Jeremy Hunt – 2024 Budget Speech
The speech made by Jeremy Hunt, the Chancellor of the Exchequer, in the House of Commons on 6 March 2024.
As we mourn the tragic loss of life in Israel and Gaza, the Prime Minister reminded us last week of the need to fight extremism and heal divisions, so I start today by remembering the Muslims who died in two world wars in the service of freedom and democracy. We need a memorial to honour them, so following representations from my right hon. Friend the Member for Bromsgrove (Sir Sajid Javid) and others, I have decided to allocate £1 million towards the cost of building one. Whatever your faith, colour or class, this country will never forget the sacrifices made for our future.
In recent times, the UK—and the UK economy—has dealt with a financial crisis, a pandemic and an energy shock caused by war in Europe, yet despite the most challenging economic headwinds in modern history, under Conservative Governments since 2010 growth has been higher than in every large European economy, unemployment has halved, absolute poverty has gone down, and there are 800 more people in jobs for every single day that we have been in office. [Interruption.] Of course, interest rates remain high as we bring down inflation, but because of the progress we have made, because we are delivering the Prime Minister’s economic priorities, we can now help families not just with temporary cost of living support, but with permanent cuts in taxation. We do that to give much needed help in challenging times, and because Conservatives know that lower tax means higher growth, and higher growth means more opportunity, more prosperity and more funding for our precious public services. [Interruption.]
Madam Deputy Speaker
Order. The Chancellor has hardly said anything—[Interruption.] Order. You cannot get excited yet. Other people want to hear what the Chancellor has to say. It matters, so we will have a bit of good behaviour, please.
Jeremy Hunt
Thank you, Madam Deputy Speaker.
If we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration; it can only come by building a high-wage, high-skill economy—not just higher GDP, but higher GDP per head.
That is the difference. The Labour party’s plans would destroy jobs, reduce opportunities and risk family finances with spending that pushes up taxes. Instead of going back to square one, the policies I announce today mean more investment, more jobs, better public services and lower taxes in a Budget for long-term growth.
I start with the updated forecasts from the Office for Budget Responsibility, for which I thank Richard Hughes and his team. First, inflation. When the Prime Minister and I came into office, it was 11%. The latest figures show—[Interruption.]
Madam Deputy Speaker
Order. This is not amusing any more. We need to hear what the Chancellor has to say. I can tell who is making the noise, and you simply will not get a chance to speak later. That is the end of it.
Jeremy Hunt
When the Prime Minister and I came into office, inflation was 11%, but the latest figures show it is now 4%—more than meeting our pledge last year to halve it. Today’s forecasts from the OBR show it falling below the 2% target in just a few months’ time, nearly a whole year earlier than forecast in the autumn statement.
That did not happen by accident. Whatever the pressures, and whatever the politics, a Conservative Government, working with the Bank of England, will always put sound money first. We also understand that tackling inflation, while necessary, is painful. It means higher interest rates and a period of lower growth, so we have given the average household £3,400 in cost of living support over the past two years. Doing so makes economic as well as moral sense. The OBR predicted real household disposable income per person would fall by 2% in the past year; instead, after that support, it is on track to rise by 0.8%.
Today, I take further steps to help families with cost of living pressures, starting with measures to help the poorest families. We have already abolished higher charges for electricity paid by those on prepayment meters, increased the local housing allowance and raised benefits by double the expected inflation. Today, I focus on those falling into debt. Nearly 1 million households on universal credit take out budgeting advance loans to pay for more expensive emergencies such as boiler repairs or help getting a job. To help make such loans more affordable, I have decided to increase the repayment period for new loans from 12 months to 24 months.
For some people—[Interruption.] I thought Labour Members cared about people on the lowest incomes, but trust them not to want to hear about debt. For some people the best way to resolve debt is through a debt relief order, but getting one costs £90, which can deter the very people who need them most, so, having listened carefully to representations from Citizens Advice, I today relieve pressure on around 40,000 families every year by abolishing that £90 charge completely.
Next, the household support fund. It was set up on a temporary basis and due to conclude at the end of this month. Having listened carefully to representations from the Joseph Rowntree Foundation, the Trussell Trust, the right hon. Member for East Ham (Sir Stephen Timms), my right hon. Friend the Member for Suffolk Coastal (Dr Coffey) and my hon. Friends the Members for Colchester (Will Quince) and for Ruislip, Northwood and Pinner (David Simmonds) among others, I have decided that, with the battle against inflation still not over, now is not the time to stop the targeted help that it offers. We will therefore continue it at current levels for another six months.
