CHANCELLOR Philip Hammond unveiled his plan to boost Britain's economy when he delivered the Autumn Statement today.
The expected hike in infrastructure spending will include dualing the A66 between Penrith and Scotch Corner to boost east-west connectivity.
He confirmed that the Income T ax personal allowance would rise to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament.
The p ersonal allowance to then rise in line with inflation during the 2020s.
The National Living Wage will increase from £7.20 to £7.50 in April.
Fuel duty was frozen too for the seventh successive year, at a cost of £850m, saving the average car driver £130 and van driver £350 a year.
But there were tax increases too, with I nsurance P remium T ax to rise from 10 per cent to 12 per cent next June.
Mr Hammond said the Brexit vote underlined the “urgent” need to tackle the UK economy’s long-term weaknesses as the Office for Budget Responsibility (OBR) slashed growth forecasts for next year.
The Chancellor said the economy had so far “confounded commentators” with its “strength and resilience”.
But he revealed the OBR had downgraded growth forecasts for next year from 2.2 per cent to 1.4 per cent as a result of the uncertainty caused by the Brexit vote and higher inflation due to the fall in sterling.
Mr Hammond told MPs: “That’s slower, of course, than we would wish, but still equivalent to the IMF’s forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy.”
The Chancellor said the June 23 vote to leave the European Union will “change the course of Britain’s history” and “makes more urgent than ever the need to tackle our economy’s long-term weaknesses” including the productivity gap.
The OBR forecast growth this year to be 2.1 per cent, higher than the 2.0 per cent forecast in March, but it will fall to 1.4 per cent next year before recovering to 1.7 per cent in 2018, 2.1 per cent in 2019 and 2020 then 2.0 per cent in 2021.
Mr Hammond confirmed he was abandoning predecessor George Osborne’s aim of achieving a budget surplus by 2019 - 20 as he acknowledged the decline in growth would have an impact on the public finances.
The plan now was to e liminate deficit as “early as possible” in next Parliament
He told MPs Government borrowing would hit £68.2bn this year and £59bn next year compared with the March forecast of £55.5bn and £38.8bn.
The Chancellor's spending plans include :
:: A new National Productivity Investment Fund of £23 bn to be spent on innovation and infrastructure over the next five years;
:: Additional investment in research and development, rising to an extra £2 bn per year by 2020/21;
:: A £2.3 bn Housing Infrastructure Fund aimed at delivering up to 100,000 new homes in high-demand areas and £1.4 bn made available to deliver 40,000 additional affordable homes;
:: An additional £1.1 bn investment in English local transport, including pinch points on strategic roads, digital signalling on railways and low emission and autonomous vehicles;
:: Investment of more than £1 bn in digital infrastructure and 100 per cent business rates relief on new fibre infrastructure.
The Chancellor said: “We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment.
“ But we must sustain this effort over the long term if we are to make a lasting difference to the UK’s productivity performance.”
Mr Hammond confirmed that the Government has no plans for further welfare savings in this Parliament.
And he said that the Ministry of Justice would be allowed to increase prison officers by 2,500, while £1 bn of Whitehall efficiency savings for 2019 - 20 would be reinvested in priority areas.
Government will meet commitments to protect budgets for key public services, defence, overseas aid and the pension “triple lock” until the end of this Parliament.
Mr Hammond confirmed corporation tax will be reduced to 17 per cent as planned.
For the oil and gas sector, the Carbon Price Support will be capped until 2020 and business rates reductions worth £6.7 billion will be implemented.
Rural Rate Relief is to be increased to 100 per cent giving small businesses a tax break worth up to £2,900.
Employee and employer National Insurance thresholds are to be equalised at £157 per week from April , at a maximum cost to business of £7.18 per employee a year.
As widely trailed, tax savings on salary sacrifice and benefits in kind are to be stopped, with exceptions for ultra low emission cars, pensions, childcare and cycling.
The G overnment aims to raise £630 m by removing tax benefits of disguised earnings for the self-employed and employers.
Measures to crackdown on inappropriate tax avoidance to raise around £2 billion over the forecast period.
Measures to stop multi-nationals avoiding tax should raise £5 bn from the largest businesses in the UK.
Mr Hammond also announced measures to help the so-called 'jams' those who are “just about managing”.
The Universal C redit taper rate is to be cut from 65 per cen to 63 per cent from April at a cost of £700 m.
And there will be a b an on letting agency fees “as soon as possible” and consultation on how to ban pension cold calling.
A n ew Investment Bond, to be launched through NS&I, with interest rate of 2.2 per cent, will help 2m savers.
He concluded by announcing that the Autumn Statement will be abolished.
N ext year ’s budget to be the last held in Spring. Starting in Autumn 2017, the annual Budget will be held in the a utumn and subsequent s pring statements will not be “major fiscal events”.
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