LONDON (Reuters) - Chancellor Philip Hammond delivered his annual budget statement to parliament on Monday.
Below are highlights from the speech:
The UK has been leading attempts to deliver international corporate tax reform for the digital age. A new global agreement is the best long-term solution. But progress is painfully slow. We cannot simply talk forever.
So we will now introduce a UK Digital Services Tax. This will be a narrowly-targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants – rather than our tech start-ups - that shoulder the burden of this new tax.
The Digital Services Tax will only be paid by companies which are profitable and which generate at least 500 million pounds a year in global revenues in the business lines in scope.
We will consult on the detail to make sure we get it right, and to ensure that the UK continues to be the best place to start and scale-up a tech business. It will come into effect in April 2020… …and is expected to raise over 400 million pounds a year.
I can report to the British people that their hard work is paying off and the era of austerity finally coming to an end.
We are at a pivotal moment in our EU negotiations and the stakes could not be higher: Get it right, and we will not only protect Britain’s jobs, businesses and prosperity but we will also harvest a double “Deal Dividend”, a boost from the end of uncertainty; And a boost from releasing some of the fiscal headroom I am holding in reserve.
We are confident that we will secure a deal which delivers that dividend. Confident, but not complacent.
I have already allocated 2.2 billion pounds to departments for Brexit preparations; And in the Autumn Budget last year I set aside a further 1.5 billion pounds to be allocated for 2019-20.
Today I am increasing that sum to 2 billion pounds and in the coming week the Chief Secretary will announce allocations to individual Departments.
If the economic or fiscal outlook changes materially in-year I reserve the right to upgrade the Spring Statement to a full Fiscal Event.
The OBR expect growth to be resilient across the forecast period improving next year from the 1.3 percent forecast at the Spring Statement to 1.6 percent, then 1.4 percent in 2020 and 2021; 1.5 percent in 2022; and 1.6 percent in 2023.
And today the OBR confirm Britain’s “jobs miracle” is set to continue revising up participation in the labour market, revising down the country’s “equilibrium unemployment rate”.
The OBR is forecasting sustained real wage growth in each of the next five years.
Taking into account all announcements since the Spring Statement, including measures I shall announce today, shows the deficit down from almost 10 percent under Labour to less than 1.4 percent next year under this Conservative Government and falling to just 0.8 percent by 2023-24.
We meet our structural borrowing target three years early and deliver borrowing of just 1.3 percent of GDP in 20-21 maintaining 15.4 billion pounds headroom against our 2 percent Fiscal Rules target.
Today the OBR confirm that our national debt peaked in 2016/17 at 85.2 percent of GDP and then falls in every year of the forecast from 83.7 percent this year; to 74.1 percent in 23-24 that’s lower in every year than forecast at the Spring Statement.
I have set out an indicative 5-year path for departmental resource spending...In Spending Review 2010 average real growth was –3 percent; In Spending Review 2015 it was –1.3 percent; From next year it will be +1.2 percent annual average real growth.
When our EU negotiations deliver a deal, as I am confident they will, I expect that the “Deal Dividend” will allow us to provide further funding for the Spending Review.
Over the next five years, total public investment is growing 30 percent to its highest sustained level in 40 years, investing in the roads, railways, research, and digital infrastructure that will power our economy through the 21st Century.
I will provide an additional 1 billion pounds to the Ministry of Defence to cover the remainder of this year and next to boost our cyber capabilities and our anti-submarine warfare capacity and to maintain the pace of the Dreadnought programme to ensure Continuous At Sea Deterrence.
I remain committed to the use of public-private partnership where it delivers value for the taxpayer and genuinely transfers risk to the private sector. But there is compelling evidence that the Private Finance Initiative does neither.
We will honour existing contracts. But the days of the public sector being a pushover, must end. We will establish a centre of excellence to actively manage these contracts in the taxpayers’ interest starting in the health sector. And we will go further.
I have never signed off a PFI contract as Chancellor and I can confirm today that I never will. I can announce that the Government will abolish the use of PFI and PF2 for future projects.
I can announce a package of measures to stimulate business investment and send a message loud and clear to the rest of the world: Britain is open for business: I am increasing the Annual Investment Allowance, from 200,000 pounds to 1 million pounds for two years.
I can announce today: A further 500 million pounds for the Housing Infrastructure Fund, to unlock a further 650,000 homes; The next wave of strategic partnerships with 9 Housing Associations to deliver 13,000 homes across England.
We will introduce a new tax on the manufacture and import of plastic packaging which contains less than 30 percent recycled plastic transforming the economics of sustainable packaging.
I will monitor carefully the effectiveness of the action the takeaway drinks industry is taking to reduce single-use plastics and I will return to this issue if sufficient progress is not made.
We will increase Remote Gaming Duty on online games of chance, to 21 percent in order to fund the loss of revenue as we reduce FOBT stakes to 2 pounds.
Reporting by Kate Holton and Sarah Young