Next, I turn to a measure that will help businesses and households more broadly. In the autumn statement I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%. However, I have listened carefully to my right hon. Friends for Altrincham and Sale West (Sir Graham Brady) and for Vale of Glamorgan (Alun Cairns), and to my hon. Friend the Member for Moray (Douglas Ross), who is a formidable champion of the Scottish whisky industry. I also listened to Councillor John Tonks from Ash—a strong supporter of the wonderful Admiral pub—who pointed out the pressures facing the industry. Today, I have decided to extend the alcohol duty freeze until February 2025. That will benefit 38,000 pubs across the UK, on top of the £13,000 saving that a typical pub will get from the 75% business rates discount that I announced in the autumn. We value our hospitality industry. We are backing the great British pub.
Another cost that families and businesses worry about is fuel. The shadow Chancellor complained about the freeze on fuel duty. Labour has opposed it at every opportunity. The Labour Mayor of London wants to punish motorists even more with his ultra low emission zone plans. However, lots of families and sole traders depend on their car. If I did nothing, fuel duty would increase by 13% this month, so instead I have listened to my right hon. Friend the Member for Witham (Priti Patel), my hon. Friends the Members for Stoke-on-Trent North (Jonathan Gullis) and for Dudley North (Marco Longhi) and others, as well as to The Sun newspaper’s “Keep it Down” campaign. I have as a result decided to maintain the 5p cut and freeze fuel duty for another 12 months. That will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250. Taken together with the alcohol duty freeze, that decision also reduces headline inflation by 0.2 percentage points in 2024-25, allowing us to make faster progress towards the Bank of England’s 2% target.
There can be no solid growth without solid finances. An economy based on sound money does not pass its bills to the next generation. When it comes to borrowing, some believe that there is a trade-off between compassion and fiscal responsibility. They are wrong. It is only because we responsibly reduced the deficit by 80% between 2010 and 2019 that we could provide £370 billion to help businesses and families in the pandemic. Labour opposed our plans to reduce the deficit every single step of the way, but, to be fair, they were consistent. In coalition, the Lib Dems supported controlling spending, but now they say that they would prop up a party that will turn on the spending taps. It is the difference between no plan and no principles—and I am delighted that, for once, the right hon. Member for Kingston and Surbiton (Ed Davey) is here to hear that.
Today, we say something different: there is nothing compassionate about running out of money. With the pandemic behind us, we must once again be responsible and build up our resilience to future shocks. That means bringing down borrowing so we can start to reduce our debt, and today’s figures confirm that is happening. Ahead of my first autumn statement in 2022, the OBR forecast that headline debt would rise to above 100% of GDP. Today, it says that it will fall in every year, to just 94% by 2028-29. According to the OBR, underlying debt—which excludes Bank of England debt—will be 91.7% in 2024-25, then 92.8%, 93.2% and 93.2%, before falling to 92.9% in 2028-29, with final year headroom against debt falling of £8.9 billion. Our underlying debt is therefore on track to fall as a share of GDP, meeting our fiscal rule, and we continue to have the second lowest level of Government debt in the G7, lower than that of Japan, France or the United States.
We also meet our second fiscal rule—for public sector borrowing to be below 3% of GDP—three years early. Borrowing falls from 4.2% of GDP in 2023-24 to 3.1%, then 2.7%, 2.3%, 1.6%, and 1.2% in 2028-29. By the end of the forecast, borrowing is at its lowest level of GDP since 2001. None of that, of course, would be possible if Labour implemented its pledge to decarbonise the grid five years early, by 2030; by its own calculations, that costs £28 billion a year to do. Last month, after flip-flopping for months, Labour said that it is not going to spend the £28 billion after all, but will somehow meet its pledge. “Somehow” can only mean one thing: tax rises on working families. Same old Labour!
Today, in contrast, a Conservative Government bring down taxes with borrowing broadly unchanged—in fact, borrowing is slightly lower than in the autumn statement. The fact that we are bringing borrowing down is of particular importance to one very special person: Sir Robert Stheeman is the outgoing chief executive of the Government’s Debt Management Office, and after 20 years of exceptional public service, he is in the Gallery. Thank you, Sir Robert.
I now turn to growth. Just after I became Chancellor, the OBR expected GDP to fall by 1.4% in the following year; in fact it grew, albeit slowly. Now the OBR expects the economy to grow by 0.8% this year and 1.9% next year, which is 0.5% higher than its autumn forecast. After that, growth rises to 2.2%, 1.8%, and 1.7% in 2028. [Interruption.] Opposition Members do not want to hear this, but these are the facts. Since 2010, we have grown faster than Germany, France or Italy—the three largest European economies—and according to the International Monetary Fund, we will continue to grow faster than all three of them in the five years ahead. Surveys by Lloyds and Deloitte show that business confidence is returning. In other words, because we have turned the corner on inflation, we will soon turn the corner on growth.
