells Tory MPs that they should get used to these U-turns. It won’t be long before government asks them to back VAT on private school fees, he says.

Starmer says the story of this parliament is simple: a Conservative party clinging to the ideas of the past, and unable to generate growth.

He says the Tories have torched their reputation for fiscal responsibility, and any suggestion they will put the country first.

People are paying higher mortgages because of the Liz Truss mini-budget, he says.

And will recognise this as a con, he says.

And a “Tory stealth tax is coming their way in the form of a higher council tax bill”.

Updated

Starmer describes budget as 'last, desperate act of party that has failed'

The division is over. The government won by 288 votes to 38.

Keir Starmer is now speaking.

He starts by referring to the budget as “the last, desperate act of a party that has failed”.

OBR: Medium-term outlook remains challenging

As Hunt sat down, the Office for Budget Responsibility released its latest assessment of the UK economy – its Economic and Fiscal Outlook.

The OBR starts by saying that the UK’s near-term growth prospects have improved, thanks to inflation falling faster than it expected in November. That has led markets to expect a sharper decline in interest rates.

The OBR says:

This strengthens near-term growth prospects and should enable a faster recovery in living standards from last financial year’s record decline.

But the medium-term economic outlook “remains challenging”, the fiscal watchdog warns.

The OBR has lifted its estimate for the current UK population, following the 2021 Census and net migration since then. But, it also sees rising economic inactivity (more people are unable to work due too ill health).

And that means the economy, as a share of the population, is expected to be slightly smaller than expected in November. That means even worse living standards:

The OBR says:

One of the biggest changes to our economy forecast is an increase in the size and growth of the UK population. But higher and rising levels of inactivity offset its impact on the overall size of the workforce, leaving our forecast for the level of GDP in five years virtually unchanged from the autumn, and the level of GDP per person slightly lower.

Updated

Budget debate held up after SNP MPs force surprise vote on its provisions

Eleanor Laing, the deputy speaker, is now calling a vote on certain budget measures (taxes that come into force tonight) that have to go through as soon as the budget speech is over. Normally this is down by acclamation (government MPs shouting aye), so that the Commons can get on with listening to the opposition’s response. But some MPs have forced a division (by shouting no), and there is a vote.

It seems to have been the SNP who were forcing a division.

After the speaker ignored Commons rules in a way that led to MPs not getting a vote on their Gaza motion last month, they have been talking about using more disruptive tactics at Westminster.

The division will take about 15 minutes, and then Keir Starmer will get a chance to respond to the budget.

Hunt confirms 2p cut in national insurance, claiming average personal taxes now at lowest level since 1975

Hunt is now talking about national insurance.

From April employee national insurance will be cut from 10% to 8%, and self-employed NICS from 8% to 6%.

He says, combined with the changes announced in the autumn statement, 27 million people will gain £900. And 2 million self-employed people will gain £650.

He says the OBR says this will put 200,000 more people in work. And it will increase GDP by 0.4%, he says.

He says this will bring personal taxes to their lowest level since 1975.

And he says the Conservatives will continue to keep cutting national insurance.

(There is a big difference between personal taxes and the overall tax burden. In 1975 VAT had only just been introduced, and it was levied at 10%. It is double that rate now.)

Hunt says 500,00 families will gain almost £1,300 from increase in high income threshold for child benefit

Hunt says he will change the way child benefit is paid.

At the moment the high income threshold applies to individuals, not households. That will change, he says.

And he says he is also increasing the higher income threshold. It will go up from £50,000 to £60,000.

He claims that almost half a million families will gain by almost £1,300.

Hunt’s decision to abolish non-dom status means Labour need to find another way to provide extra funding for the NHS (as Hunt says he is using the money to cut taxes for working people), points out Sky’s News’s Sophie Ridge.

Hunt says he will raise £2.7bn by abolishing non-dom status

Hunt is now talking about abolishing non-dom status.

He claims Labour was only interested in this because it was a plan Nigel Lawson originally favoured.

He confirms that he will abolish non-dom status. This provokes lots of jeering. Hunt says he aims to please all sides of the house. Eleanor Laing, the deputy speaker, urges MPs to “shout more quietly”.

