The Manufacturer provides rolling coverage of Chancellor George Osborne’s Budget 2016.
George Osborne is expected to set out a further £4 billion in extra spending cuts today, alongside announcing investment to boost the UK’s infrastructure.
Ahead of what will be his eighth Budget, Osborne tweeted this morning: “Today’s Budget sets out long term solutions to long term problems.”
The Manufacturer will be providing live coverage, so remember to refresh your browser and allow us to keep you up to date.
Economic overview
Today I report on an economy set to grow faster than any other advanced economy in the world.
I report on a deficit down by two-thirds, falling each year and on course for a Budget surplus.
The British economy is growing because we didn’t seek short term fixes but pursued a long term economic plan.
Financial markets are turbulent. Productivity growth across the west is too low. And the outlook for the global economy is weak. It makes for a dangerous cocktail of risks. But one that Britain is well-prepared to handle, if we act now so we don’t pay later.
Nor as a nation are we powerless. We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability. In this Budget we choose to put stability first.
The path we have followed over the past five years has given us one of the strongest economies in the world, and it is a path we shall continue on in the years ahead.
We fix our plans to fit the figures, we don’t fix the figures to fit our plans.
The hard work of fixing our economy is paying off. In 2015, we were ahead of everyone but America.
The Office for Budget Responsibility (OBR) has forecast that the UK economy will expand by 2% this year, 2.2% in 2017 and then 2.1% in 2018, 2019 and 2020.
This growth will be faster than any of the major developed economies, however the forecast is still a revision.
EU Referendum
The OBR is explicit today that their forecasts are predicated on the UK remaining in the European Union.
My view is that Britain will be stronger, safer and better off inside a reformed European Union. I believe we should not put at risk all the hard work that the British people have done to make our country strong again.
We will deliver sensible reforms to keep Britain living within its means and not repeat the mistakes of the past.
Britain is prepared for whatever the world throws at it because we have stuck to our long term economic plan.
My Budgets last year delivered key improvements to productivity like the Apprenticeship Levy, lower corporation tax and the National Living Wage. My Budget this year sets out these further bold steps we need to take.
Key points
One. Fundamental reform of the business tax system. Loopholes closed. Reliefs reduced but so too are rates. And the result: a huge boost for small business and enterprise.
Two. A radical devolution of power so more of the responsibility and the rewards of economic growth are in the hands of local communities.
Three. Major new commitments to the national infrastructure projects of the future.
Four. Confronting the obstacles that stand in the way of important improvements to education and our children’s future.
And five. Backing people who work hard and save.
Corporation tax
In the last Parliament I cut corporation tax dramatically. But I also introduced the Diverted Profits Tax, to catch those trying to shift profits overseas.
As a result Britain went from one of the least competitive business tax regimes to the most competitive – and we raised much more money for public services.
Our policy is to not raise taxes on business, but lower taxes for businesses.
I can confirm today we’re going to reduce the rate of Corporation Tax even further. That’s the rate Britain’s profit-making companies – large and small – have to pay. And all the evidence shows it’s one of the most distortive and unproductive taxes there is.
Corporation Tax was 28% at the start of the last Parliament and we reduced it so that it’s 20% at the start of this one. Last summer I set out a plan to cut it to 18% in coming years. Today I am going further. By April 2020 it will fall to 17%.
Business rate relief
Business rates are the fixed costs which weigh down on small businesses. At present small business rate relief is only permanently available to firms with a rateable value of less than £6,000.
In the past I’ve been able to double it for one year only. Today, I am more than doubling business rate relief, and more than doubling it permanently.
The tax threshold will raise from £6,000 to £15,000, and the higher rate will raise from £18,000 to £51,000.
From April next year, 600,000 small businesses will pay no business rates at all. That’s an annual saving for them of up to nearly £6,000 – forever. A further 250,000 businesses will see their rates cut. In total, half of all British properties will see their business rates fall or be abolished altogether.
Businesses also want a simpler tax system. I am funding a dramatic improvement in the service HMRC offers them.
Energy
Many have complained bitterly to me about the complexity of the Carbon Reduction Commitment. It’s not a commitment; it’s a tax. So I can tell the House: we’re not going to reform it. Instead I have decided to abolish it altogether. And to make good the lost revenue – the Climate Change Levy will rise from 2019.
The most energy intensive industries like steel remain completely protected, and I’m extending the climate change agreements that help many others.
The Energy Secretary and I are announcing £730 million in further auctions to back renewable technologies. And we’re now inviting bids to help develop the next generation of small modular reactors.
The oil and gas sector employs hundreds of thousands of people in Scotland and around our country. I am today cutting in half the supplementary charge on oil and gas from 20% to 10%, and effectively abolishing petroleum revenue tax.
Infrastructure
In every international survey of our country, our failure for a generation to build new housing and new transport has been identified as a major problem. But we are the builders.
Today we’re setting out measures to speed up our planning system, zone housing development and prepare the country for the arrival of 5G technology.
From 2018, we are going to halve the price of the tolls on the Severn Crossings between England and Wales.
So we are giving the green light to High Speed 3 between Manchester and Leeds; finding new money to create a 4-lane M62; and will develop the case for a new tunnelled road from Manchester to Sheffield. We’ll upgrade the A66 and A69 too.
I said we would build the Northern Powerhouse We’ve put in place the mayors. We’re building the roads. We’re laying the track. We’re making the Northern Powerhouse a reality and rebalancing our country.
The Government that is delivering Crossrail 1, will now commission Crossrail 2.
Sugar levy
Our nation’s productivity is no more, no less than the combined talents and skills of the people on these islands.
I am announcing a new sugar levy on soft drinks; coming into force in 2018 – giving companies two years to prepare themselves.
The £520m this levy will raise will be used to help fund school sport activities and longer school days.
Today, I am freezing fuel duty for the sixth year in a row – representing £75 worth of yearly savings to the average driver; £270 a year to a small business with a van.
Capital Gains Tax
Our Capital Gains Tax is now one of the highest in the developed world, when we want our taxes to be among the lowest.
The headline rate of Capital Gains Tax currently stands at 28%. Today I am cutting it to 20%. And I am cutting the Capital Gains Tax paid by basic rate taxpayers from 18% to just 10%.
The rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest.
I am also introducing a brand new 10% rate on long term external investment in unlisted companies, up to a separate maximum of £10 million of lifetime gains.