Today’s OBR forecasts also show that we have made good progress on the Prime Minister’s three economic priorities. Compared to when the three pledges were made, inflation has halved, debt is falling in line with our fiscal rules, and growth is fully 1.5 percentage points higher than predicted. [Interruption.] Labour Members do not have a growth plan, so they might as well listen to ours. As growth returns, our plan is for economic growth, not growth sustained through migration, but growth that raises wages and living standards for families—not just higher GDP, but higher GDP per head. That means sticking to our plan, with a Budget for long-term growth: more investment, more jobs, better public services and lower taxes.
I start with investment. Economists say that stimulating investment is the most effective way to raise productivity, and therefore wages and living standards. Since 2010, we have been doing just that. Business—[Interruption.] Labour Members might want to listen to what I am about to say, because business investment has risen from an average of 9.3% of GDP under Labour to 9.9% under the Conservatives. This year, it will be 10.6% of GDP. That is £30 billion more business investment than if it had continued at Labour levels, and it is still going up.
In the short period since the autumn statement, Nissan has announced that it will build two new electric car models in the UK. Microsoft and Google have announced data centres worth over £3 billion. Thanks to my right hon. Friend the Business Secretary, the global investment summit unlocked £30 billion of investment. In fact, since 2010, greenfield foreign direct investment has been higher here than anywhere else in Europe, and for the last three years the UK has had the third highest levels in the world after the United States and China—and we are not stopping there.
In the autumn statement, I announced that we would introduce permanent full expensing, a £10 billion tax cut for businesses that gives the UK the most attractive investment tax regime of any large European or G7 country. It was welcomed by over 200 business leaders, with the CBI saying it was a game changer and the single most transformational thing we could do to fire up the British economy. Today, I take further steps to boost investment. Having listened to calls from the CBI, Make UK and the British Chambers of Commerce, we will shortly publish draft legislation for full expensing to apply to leased assets, a change I intend to bring in as soon as it is affordable.
We will also help small businesses, which is something close to my heart. As well as the business rates support, and the work on prompt payments that I announced in the autumn, I will provide £200 million of funding to extend the recovery loan scheme as it transitions to the growth guarantee scheme, helping 11,000 small and medium-sized enterprises access the finance they need. Following representations from the Federation of Small Businesses, as well as my hon. Friends the Members for Loughborough (Jane Hunt), for Southend West (Anna Firth), and for Rother Valley (Alexander Stafford), I will reduce the administrative and financial impact of VAT by increasing the VAT registration threshold from £85,000 to £90,000 from 1 April—the first increase in seven years. That will bring tens of thousands of businesses out of paying VAT altogether, and encourage many more to invest and grow.
I now move to measures to address historical under-investment in our nations and regions. Since we started levelling up in 2019, two thirds of all new salaried jobs created have been outside London and the south-east. We have announced 13 investment zones and 12 freeports, which continue to attract investment—including recently, thanks to the efforts of Mayor Ben Houchen, from the Pneuma Group, which is investing £15 million into the Tees Valley investment zone.
Today, working with the Levelling-Up Secretary, I devolve further power to local leaders, who are best placed to promote growth in their areas. I can announce the north-east trailblazer devolution deal, which provides a package of support for the region potentially worth over £100 million. I will devolve powers to Buckinghamshire, Warwickshire and the most beautiful county in England, Surrey. I see the Leader of the Opposition smiling because, like me, he is a Surrey boy. I know he has been taking advice from Lord Mandelson, who yesterday rather uncharitably said he needed to “shed a few pounds”. Ordinary families will shed more than a few pounds if that lot get in. If he wants to join me on my marathon training, he is most welcome.
Today, we continue to spread opportunity throughout the country by allocating £100 million of levelling-up funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch and Coventry to support cultural projects in these communities. That is alongside support for capital projects across the country, including in Bingley. We are expanding the long-term plan for towns to 20 new places, including Darlington—home of the Treasury’s fantastic Darlington economic campus—Coleraine, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, providing each with £20 million of funding to invest in community regeneration over the next decade. We will provide £15 million in new funding to the West Midlands Combined Authority to support culture, heritage and investment projects, on the recommendation of our go-getting Mayor, Andy Street, and we will allocate £5 million to renovate hundreds of local village halls across England, so that they can remain at the heart of their communities.
Because this is a Conservative and Unionist Government, we will also set aside funding to support the SaxaVord spaceport in Shetland and an agrifood launchpad in mid-Wales, and funding to support Northern Ireland’s businesses in expanding their global trade and investment opportunities. As a result of the decisions we take today, the Scottish Government will receive nearly £300 million in Barnett consequentials; there will be nearly £170 million for the Welsh Government and £100 million for the Northern Ireland Executive. [Interruption.] I do appreciate that a tax-cutting Budget is very uncomfortable for the biggest tax-raisers in the United Kingdom. We also want to level up opportunity across the generations, including by building more houses for young people, and we are on track to deliver over 1 million homes in this Parliament.