Hunt says there will be a non-dom-style tax status open to people coming to the UK for four years. But after that they will have to pay UK taxes.

Hunt says this will raise £2.7bn by end of forecast period. Unlike Labour, the Tories will use this to cut taxes, he says.

Hunt says he will raise £1.5bn by extending windfall tax on energy companies

Hunt says energy companies. Their profits are extending because of the Ukraine war, so Hunt says he will extend the sunset clause in the windfall tax for an additional year, to 2029, raising £1.5bn.

Hunt turns to multiple dwellings relief, and jokes that this will interest Angela Rayner.

He is abolishing this, he says.

And he says the Treasury and the OBR are both saying the government will raise more money be reducing the higher rate of property capital gains tax from 28% to 24%. The Treasury and the OBR have discovered “their inner Laffer curve”.

“That really is for you, Angela,” he says.

Hunt says tax relief for holiday lettings will end

Hunt says he has been lobbied by MPs representing coastal towns. The tax system for holiday lettings is not working, he says. So he will abolish the furnished holiday lettings relief, he says.

Updated

Hunt confirms new tax on vapes

Hunt confirms a new tax on vapes.

And there will be a one-off increase in tobacco duties.

There will be an increase in the tax on non-economy flights, he says.

Hunt is now talking about taxes.

“Keeping taxes down matters to Conservatives in a way it never can for Labour,” he claims.

He says lower taxed economies have more energy, more dynamism and more innovation.

Hunt says in the next spending review the Treasury plans that pay for themselves through productivity savings over five years.

He cites as an example a plan to tackle knife crime.

And the government will spend £230m on plans to speed up police response times, including in some instances using drones as first responders.

There will be £170m to fund non-court resolution, to cut delays in courts.

There will be an investment to increase the capacity of the estate for children in care.

And the government will fund 50 new schools for special needs children, he says.

If there are “cash-releasing savings”, the government can maintain services with less money, he says.

Olly Bartrum, senior economist at the Institute for Government, has welcomed Hunt’s decision not to cut the increase in departmental spending (following rumours it could be trimmed to just a 0.75% increase).

But even so, the 1% increase in real terms just announced is still “problematic”, he points out, as public services are under huge strain, after a long period of underinvestment.

Plus, as the IFS’s Paul Johnson points out, some departments will suffer big cuts so that others can receive increases:

Updated

Hunt announces £3.4bn plan to modernise NHS's IT system

Hunt says the NHS needs modernisation. Modernising its IT system will cost £3.4bn, he says. But he says this will unlock productivity savings worth 10 times as much. So he will fund it in full, he says.

This will double the NHS investment in digital transformation, he says.

And it means NHS funding has gone up by 13% in real terms since the start of this parliament, he says.

He quotes Amanda Pritchard, chief executive of NHS England, saying this will enable the NHS to deliver productivity growth of 1.9% over the next parliament.

Hunt says he will maintain plan to increase future public spending by 1%

Hunt is now turning to public services.

There a particularly loud bout of heckling. Eleanor Laing, the deputy speaker, complains that was out of order.

Hunt says violent crime is down and he says the armed forces are the best in Europe. Defence spending will go up to 2.5% of GDP as soon as economic circumstances allow.

He says the number of doctors and nurses in the NHS has risen.

But, although spending has risen, public sector productivity remains below pre-pandemic level. That show money is not the solution, he says. He says we need a more productive state, not a bigger state.

He says the government will maintain the plan to increase public spending by 1% in real terms set out in the autumn statement – but the government will “spend it better”, he says.

There had been reports he would cut this to 0.75%.

Updated

Hunt says the government is pressing on with plans to sell its stake in NatWest bank this summer, subject to market conditions and achieving value for money.

NatWest’s shares are trading a seven-month high today, at 254p.

But…. the stake (bought in 2008 to rescue Royal Bank of Scotland, as NatWest was then called), was bought at an effective price of 500p each.

So “value for money” will be relative [though the stake was bought to rescue the banking sector, not for a profit].

The government owns around 31% of NatWest today, worth around £7bn.

Updated

Hunt says those people who can work should. He says all his budgets have included plans to get more people into the workforce.

The government’s childcare plan will mean another 60,000 people entering the workforce.

