The Chancellor of the Exchequer, the Rt Hon Philip Hammond has delivered the 2018 budget. It sought to demonstrate that austerity is coming to an end and included a number of spending commitments. He indicated that as the UK prepares to leave the EU, the government is taking further steps to ensure a positive future by investing in public services, supporting businesses, and boosting living standards across the country. Measures within the budget included growth in departmental spending budgets, additional funding for the NHS and also for local councils for social care. He announced a temporary increase to £1 million in the Annual Investment Allowance for businesses and an additional £500 million to help prepare for exiting the European Union. Measures included:
- Setting out a new path for public spending ahead of the Spending Review in 2019, with day-to-day departmental spending now growing in real terms for the first time since 2010
- Funding the NHS for its new five-year settlement until 2023-24, announced by the government in June to celebrate the NHS’s 70th birthday; and providing local councils with additional funding for social care to help older people with care needs and to help children to live safely at home
- Delivering the government’s commitment to increase the Personal Allowance to £12,500 in 2019-20, a year earlier than planned, so that people can keep more of what they earn
- Boosting the National Living Wage and increasing the Universal Credit (UC) Work Allowances by £1,000, to ensure that work pays and to help families with the cost of living
- Investing £1 billion in defence across 2018-19 and 2019-20, and £160 million in counter-terrorism police in 2019-20, so that they are well equipped to keep citizens and communities safe
- Increasing the National Productivity Investment Fund (NPIF) from £31 billion to £37 billion, and delivering the largest ever strategic roads investment package worth £28.8 billion from 2020-25
- Backing business with further incentives to invest in the short and long term, with a temporary increase in the Annual Investment Allowance to £1 million and the introduction of a new allowance for investments in non-residential structures and buildings
- Ensuring that large, established, digital services companies pay their fair share by introducing a 2% tax on the revenues of search engines, social media platforms and online marketplaces, reflecting the value they derive from UK users
- Preparing for exiting the EU by providing an additional £500 million to government departments, bringing the government’s investment in EU exit preparations to over £4 billion since 2016
The government is seeking to support business and entrepreneurship by increasing access to finance for private sector investment and helping people who want to start and grow businesses. This includes action to unlock pension fund investment in growing firms and policies to raise business productivity. The Budget is also boosting exports by extending UK Export Finance’s direct lending scheme by £2 billion in 2020-21 and 2021-22.
On new technologies and innovation, the Budget reiterated the government’s commitment to research and development, and the Industrial Strategy ambition to raise total research and development investment to 2.4% of GDP by 2027, the Budget includes additional support for cutting-edge science and technologies. This includes long-term support for research and development; the Budget allocates £1.6 billion to strengthen the UK’s global leadership in science and innovation to reinforce the UK’s commitment to a strong environment for international scientific collaboration. Since 2016, the government has invested an additional £7 billion in research and development, the largest increase to research and development in 40 years. As part of this investment in research and development, the government will increase the Industrial Strategy Challenge Fund by £1.1 billion, supporting technologies of the future.
The Budget indicated that science and innovation is at the heart of government and aims to stimulate the use of cutting-edge science and innovation. The Budget announces a new £50 million per year fund designed to address the most pressing challenges in areas such as public health and cyber security. The fund will focus on joint programmes between government and industry, and will begin in 2021-22. The government will also invest an additional £120 million through the Strength in Places Fund. This will support clusters of science and innovation excellence across the UK and enable them to further develop their strengths. This funding extends the existing programme until 2021-22.
The Chancellor announced that there would be no further projects funded through the Private Finance Initiative.
The 2018 Budget Policy Document can be seen here.