Last week, the Levelling-Up Secretary allocated £188 million to supporting projects in Sheffield, Blackpool and Liverpool. Today I go further, allocating £242 million of investment to Barking Riverside and Canary Wharf, which together will build nearly 8,000 houses; Canary Wharf will also be transformed into a new hub for life science companies. We are launching a new £20 million community-led housing scheme that will support local communities in delivering the developments that they want and need. I am pleased to announce the next steps for Cambridge to reach its potential as the world’s leading scientific powerhouse. I confirm that there will be a long-term funding settlement for the future development corporation in Cambridge at the next spending review; there will be over £10 million invested in the coming year to unlock delivery of crucial local transport and health infrastructure.
The final levelling-up measures I announce today support north Wales, of which I have many happy childhood memories. In Mold, following representations from my hon. Friend the Member for Vale of Clwyd (Dr Davies), we will help fund the renovation of Theatr Clywd. I can announce that this week, the Government have reached agreement on a £160 million deal with Hitachi to purchase the Wylfa site in Ynys Môn and the Oldbury site in south Gloucestershire. Ynys Môn has a vital role in delivering our nuclear ambitions, and no one should take more credit for today’s announcement than my tireless, tenacious and turbocharged hon. Friend the Member for Ynys Môn (Virginia Crosbie). More investment by large businesses, more support for small businesses, promoting investment in our nations and regions—all part of a Budget for long-term growth that sticks to our plan to deliver more jobs, better public services and lower taxes.
I turn to one of the most powerful ways to attract investment: supporting our most innovative industries. Outside the US, we have the most respected universities, the biggest financial services sector and the largest tech ecosystem in Europe. We have double the artificial intelligence start-ups of anywhere else in Europe, double the venture capital investment, and a tech economy now double the size of Germany’s and three times the size of France’s. We are on track to become the world’s next silicon valley.
In today’s Budget for long-term growth, I take further steps to attract investment to our technology-related industries. I want our brilliant tech entrepreneurs to not just start here, but stay here, including when the time comes for a stock market listing, so we will build on the Edinburgh and Mansion House reforms to unlock more pension fund capital. We will give new powers to the Pensions Regulator and the Financial Conduct Authority to ensure better value from defined contribution schemes by judging performance on overall returns, not cost.
We will make sure that there are vehicles to make it easier for pension funds to invest in UK growth opportunities, so I am today publishing the names of the winners of the LIFTS—long-term investment for technology and science—competition. But I remain concerned that other markets, such as Australia, generate better returns for pension savers, with more effective investment strategies and more investment in high-quality domestic growth stocks. So I will introduce new requirements for defined-contribution and local government pension funds to disclose publicly their level of international and UK equity investments. I will then consider what further action should be taken if we are not on a positive trajectory towards international best practice.
I also want to create opportunities for a new generation of retail investors to engage with public markets, so we will proceed with a retail sale for part of the Government’s remaining NatWest shares this summer, at the earliest opportunity, subject to supportive market conditions and value for money. We will continue to explore how savers could be allowed to take their pension pots with them when they change job. We will make it easier for people to save for the long term with a new British savings bond, delivered through National Savings and Investments, offering savers a guaranteed rate, fixed for three years.
Today, following calls from over 200 representatives of the City and our high-growth sectors, I will reform the ISA system to encourage more people to invest in UK assets. After a consultation on its implementation, I will introduce a brand-new British ISA, which will allow an additional £5,000 annual investment for investments in UK equity, with all the tax advantages of other ISAs. That will be on top of existing ISA allowances and will ensure that British savers can benefit from the growth of the most promising UK businesses, as well as supporting those businesses with the capital to expand.
I now turn to our other growth industries, starting with clean energy. We want nuclear to provide up to a quarter of our electricity by 2050. As part of that, I want the UK to lead the global race in developing cutting-edge nuclear technologies. I can therefore announce that Great British Nuclear will begin the next phase of the small modular reactor selection process, with companies now having until June to submit their initial tender responses. Our brilliant Secretary of State for Energy Security and Net Zero will also allocate up to £120 million more to the green industries growth accelerator, to build supply chains for new technology, ranging from offshore wind to carbon capture and storage. By January next year, as promised in the autumn statement, we will have a new, faster connections process to the grid up and running. In advanced manufacturing we have announced a further £270 million of investment into innovative new automotive and aerospace research and development projects, building the UK’s capabilities in zero-emission vehicle and clean aviation technologies.
I now turn to our creative industries. We have become Europe’s largest film and TV production centre, with Idris Elba, Keira Knightley and Orlando Bloom all filming their latest productions here. Studio space in the UK has doubled over the last three years and, at the current rate of expansion, next year we will be second only to Hollywood globally. In the autumn statement I committed to providing more tax relief for visual effects in film and high-end TV. I can today confirm that we will increase the rate of tax credit by 5%, and remove the 80% cap for visual effects costs in the audio-visual expenditure credit. Having worked closely with the Secretary of State for Culture, Media and Sport, and listened carefully to representations from companies such as Pinewood, Warner Bros. and Sky Studios, we will provide eligible film studios in England with a 40% relief on their gross business rates until 2034. Having heard representations from the British film industry, Pact, and indeed the Prime Minister, we will introduce a new tax credit for UK independent films with a budget of less than £15 million. For our creative industries more broadly, we will provide £26 million of funding to our pre-eminent theatre, the National Theatre, to upgrade its stages.