That is a credit to Gillian Keegan, the education secretary, who is doing “an effing good job”, he jokes.

Hunt announces plans for new tax reliefs for the film industry in the UK.

And a new tax credit will be allowed for UK films with budgets of less than £15m.

The National Theatre in London will get a grant to upgrade its stages.

During the pandemic tax relief was allowed for theatres, he says. They have been a lifeline. Those tax reliefs will be permanent, at 45% for touring and orchestral productions, and 40% for non-touring productions.

He quotes Andrew Lloyd Webber as saying this will ensure the UK can remain a global centre of excellence.

And he levers in another forced joke – referring to Rachel Reeves’s thespian talents, because she acts like a Tory. (That one is even worse than his previous effort – see 12.56pm.)

Paul Johnson, director of the Institute for Fiscal Studies, advises taking today’s borrowing figures with “a pinch of salt”, as they are dependent on very tight spending plans for the next parliament:

Hunt announces plan for new 'British Isa' allowing £5,000 investments in UK firms, on top of existing Isa allowance

Hunt claims the UK is on track to become the world’s next Silicon Valley.

He says he is wants to change rules for pension funds. They should have to disclose their level of UK equity investment, he says.

And he wants to encourage the development of a new generation of retail investors, he says.

The government will consider ways of making it easier for people to take their pension pots with them when they change jobs.

And the government will introduce a new “British Isa”, allowing investments of £5,000 in British firms. This Isa allowance will be on top of the existing one

Updated

UPDATED: Latest growth forecasts

UPDATED: The latest growth figures are slightly more positive than expected by the OBR in the autumn, for this year and the next two.

There’s quite a pick-up in growth next year.

But it’s still a weak growth outlook by long-term standards.

Hunt says the OBR are forecasting:

  • 2024: 0.8% growth, up from 0.7% growth expected in November.

  • 2025: 1.9% growth, up from 1.4% growth expected in November.

  • 2026: 2.2% growth, up from 2% growth expected in November.

  • 2026: 2% growth, matching the 2% growth expected in November

  • 2027: 1.8% growth, down from 2% growth expected in November.

  • 2028: 1.7% growth, matching the 1.7% growth expected in November.

* – We’ve updated this table, because Hunt originally said growth in 2026 would be “two point two percent”, but it appears he meant “two percent”, with no percentage point.

Updated

Hunt is still talking about particular regional investments.

His list includes measures for Cambridge, to fund a development corporation there. There will be money for transport there.

And there is money for north Wales, including money to fund the renovation of Theatre Clwyd.

And the government will be purchasing the Wylfa site on Anglesey, where there are plans for a nuclear power station.

Hunt is now talking about measures to address historic underinvestment in nations and regions.

He announced the north-east trailblazer devolution deal, he says.

And he announced devolution plans for Surrey. He says Keir Starmer, as a Surrey boy, ought to welcome this.

And then he shoehorns in a rather feeble joke about Peter Mandelson saying yesterday that Starmer should “shed a few pounds”. If Labour get in, people will be losing more than a few pounds due to their tax plans, he says.

Updated

The budget deficit (how much the UK borrows each year to balance the books) falls though the next five years, Hunt says, from 4.2% of GDP in the 2023-24 financial year, to 3.1%, 2.7%, 2.3%, 1.6% and 1.2% by 2028-29.

That’s the lowest level of annual borrowing since 2001….

.. but it’s based on very tight spending plans, our colleague Pippa Crerar points out:

Updated

Hunt says the government plan does not envisage growth sustained by immigration.

Turning to investment, he says this is the best way to improve productivity.

He insists the government record on investment has been strong.

In the autumn statement he announced full expensing – making the UK’s tax investment rules the most attractive for any large European economy, he says.

He says the government will apply this to leased assets. This change will come in “as soon as it’s affordable”.

There will be £200m to extend the recovery loan scheme, he says.

And the VAT registration threshold will go up form £85,000 to £90,000, he says.

Updated

The latest estimates for UK national debt show that it will be a little higher than expected in the autumn statement, as a share of the economy, in the next two financial years.

But, as Hunt points out, he’s still on track to have debt falling as a share of GDP in five years time, meeting his fiscal rule.

