Budget 2018: Politicians clash over ‘end of austerity’ claims

Philip Hammond used his Budget to offer early tax cuts for millions of workers and extra cash for Whitehall departments, as he claimed that austerity was ‘coming to an end’ after eight years.

Boosted by improved public finance forecasts, the Chancellor promised a ‘brighter future’ after years of constraint imposed following the financial crash.

Chancellor Philip Hammond outside 11 Downing Street, London, before heading to the House of Commons to deliver his Budget. Picture: Victoria Jones/PA Wire

Chancellor Philip Hammond outside 11 Downing Street, London, before heading to the House of Commons to deliver his Budget. Picture: Victoria Jones/PA Wire

But Tory and Labour leaders in Yorkshire said they still faced significant funding challenges despite new pots of money being announced for issues including social care, health, education and tackling potholes.

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Measures announced in Mr Hammond’s third Budget amounted to a total £100 billion loosening of the purse-strings over a six-year period.

The spectre of a no-deal Brexit hung over the 72-minute statement, with the Office for Budget Responsibility warning that failure to reach agreement with Brussels would hit the economy hard.

Chancellor Philip Hammond holds his red ministerial box outside 11 Downing Street, London, flanked by Treasury colleagues Liz Truss (left) and Mel Stride, before heading to the House of Commons to deliver his Budget. Picture: David Mirzoeff/PA Wire

Chancellor Philip Hammond holds his red ministerial box outside 11 Downing Street, London, flanked by Treasury colleagues Liz Truss (left) and Mel Stride, before heading to the House of Commons to deliver his Budget. Picture: David Mirzoeff/PA Wire

A disorderly Brexit ‘could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances’, warned the Government’s independent forecaster.

In a move designed to put the UK at the forefront of international action to adapt tax systems to the digital age, the Chancellor announced a new £400 million levy aimed at internet giants such as Google and Facebook.

But while global tech firms will face a new tax, Mr Hammond promised a package of help for struggling high streets.

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Around 32 million Britons will be given an income tax cut as Mr Hammond brought promised increases in the tax-free personal allowance forward by a year from 2020 to 2019.

In the last scheduled Budget before Brexit, Mr Hammond said: “We are at a turning point in our history and we must resolve to go forwards, not backwards and work together to build a Britain we can all be proud of.”

Mr Hammond said his Budget was aimed at helping ‘the strivers, the grafters and the carers’ and would pave the way for a ‘brighter future’.

But Labour leader Jeremy Corbyn labelled the statement a ‘broken promise Budget’. He told MPs: “Whatever the Chancellor claims today, austerity is not over.”

The Chancellor set out a five-year plan for departmental spending which will see Whitehall budgets rise by an average of 1.2 per cent a year.

However, detailed figures made clear that the lion’s share of this extra funding will go to pay for a £20.5bn boost to NHS spending.

Among the announcements was a £770m increase to the existing £1.7bn Transforming Cities fund designed to improve transport links between cities and outlying areas. 

The fund, announced at last year’s Budget, saw half the funding reserved for areas with fully implemented devolution deals, meaning political leaders in West Yorkshire and the Sheffield City Region had to compete with the rest of the country for the remainder.

Mr Hammond pledged £37m to support the development of Northern Powerhouse Rail, the high speed line connecting the North’s biggest cities. Transport for the North is currently working on its submission to the Treasury on the project, which has yet to receive formal government approval.

A promised £13m to improve access to flood information included an expansion to the flood warning system to an extra 1,300 at-risk properties in Yorkshire and the Humber.

And after the Budget speech, Treasury officials said the ‘Northern Powerhouse Strategy’, first published in 2016, was to be refreshed next year to improve productivity.

The Chancellor said in a statement: “My Budget sends a clear message to the people of Yorkshire and the Humber – your hard work is paying off and austerity is coming to an end.

“Thanks to our careful stewardship of the economy the public finances are in a much stronger position and national debt is falling.

“This means we have more money to invest in Britain’s future – boosting local services, supporting our high street, backing business and fuelling the economy.”

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Sheffield South East MP Clive Betts also disputed that austerity was coming to an end.

He said: “There is no end in sight to austerity for the local services on which all of us depend.

“The Chancellor has done nothing more than scratch the surface in responding to the plight of children’s and adult social care services and he has done absolutely nothing to address increasing crime.”