I particularly want to recognise the contribution of our creative industries and the tourism that comes from orchestras, museums, galleries and theatres. In the pandemic, we introduced higher 45% and 50% levels of tax relief, which were due to end in March 2025. They have been a lifeline for performing arts across the country. Today, in recognition of their vital importance to our national life, I can announce that I am making those tax reliefs permanent at 45% for touring and orchestral productions, and 40% for non-touring productions. Lord Lloyd Webber says that this will be a once-in-a-generation transformational change that will ensure Britain remains the global capital of creativity.
I suspect that the new theatre reliefs may be of particular interest to the shadow Chancellor, who seems to fancy her thespian skills when it comes to acting like a Tory. The trouble is that we all know how her show ends: higher taxes, like every Labour Government in history—[Interruption.] I am delighted that Labour Members are cheering the fact that Labour Governments always put up taxes. They are right!
I want to mention our life sciences sector, where we will support research by medical charities into diseases such as cancer, dementia and epilepsy with an additional £45 million, including £3 million for Cancer Research UK. But I have long believed that we should be manufacturing medicines as well as developing them, so I can today also announce a brand-new investment by one of our greatest life science companies, AstraZeneca, led by mon ami the irrepressible Sir Pascal Soriot. AstraZeneca made its covid vaccine available to developing countries at cost, as a result saving over 6 million lives. Today, because of the Government’s support for the life sciences sector, it has announced plans to invest £650 million in the UK to expand its footprint on the Cambridge biomedical campus, and fund the building of a vaccine manufacturing hub in Speke in Liverpool. That is more investment and better jobs in every corner of the country in a long-term Budget for growth from a Conservative Government.
One of the biggest barriers to investment is businesses not being able to hire the staff they need. The economy today has around 900,000 vacancies. It would be easy to fill them with higher migration, but with over 10 million adults of working age who are not in work, that would be economically and morally wrong. Those who can work should work, and I have tackled that issue in every Budget and autumn statement I have delivered. A year ago, I abolished the pensions lifetime allowance, which had pushed doctors and others to take early retirement. Ask any doctor what they think about Labour’s plans to bring it back and they will say, “Don’t go back to square one.” In the autumn, with the help of our superb Secretary of State for Work and Pensions, we announced the back to work plan, which will support 1 million adults with medical conditions and reduce the number of people assessed as not needing to work by two thirds.
A year ago, I also announced the biggest ever expansion of childcare—[Interruption.] Just listen. Extending the 30-hour free childcare offer to all children of working parents from nine months. [Interruption.] We have not had a childcare plan from Labour, so Opposition Members might want to listen to ours. Our plan will mean an extra 60,000 parents enter the workforce in the next four years—a tremendous achievement for the Education Secretary, who I think is doing an effing good job. Today, following representations from many people, including the CBI, I announce measures to support the childcare sector to make the new investments it now needs to make. I am guaranteeing the rates that will be paid to childcare providers to deliver our landmark offer for children over nine months old for the next two years. That is more people in work and more jobs, sticking to our plan in a long-term Budget for growth.
I now turn to public services. [Interruption.] I thought they were supposed to be interested in public services—[Interruption.] I can wait.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. A little bit of murmuring is normal, but I should not be able to hear what Members are saying over there. That is clearly out of order. Let us have some courtesy.
Jeremy Hunt
Thank you, Madam Deputy Speaker.
Good public services need a strong economy to pay for them, but a strong economy also needs good public services. In 2010, schools in the UK were behind Germany, France and Sweden in the OECD’s PISA—programme for international student assessment—education rankings for reading and maths. Now, after Conservative reforms, we are ahead of them. Burglaries and violent crime have halved in the last 14 years after we invested in 20,000 more police officers. Our armed forces remain the most professional and best-funded in Europe, with defence spending already more than 2% of GDP. We are providing more military support to Ukraine than nearly any other country, and our spending will rise to 2.5% as soon as economic conditions allow. The NHS is still recovering from the pandemic but has 42,000 more doctors and 71,000 more nurses than it did under Labour—that is 250 more doctors and 400 more nurses for every single month that we have been in office.
Resources matter, of course, which is why, despite all the economic shocks we have faced, overall spending on public services has gone up since 2010—in the case of the NHS, by more than a third in real terms. Although spending has continued to rise every year, public sector productivity still remains below pre-pandemic levels by nearly 6%. This demonstrates that the way to improve public services is not always more money or more people; we also need to run them more efficiently. We need a more productive state, not a bigger state.