Here are the new forecasts for public sector net debt (excluding the Bank of England), as a share of the economy:

  • 2024-25: 91.7% of GDP, compared with 91.6% expected in November.

  • 2025-26: 92.8%, compared with 92.7% expected in November.

  • 2026-27: 93.2%, matching the 93.2% expected in November.

  • 2027-28: 93.2%, matching the 93.2% expected in November.

  • 2028-29: 92.9%, compared with 92.8% expected in November

That leaves the chancellor with £8.9bn of fiscal headroom to have debt falling at the end of the forecast period – a rather small amount of headroom.

Updated

Hunt says OBR forecasting 0.8% growth this year

Hunt is now talking about growth.

He says the OBR expects growth to be 0.8% this year, and 1.9% next year – higher than previously expected.

Hunt claims Labour can only implement its energy policy within fiscal rules by raising taxes

Hunt is now reading out the debt figures.

He says it is on track to fall as a percentage of GDP, meeting the fiscal rules.

And the government is also meeting its rule about having borrowing below 3% of GDP early.

If Labour decarbonise the electricity grid by 2030, they will not meet these rules, he says.

He says Labour claim it will decarbonise in accordance with its fiscal rules. That can only mean tax rises, he says.

Updated

Hunt says, on growth, some think there is a trade off between compassion and social responsiblity.

He says he does not accept that. It is only because the Tories cut the deficit that they could afford support for people during Covid.

He attacks the Liberal Democrats for having no principles, and says he is pleased Ed Davey is in the chamber to hear this.

This was a reference to Davey campaign in Hunt’s own constituency, which is a Lib Dem target seat.

Fuel duty freeze extended

Hunt says he will maintain the supposedly “temporary” 5p cut in fuel duty. And he will extend the freeze in fuel duty.

Updated

The Treasury says extending the duty freeze until next February will cut costs for breweries, distilleries, restaurants, nightclubs, pubs & bars.

Hunt says freeze in alcohol duty being extended until February 2025

Hunt says he will extend the freeze in alcohol duty until February 2025.

The government is backing the “great British pub”, he says.

Hunt says he will continue the household support fund – which helps low-income families facing particular financial problems – for another six months. It had been due to wrap up

Hunt announces abolition of £90 charge for a debt relief order

Hunt says households have had £3,400 in economic support.

As a result, real household income is on course to rise, he says.

He says he has plans to help those facing debt.

For people taking advance loans, he will increase the repayment programme from 12 months to 24 months, he says.

For some people a debt relief order will help. But they cost £90, he says. He will abolish that charge.

Updated

Hunt says it’s important to grow GDP-per-capita (or per head of population), not just headline GDP.

That comes after the latest GDP data showed that GDP-per head (a measure of living standards) fell through 2023, and hasn’t risen for the last seven quarters, as this post from last month shows:

Updated

Hunt says OBR expects inflation to fall below 2% within months

Hunt says Labour’s plans would push up taxes.

He turns to the forecasts.

First, inflation.

It was 11% when he and Rishi Sunak took office.

The latest figures show it at 4%, and the OBR forecasts show it falling below the 2% target in just a few months time – a year earlier than forecast in the autumn statement.

Hunt claims 'lower taxes mean higher growth'

Hunt says he can now offer permanent cuts in taxation. He is doing this to deliver help in challenging times.

But it is also because “lower taxes mean higher growth”.

He says higher growth cannot come from more immigration.

Jessica Frank-Keyes, a reporter for City AM, says the £1m for a memorial to Muslims who died in two world wars is a “nod to current community tensions”:

Updated

Hunt is speaking, but there is very loud heckling.

Updated

Jeremy Hunt delivers budget statement

Jeremy Hunt is deliving the budget statement.

He starts by saying MPs mourn the loss of life in Israel and Gaza. He starts recalling the Muslims who died in the two world wars. He will allocated £1m for a memorial for them.

He says this is partly in response to a campaign by Sajid Javid.

PMQs is over, and the budget statement is about to start.

The Labour MP Tonia Antoniazzi says Rishi Sunak is wrong in what he said about Keir Starmer’s record on rape convictions as DPP. (See 12.11pm.)