In autumn 2022, I set day-to-day spending to increase by 1% a year in real terms over the next Parliament. Some say that is not enough and we should raise spending by more, and others say it is too much and we should cut it to improve efficiency—neither are right. It is not fair to ask taxpayers to pay for more when public service productivity has fallen; nor would it be wise to reduce that funding, given the pressures that public services face. So I am keeping the planned growth in day-to-day spending at 1% in real terms, but we are going to spend it better. [Interruption.] The Opposition do not have a plan for public services, as with everything else, so why not listen to ours?
Today I am announcing a landmark public sector productivity plan that restarts public service reform and changes the Treasury’s traditional approach to public spending. I start with our biggest and most important public service: the NHS. One of my greatest privileges was to be Health Secretary. Thanks to the NHS, I have three gorgeous children, the oldest of whom has been patiently listening in the Gallery. The NHS is, rightly, the biggest reason most of us are proud to be British, but the systems that support its staff are often antiquated. Doctors, nurses and ward staff spend hours every day filling out forms when they could be looking after patients. [Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. I do not like to interrupt the Chancellor, but Mr Streeting, you are too close to me to be shouting that loudly. If you want to shout that loudly, you should go away and sit up there. I apologise for interrupting the Chancellor.
Jeremy Hunt
When patients do not show up or one member of a team is ill, operating theatres are left empty despite long waiting lists. When we published the NHS long-term workforce plan, I asked the NHS to put together a plan to transform its efficiency and productivity. I wanted better care for patients, more job satisfaction for staff and better value for taxpayers. Making changes on the scale we need is not cheap. The investment needed to modernise NHS IT systems so they are as good as the best in the world costs £3.4 billion, but it helps unlock £35 billion of savings—ten times that amount—so in today’s Budget for long-term growth, I have decided to fund the NHS productivity plan in full.
With that new investment, we will slash the 13 million hours lost by doctors and nurses every year to outdated IT systems. We will cut down and potentially halve form filling by doctors by using artificial intelligence. We will digitise operating theatre processes, allowing the same number of consultants to do an extra 200,000 operations a year. We will fund improvements to help doctors read MRI and CT scans more accurately and quickly, speeding up results for 130,000 patients every year and saving thousands of lives, something that I know would have delighted my brother Charlie, who I recently lost to cancer.
We will improve the NHS app so that it can be used to confirm and modify all appointments, reducing up to half a million missed appointments annually and improving patient choice. We will set up a new NHS staff app to make it easier to roster electronically and end the use of expensive off-framework agencies. As a result of this funding, all hospitals will use electronic patient records, making the NHS the largest digitally integrated healthcare system in the world. Today’s announcement doubles the amount the NHS is investing on digital transformation over three years.
On top of this longer-term transformation, we will also help the NHS meet pressures in the coming year with an additional £2.5 billion. That will allow the NHS to continue its focus on reducing waiting times and brings the total increase in NHS funding since the start of the Parliament to 13% in real terms. The NHS was there for us in the pandemic, and today with nearly £6 billion of additional funding, a Conservative Government are there for the NHS.
The head of the NHS, Amanda Pritchard today said that this investment shows that
“the government continues to back the NHS”.
She said that, as a result of the investment, the NHS can commit to delivering 1.9% annual productivity growth over the next Parliament, more than double the average productivity growth in public services between 2010 and 2019.
But today is not just about the NHS. I want this groundbreaking agreement with the NHS to be a model for all our public services. Across education, the police, the courts and local government, I want to see more efficient, better-value and higher-quality public services, so today I can announce that in the next spending review, the Treasury will do things differently. We will prioritise proposals that deliver annual savings within five years equivalent to the total cost of the investment required, and today we make a start with some excellent proposals.
Violence reduction units and hotspot policing have prevented an estimated 136,000 knife crimes and other violent offences, as well as over 3,000 hospital admissions. Every crime costs money, so we will provide £75 million to roll that model out in England and Wales. Police officers waste around eight hours a week on unnecessary admin. With higher productivity, we could free the equivalent of 20,000 police officers over a year. We will spend £230 million rolling out time-saving and money-saving technology that speeds up police response times by allowing people to report crimes by video call and, where appropriate, use drones as first responders.
Too many legal cases, particularly in family law, should never go to court, and it would cost us less if they did not, so we will spend £170 million to fund non-court resolution, reduce reoffending and digitise the court process. Too many children in care end up being looked after by unregistered providers that are much more expensive, so we will invest £165 million over the next four years to reduce that cost by increasing the capacity of the children’s homes estate.
Special educational need provision can be excellent when outsourced to independent sector schools, but also expensive, so we will invest £105 million over the next four years to build 15 new special free schools to create additional high-quality places and increase choice for parents. We will also put in place a plan to realise the tens of billions of savings recommended in an excellent speech by the head of the National Audit Office.