Rape conviction rates rose from 57.7% to 60.3% during @Keir_Starmer’s tenure as Director of Public Prosecutions. Rishi Sunak should retract his lie immediately #PMQs

Andrew Gwynne (Lab) asks if Sunak agrees all ministers should publish their tax returns. And has Sunak ever filed a tax return in the US he has not published?

Sunak says he does not think it would be proportionate for all ministers to have to publish their tax returns. He says he has been transparent about his own – although he does not specifically address the question about a US tax return.

Angela Eagle (Lab) ask what part of his economic legacy Sunak is most proud of: the highest tax burden since the second world war, or the slowest pace of household income growth since the Napoleonic war?

Sunak says it is saving 10m jobs during the pandemic.

Graham Stringer (Lab) asks about wealth inequalities between the north and the south. Has the levelling-up agenda failed?

Sunak claims inequality has declined under this government. And the north has received some of the highest levelling-up funding per capita.

And he criticises Labour for not saying what it will do about HS2, and the money from the cancellation of phase two that the Tories are reinvesting.

Updated

Sir Jeffrey Donaldson, the DUP leader, asks Sunak if he will continue to press the Irish government to continue to do more to investigate crimes that took place during the Troubles in their jurisdiction.

Sunak says he has spoken to the taoiseach on this. He says he wants families to get as much information as possible about these crimes.

David Davis, the former Brexit secretary, says the government should pay proper compensation, not just to post officer operators who were convicted, but who had to repay money to the Post Office they were wrongly accused of stealing.

Sunak backs Davis for his campaigning on this.

Stephen Flynn, the SNP leader, says the Conservative party in Scotland is furious about Scotland being taxed to fund a tax cut for England. (See 12.01pm.)

Sunak says he won’t comment on the budget. But when he was in Scotland last week, it was clear only the Scottish Conservatives stand up for the energy industry.

Flynn says that is not the case. He says up to 100,000 jobs are at risk. Scotland’s jobs and resources are being lost to help Westminster. Will the PM call an election?

Sunak says, if Flynn supports the energy sector, why has the SNP not backed government moves to help it. And he says Scotland is now the high-tax capital of the UK.

Updated

Starmer says the “rosy picture” Sunak paints of the system is at odds with the lack of confidence women have it. And at Westminster the government has not even allowed a vote on the plan to ban MPs from the estate if they have been accused of sex offences. When will that be allowed?

Sunak ignores the question about the vote, but lists other measures the government is taking to help women.

Starmer says that claim will be fact checked. He says victims deserve better than this “nonsense”. When will the government commit to matching Labour’s plans to tackle violence against women and girls.

Sunak says the government has already implemented a rape review plan.

Updated

Starmer says this recommendation should be implemented urgently. He asks Sunak to look again at this. The Sarah Everard murder should have been a watershed, he says. But most rape cases do not lead to charges. How can victims have confidence in the system?

Sunak says the rape action review plan is showing considerable progress. Sentences for rape have increased by a third, under a power that Labour voted against. Last year there was a 50% increase in rape charges, he says. And he says while Starmer was at the CPS rape convictions fell.

Starmer says there is a world of difference between a code, and binding national standards. Wayne Couzens was not sacked even though he had been accused of indecent exposure. All indecent exposure allegations against serving officers should be investigated, as the report recommends. Will this happen immediately?

Sunak says indecent exposure is abhorrent. Any officer charged with a sexually motivated crime should be suspended, he says.

Updated

Starmer says concerns about police vetting were first raised in 2012. Labour wants mandatory national vetting standards. Why aren’t they already in place?

Sunak says the college of policing has updated its statutory code. And an entire check againt the national police database has been carried out.

Keir Starmer asks about the murder of Sarah Everard. He cannot imagine the pain her relatives are going through. The Angiolini report says there is nothing to stop this happening again, he says.

Sunak says this was an appalling case. He says the largest ever screening of officers has been carried out. All recommendations in the report are being considered, he says.

Updated

Kieran Mullan (Con) asks about food security and support for farmers.

Sunak refers to what he told the NFU confernce two weeks ago. One new scheme for farmers opens today, he says. Unlike Labour in Wales, the Tories will not introduce top-down, damaging targets, he says.

PMQs begins

Rishi Sunak starts with the normal spiel about his engagements including meetings with colleagues. But he will be listening to the budget, he says.

Updated

Scottish Tory leader Douglas Ross says he will not vote for budget plan to extend windfall tax on energy firms

Kevin Schofield from HuffPost UK has a quote from Douglas Ross saying he will not vote for an extension of the windfall tax. (See 11.54am.) In his story Schofield quotes Ross as saying:

The Scottish Conservatives have a clear position. We will always stand up for the livelihoods of the almost 100,000 Scottish workers who depend on our oil and gas industry.

Unlike Labour and the SNP who would stop any new developments, we will not support any action that would put those jobs at risk.

As such, while I support many of the Budget measures, as Scottish Conservative Leader I will not vote for this extension when it is brought before Parliament.

My Scottish Conservative colleagues and I will continue to have robust discussions with the Chancellor on this matter.

The BBC’s David Wallace Lockhart says Douglas Ross, the Scottish Tory leader, will refuse to vote for any extension of the windfall tax on oil and energy companies. (See 11.37am.)

Rishi Sunak faces Keir Starmer at PMQs

Before the budget we’ve got PMQs. Here is the list of MPs down to ask a question.

This is just the list of backbenchers who won the right to ask a question in the ballot, not the full list of MPs who will speak. That’s because the speaker will also choose people not on the list, to ensure questions come in the government/opposition/government/opposition order.

On Monday George Galloway said he would try to get a question in today. Given that Rishi Sunak described Galloway’s win in the Rochdale byelection as “beyond alarming”, he may feel entitled to a right of reply.

Labour says adopting its plan to abolish non-dom tax status would be 'humiliating U-turn' for Tories

Another Labour tax proposal which Jeremy Hunt has lifted for the budget is the plan to abolish non-dom status. The Financial Times has some detail about how Hunt will do this. It says:

The chancellor is looking to scrap the two-century old concept of domicile, and change when individuals receive the tax break, the Financial Times has been told. The Treasury declined to comment.

Non-domiciled people are UK residents deemed to have their permanent home or “domicile” outside the country. They can currently earn money from abroad without paying UK tax on this for up to 15 years, provided they do not bring any income or capital gains into the country.

Hunt will modernise the system, replacing the concept of domicile in tax with a statutory residence test that would define who benefits from a new system of tax privileges.

He will also encourage wealthy people to bring their foreign-held assets and money to the UK. Tax experts have long complained the current regime is complicated and disincentivises non-doms from bringing wealth into the country, as they are taxed when they do so.

Darren Jones, the shadow chief secretary to the Treasury, has described this as a “humiliating U-turn”.

Jeremy Hunt is expected to extend the windfall tax on energy companies in the budget to help fund his national insurance cut. Extending the windfall tax is a Labour proposal that the Tories used to dismiss, and, according to a Daily Telegraph story, Douglas Ross, the Scottish Conservative leader, is so angry about the move that colleagues thought he might resign. Ross is MP for Moray, in the north-east of Scotland, and he is worried that the potential impact on the oil and gas industry in Scotland will cost the party votes.

In their story, Nick Gutteridge, Dominic Penna and Simon Johnson say Ross had a row with Rishi Sunak about this at a reception on Sunday night. They report:

The leader of the Scottish Conservatives had doggedly sought out Mr Sunak across the crowded, stifling room, determined to give him a piece of his mind about the Treasury’s plans to extend the windfall tax on North Sea oil and gas giants for an extra year.

What followed was a “heated” discussion between the pair, with Mr Ross warning the move would hammer the Tory vote north of the border and the prime minister countering that it was necessary to deliver a National Insurance cut for millions of workers.

A clearly dissatisfied Mr Ross then sought out Jeremy Hunt, the chancellor, and delivered a last-ditch plea to him to drop the measure from Wednesday’s budget. While his demands ultimately fell on deaf ears, they prompted severe unease in Downing Street.

No 10 began to fear that their party’s Scottish leader was planning to resign in protest at the decision – a move that would have gone down well with core Tory voters in Aberdeenshire, but would have been a disastrous display of disunity on budget day.