The OBR says that a 5% increase in public sector productivity would be the equivalent of about £20 billion in extra funding. With these plans, we can deliver that and more. If we ensure that they are cash-releasing savings, as we are committed to doing, it will be possible to live with more constrained spending growth without cutting services valued by the public. So with the energy and drive of my talented Chief Secretary to the Treasury, we launch our public sector productivity plan in today’s Budget for long-term growth: more investment, more jobs, better public services and—one more thing—lower taxes.
Keeping taxes down matters to Conservatives in a way that it never can for Labour. We believe that in a free society the money people earn does not belong to the Government; it belongs to them, and if we want to encourage hard work, we should let people keep as much of their own money as possible. Conservatives look around the world at economies in North America and Asia and notice that countries with lower taxes generally have higher growth. Economists argue about cause and correlation, but we know that lower-taxed economies have more energy, more dynamism and more innovation. We know that is Britain’s future, too.
Before I explain how we will bring down taxes, I will start with some measures to make our system simpler and fairer. To discourage non-smokers from taking up vaping, we are today confirming the introduction of an excise duty on vaping products from October 2026 and publishing a consultation on its design. Because vapes can also play a positive role in helping people quit smoking, we will introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking. I will make a one-off adjustment to rates of air passenger duty on non-economy flights only to account for high inflation in recent years, and I will provide HMRC with the resources it needs to ensure that everyone pays the tax they owe, leading to an increase in revenue collected of over £4.5 billion across the forecast period.
Next, I turn to property taxation. In recent months, following tenacious representation from my hon. Friends the Members for St Austell and Newquay (Steve Double), for North Devon (Selaine Saxby), for Cities of London and Westminster (Nickie Aiken), for Torbay (Kevin Foster) and for Truro and Falmouth (Cherilyn Mackrory), I have been looking closely at our furnished holiday lettings tax regime. I am concerned that that regime is creating a distortion meaning that not enough properties are available for long-term rental by local people. So to make the tax system work better for local communities, I am going to abolish the furnished holiday lettings regime.
I have also been looking at the stamp duty relief for people who purchase more than one dwelling in a single transaction, known as multiple dwellings relief. I see the deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), paying close attention, given her multiple dwellings—[Interruption.] She—[Interruption.]
Madam Deputy Speaker
Order. Too much excitement. We have not actually heard—because we cannot hear—what the Chancellor is trying to say. [Interruption.] Okay, I can hear who is shouting, and they will not get to speak later.
Jeremy Hunt
I am sorry to disappoint the right hon. Member, but multiple dwellings relief was not actually designed for her; it was intended—[Interruption.]. It was intended to support investment in the private rented sector, but an external evaluation found no strong evidence that it had done so, and that it was being regularly abused, so I am going to abolish it.
Finally, as part of our look at property taxation in this Budget, both the Treasury and the OBR have looked at the costs associated with our current levels of capital gains tax on property and concluded that if we reduced the higher 28% rate that exists for residential property, we would in fact increase revenues because there would be more transactions. For the first time in history, both the Treasury and the OBR have discovered their inner Laffer curve. So today I will reduce the higher rate of property capital gains tax from 28% to 24%—that really is for you, Angela. [Laughter.] I now—[Interruption.]
Madam Deputy Speaker
Order. I have had enough from Opposition Members and I am definitely not having it from Government Members.
Jeremy Hunt
I now turn to oil and gas. Unlike the Labour party, we want to encourage investment in the North sea, so we will retain generous investment allowances for the sector. Following representations from my hon. Friend the Member for Banff and Buchan (David Duguid), we will also legislate in the Finance Bill to abolish the energy profits levy should market prices fall to their historical norm for a sustained period of time. But because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits, so I will extend the sunset on the energy profits levy for an additional year to 2029, raising £1.5 billion.
Next, I turn to the taxes paid by those who are resident in the UK but not domiciled here for tax purposes. [Hon. Members: “Ah!”] This is a category of people known as non-doms. Nigel Lawson wanted to end the non-dom regime in his great tax reforming Budget of 1988, which is where I suspect the Labour party got the idea from. I, too, have always believed that provided we protect the UK’s attractiveness to international investors, those with the broadest shoulders should pay their fair share. After looking at the issue over many months, I have concluded that we can indeed introduce a system that both is fairer and remains competitive with other countries, so the Government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile—[Interruption.] I aim to please all parts of the House in all my Budgets. We will replace—[Interruption.]
Madam Deputy Speaker
Order. This is impossible. [Interruption.] Order. Could you please shout more quietly? [Laughter.]
Jeremy Hunt
We will replace the non-dom regime with a modern, simpler and fairer residency-based system. From April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency: a more generous regime than at present, and one of the most attractive offers in Europe. But, after four years, those who continue to live in the UK will pay the same tax as other UK residents.