Normally the shadow chancellor would respond to a Commons statement by the chancellor, but on budget day parliamentary convention means that the leader of the opposition has to do it. Luckily, this is a task Keir Starmer has been preparing for. In his new biography of Starmer (which is excellent – I’ll write about it at more length on another day), Tom Baldwin quotes Starmer aide Chris Ward as saying that soon after Starmer became an MP in 2015 he started thinking about what he would do on days like today. “We’d book afternoons out to practise. There would be a budget and I’d say to him, one day you might have to respond to this, so we’d sit down, go through the Treasury’s figures together, and work out what he would have done if he had been leader,” Ward told Baldwin.

Today’s budget has been drafted to hobble Labour as much as possible. In a good article for Politico, Esther Webber explains that there is a long history of chancellors acting like this. She says:

Glen O’Hara, professor of modern history at Oxford Brookes University, points to the gaping trade deficit left for Labour in 1964, when outgoing Tory Chancellor Reginald Maudling infamously left a note for his successor reading: “Good luck, old cock … sorry to leave it in such a mess.”

Conservative Chancellor Norman Lamont’s pre-election budget in 1992 introduced a lower rate of income tax which Labour opposed, allowing the Tories to portray them as a “high-tax party.” The Tories unexpectedly went on to win the subsequent poll.

Jill Rutter, who worked in the Treasury alongside Lamont — and is now part of the UK in a Changing Europe think tank — confirms that “at the time, they all thought they were being super clever in terms of making life difficult for Labour.”

She cites more recent examples, too, including former Labour PM Gordon Brown’s introduction of a child poverty target just before the 2010 election — hard for any government not to honor, without appearing monstrous — and Osborne’s own austerity spending cuts ahead of the 2015 election, which proved difficult for Labour to undo without being cast as big spenders.

Jeremy Hunt has been posing for the traditional budget day photographs outside No 11 with his red box.

How taxes go down and up before and after general elections

There is a long history of governing parties cutting taxes in budgets just before general elections, and new governments (often from the same party) whacking them up again in the first budget after polling day. Jeremy Hunt is obviously in election bribe mode today, but this chart, from the Institute for Fiscal Studies thinktank, which covers fiscal events up to last year’s autumn statement, suggests that what he is doing is not unprecedented. Denis Healey did something similar before the 1979 election, which Labour lost, and Geoffrey Howe before 1983, which the Tories won.

Jeremy Hunt has been talking about “great budgets” this morning. He did not quite say today’s would be in the list, but in a video broadcast on X this morning, the chancellor said:

Great budgets change history. The bit of history I want to change is to show people it is possible, if we stick to a plan through all the ups and downs, through all the challenges, it’s possible to have healthy growth, good public services, and to bring down taxes.

Reminder: the economy is in recession, polls suggest 80% of people think public services are in a fairly bad or very bad state, and at the autumn statement the OBR said taxes as a share of GDP were forecast to reach a postwar high in 2028-29.

Updated

Jeremy Hunt told colleagues what was in the budget at an early morning cabinet meeting, and some of them seemed pretty cheerful as they were photographed on the way out. They don’t always emerge from cabinet smiling like this. Perhaps they were told to look positive, or maybe they were just pleased by what they heard.

There has been a lot of commentary (eg here) over the last 24 hours about how cutting national insurance by 2p in the pound is unlikely to help the Tories because they tried that in the autumn statement and their poll ratings have not budged. But, as Stephen Bush points out in his Inside Politics briefing for the Financial Times, this argument ignores an important factor motivating Rishi Sunak. Bush says:

So how successful was the 2p tax cut? In terms of the Conservative-Labour battle, not at all. Since the last fiscal statement, the polls have if anything worsened for the Conservative party. On Monday, polling by Ipsos put Tory support at 20 per cent, the lowest level since its survey began in 1978. The Conservatives have lost three by-elections on the bounce. But in terms of the internal battle within the Tory party, the national insurance cut has done its job, in that Rishi Sunak is still prime minister.

That’s the important political context to understand when Hunt will essentially try to do the same thing with a further 2p cut in national insurance. He will also hope that scrapping the “non-dom” tax regime will cause problems for Labour.

On that last aim, he will surely get at least some joy: scrapping the “non-dom” regime is one of Labour’s few tax rises and it is intended to fund many of their promises. Whatever alternative the party rustles up instead may be unpopular or unworkable or both. As far as the country as a whole is concerned, cutting national insurance did not move the dial in November and I doubt it is going to do so in March. And a Budget that doesn’t move the dial may, in the end, fail in its other aim of protecting Sunak from internal revolt.

Harriett Baldwin, the Conservative MP who chairs the Commons Treasury committee, told LBC this morning that she “definitely” wants to see an increase in defence spending in the budget. That is also the view of Conservative party members, according to a survey by the ConservativeHome website published yesterday. It is assumed that Tory members want tax cuts above all, but the survey suggests that 74% of them think higher defence spending is more important. They said Jeremy Hunt should increase the defence budget “even if it leaves less room for tax cuts”.

Updated

UK fuel duty cut is regressive policy that benefits the wealthy, study finds

Retaining the fuel duty cut in the budget is a regressive policy that benefits the wealthiest in society, who will save £60 a year, while those who earn the least will save just £22, according to analysis. Helena Horton has the story here.

2p cut in national insurance as Jeremy Hunt prepares to reveal full spring budget

Good morning. Looking at some of the newspaper front pages this morning, you might assume that it’s all done, and that today’s budget is a “good news” event for the Conservative party (which is in such a dire plight it may have forgotten what good news is).

From what we know, it seems as if Jeremy Hunt is going to test the “election bribe” approach to politics to destruction with a giveaway budget that he hopes will revive his party’s fortunes by anaesthetising memory of the very large tax increases the government has already imposed since 2019, and setting a campaign trap for Labour.

But there are three big questions yet to be answered.

First, is a 2p cut in national insurance the main story of the budget, or is there something much bigger to come? The 2p cut is now established as fact, but it is not entirely clear whether that is because the Treasury wanted the news out before the budget, or whether it was just forced into confirming what diligent reporting had uncovered. Budgets normally focus on tax changes taking effect in the budget year. But Rishi Sunak is also on record as wanting to cut income tax eventually to 16p in the pound, and sometimes chancellors announce tax cuts they plan to make a year or more in advance. Will we get some of that today?

Second, how will Labour react? Hunt will probably fund his tax cut by lifting two of the four tax increases proposed by Labour (which the Tories used to oppose) and by cutting plans for public spending after the election. Many in the Labour party would love to see Starmer promise to reverse any such cuts when he responds to the budget statement. But Starmer wants to fight the general election on terms set by Labour, not Hunt, and so he is unlikely to leap into such an obvious elephant trap. We might not get the full, considered Labour response today, but we will find out in what direction they are heading.

The final question is, if this is the most nakedly partisan budget of recent times, will it work? We certainly won’t know for sure today, but by 6pm we might be better placed to have a guess.

Here is our overnight story on the budget by Kiran Stacey, Pippa Crerar and Phillip Inman.

And here is Phillip’s guide to what to expect from the budget.

My colleague Graeme Wearden will be joining me later from the business blog, and we will be covering the budget in full, and then focusing on reaction and analysis.

Here is the agenda for the day.

8.30am: Rishi Sunak chairs cabinet, where Jeremy Hunt will brief ministers on what’s in the budget.

12pm: Rishi Sunak faces Keir Starmer at PMQs.

12.30pm: Hunt delivers his budget statement in the Commons. The speech will last about an hour, and when it finishes the budget red book, the Office for Budget Responsibility’s analysis, and all the other budget documentation will be published on the Treasury and OBR websites.

2.30pm: Richard Hughes, chair of the OBR, holds a press conference.

5pm: Hunt addresses a meeting of the backbench Conservative 1922 Committee.

If you want to contact me, do try the “send us a message” feature. You’ll see it just below the byline – on the left of the screen, if you are reading on a laptop or a desktop. This is for people who want to message me directly. I find it very useful when people message to point out errors (even typos – no mistake is too small to correct). Often I find your questions very interesting, too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either in the comments below the line; privately (if you leave an email address and that seems more appropriate); or in the main blog, if I think it is a topic of wide interest.

Updated

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