Recognising the contribution of many of these individuals to our economy, we will put in place transitional arrangements for those benefiting from the current regime. That will include a two-year period in which individuals will be encouraged to bring wealth earned overseas to the UK, so it can be spent and invested here—a measure that will attract onshore an additional £15 billion of foreign income and generate more than £1 billion of extra tax.
Overall, abolishing non-dom status will raise £2.7 billion a year by the end of the forecast period. The Opposition planned to use that money for spending increases, but today a Conservative Government make a different choice. We use that revenue to help cut taxes on working families. Many of those families depend on child benefit, but the way that we treat child benefit in the tax system is confusing and unfair. It is a lifeline for many parents because it helps with the additional costs associated with having children. When it works, it is good for children, good for parents, and good for the economy because it helps people into work.
We currently withdraw child benefit when one parent earns over £50,000 a year. That means that two parents earning £49,000 a year receive the benefit in full, but a household earning a lot less than that does not if just one parent earns over £50,000. Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system, including allowing HMRC to collect household-level information. We will therefore consult on moving the high-income child benefit charge to a household-based system, to be introduced by April 2026. But because that is not a quick fix, I make two changes today to make the current system fairer.
Following representations from my hon. Friends the Members for Penistone and Stocksbridge (Miriam Cates), for Carshalton and Wallington (Elliot Colburn), for Bassetlaw (Brendan Clarke-Smith) and for West Worcestershire (Harriett Baldwin), along with many others, I confirm that from this April, the high-income child benefit charge threshold will be raised from £50,000 to £60,000. We will raise the top of the taper at which it is withdrawn to £80,000. That means that no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether. Because of the higher taper and threshold, nearly half a million families with children will save an average of £1,300 next year. According to the OBR, this change will see an increase in hours among those already working to the equivalent of 10,000 more people entering the workforce. More investment, more jobs, better public services and lower tax.
There is one further set of changes that I want to make today. The way we tax people’s income is particularly unfair. Those who get their income from having a job pay two types of tax: national insurance contributions and income tax. Those who get it from other sources pay only one. This double taxation of work is unfair. The result is a complicated system that penalises work instead of encouraging it. If we are to build a high-wage, high-skill economy not dependent on migration and to encourage people not in work to come back to work, we need a simpler, fairer tax system that makes work pay. That is why I cut national insurance contributions in the autumn. By reducing the penalty on work, the OBR said that that tax cut would lead to the equivalent of 94,000 more people in work. In other words, it would fill more than one in 10 vacancies throughout the economy. Lower taxes, more jobs and higher growth.
Today, because of the progress that we have made in bringing down inflation, because of the additional investment flowing into the economy, because we have a plan for better and more efficient public services, and because we have asked those with the broadest shoulders to pay a bit more—[Interruption.]
Madam Deputy Speaker
Order. Mr Perkins—[Interruption.] I can manage, thank you very much. I have heard you five times. I have let you get away with it, but that is enough. One more strike and you’re out.
Jeremy Hunt
I know how hard it is for the Opposition to listen to arguments for lower taxes. That is the difference.
Because we have asked those with the broadest shoulders to pay a bit more, today I go further. From 6 April, employee national insurance will be cut by another 2p, from 10% to 8%, and self-employed national insurance will be cut from 8% to 6%. That means an additional £450 a year for the average employee, or £350 for someone who is self-employed. When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year, and 2 million of the self-employed will get a tax cut averaging £650. Those changes will make our system simpler and fairer, and will grow our economy by rewarding work. The OBR says that, when combined with the autumn reduction, our national insurance cuts will mean the equivalent of 200,000 more people in work—filling one in five vacancies, and adding 0.4% to GDP and 0.4% to GDP per head.
This is the second fiscal event in which we have reduced employee and self-employed national insurance. We have cut it by one third in six months without increasing borrowing and without cutting spending on public services. That means that the average earner in the UK now has the lowest effective personal tax rate since 1975. Their effective taxes are now lower than in America, France, Germany or any G7 country. Because Conservatives believe that making work pay is of the most fundamental importance, and because we believe that the double taxation of work is unfair, our long-term ambition is to end this unfairness. When it is responsible, when it can be achieved without increasing borrowing and when it can be delivered without compromising high-quality public services, we will continue to cut national insurance as we have done today, so that we truly make work pay.
We stick to our plan with a Budget for long-term growth. It delivers more investment, more jobs, better public services and lower taxes. However, dynamism in an economy does not come from Ministers in Whitehall but from the grit and determination of people who take risks, work hard and innovate—not Government policies but people power. It is to unleash people power that today we put this country back on a path to lower taxes: a plan to grow the economy versus no plan; a plan for better public services versus no plan; a plan to make work pay versus no plan. Growth up, jobs up and taxes down. I commend this statement to the House.
