What HM Treasury is doing
The UK responds to lower productivity growth and a more difficult global economy by:. It is a Budget that steers Britain through uncertain times, providing security now and opportunity for the next generation. It forecasts employment to be CPI is forecast to be below the 2.
Public sector net borrowing is forecast to fall to 3. Public sector net debt is forecast to fall to This provides the bedrock of security for working people. This Budget will ensure that the UK will meet its fiscal target of achieving a surplus in In addition to measures announced at the Spending Review and Autumn Statement, the government will:.
This Budget provides security for working people and opportunity for the next generation. This Budget backs business and enterprise to drive up productivity growth and create job opportunities. This Budget continues to lower taxes, with new support for small business and entrepreneurs, while also modernising the tax system and taking steps to ensure that taxes are fair and are paid. To tackle the long term economic challenges in the UK, this Budget announces radical reforms that will drive future prosperity, investing in the infrastructure that will deliver economic growth for the next generation.
The Budget drives forward the devolution revolution, giving local areas further control over the decisions that affect their communities. A summary of the fiscal impact of Budget policy decisions is set out in Table 1. Chapter 2 provides further information on the fiscal impact of the Budget. Chart 1 shows public spending by main function. Chart 2 shows the different sources of government revenue.
Britain is forecast to grow faster than any other major advanced economy in The global economic outlook has deteriorated since the Spending Review and Autumn Statement The IMF predicts global growth of 3. These downgrades, which reflect a pattern of disappointing post-crisis growth in many countries, are partly driven by concerns over productivity growth.
Christine Lagarde, Managing Director of the IMF , recently noted that weaker productivity growth — the rate the economy increases output per hour worked — and echoes of the financial crisis of and , are still holding back global growth. All G7 economies have seen lower productivity growth since the financial crisis. The UK was hit hard by the financial crisis, and productivity fell 2. But as the Office for Budget Responsibility OBR says, with a period of weak productivity growth after the financial crisis continuing to lengthen, they have placed more weight on the post-financial crisis period as a guide to future prospects.
Prospects for key emerging markets have deteriorated recently. For , the IMF forecasts growth in emerging markets to be 4. And after a decade of cheap debt, emerging markets are facing tighter credit conditions.
These concerns about growth prospects have been reflected in financial market volatility since the turn of the year. While a sustained fall in the oil price is a net benefit to oil importing economies like the UK, it impacts on particular sectors including the North Sea oil and gas industry.
The speed and intensity of the falls in commodity prices in the last 18 months have increased financial stress and worsened the economic outlook for commodity exporters like Brazil, Russia and many countries in the Middle East.
The combination of lower global growth and cheaper oil has meant inflation has fallen across advanced economies, with every major central bank revising down its inflation forecast. As a result, market expectations of the timing of interest-rate rises have been pushed back.
Together, the prospects of weaker growth and inflation have reduced the outlook for GDP measured at current prices, i. The UK is one of the most open trading economies in the world and is not immune to the weaker global outlook. Combined, this means that the challenge of delivering a sustained rise in living standards following the financial crisis of and is greater here in the UK than the OBR previously forecast, with GDP growth, inflation and nominal GDP growth now forecast to be weaker than at the time of the Spending Review and Autumn Statement The main driver of the reduced GDP forecast is a lower forecast for potential productivity growth — the amount of output growth per hour worked the economy is capable of producing sustainably — with the OBR placing more weight on post-crisis weakness in productivity growth.
Productivity is expected to grow by 1. Disappointing productivity growth is evident in many other major advanced economies in recent years, leading other forecasters to revise down their expectations.
For example, Table 1. The impact on potential GDP growth has been smaller in the UK, however, largely because the labour market participation rate has held up much more than in the US.
The OBR revised up its forecast for employment in from The OBR forecast employment to rise by 0. Wages and salaries are forecast to grow faster than inflation, rising by 3. That has allowed active monetary policy to support the economy while ensuring the fiscal position is sustainable. The long-term economic plan has delivered considerable economic gains since The UK was the fastest growing major advanced economy in , the second fastest in and the OECD forecast the UK to be the fastest growing in This strong employment performance has been accompanied by rising real wages see Chart 1.
Earnings growth picked up in much of , with total annual pay rising 2. This represents the highest annual growth in nominal and real earnings since Wages had been rising above inflation for 15 consecutive months by the end of Living standards, as measured by real household disposable income RHDI per capita, are expected to have risen in at their fastest rate in 14 years, driven by rising earnings and low inflation.
The government has taken unprecedented action to support those on lower pay. From 1 April , low wage workers aged 25 and above will see a pay rise as a result of the introduction of the National Living Wage NLW. Given the concerns over slowing growth in advanced economies, policymakers face a choice over how to respond. The OBR forecasts little spare capacity in the economy — as measured by the output gap — for the forecast period. This suggests that there is little benefit to policy increasing overall demand without taking measures to expand supply.
Attempting to spend more than the country can afford would not address the challenges Britain faces. In the UK, debt levels remain high. Short-term, discretionary fiscal stimulus would simply increase public debt without expanding supply. The long-term solution is structural reform.
These policies seek to make economies more efficient, competitive and productive. Since the government has acted to reform the supply side of the UK economy including by lowering taxes, cutting regulation, investing in infrastructure, and introducing the National Living Wage and Apprenticeship levy.
The financial crisis of and revealed an unstable and unbalanced model of economic growth in the UK. Since the government has taken steps to support more balanced growth across sectors and regions and to promote savings and investment. The UK is making progress in shifting towards high-value added sectors in both manufacturing and services. The manufacturing, construction and service sectors are now all larger than at the beginning of By the end of , Between and , 16, new jobs in car production have been created and in car manufacturing exports reached a record high.
Within services, output has been strong across different high-value added sectors. Scientific research and development has grown by Rebalancing within the services sector has been particularly strong. Investment in productive assets, from plant and machinery to software and patents, is vital for a thriving economy. Since then it has picked up, and investment grew faster than in any other major advanced economy in and is forecast by the OECD to continue to increase at the fastest rate in and In , business investment increased by 4.
Regional economic disparities have long been a problem, with London and the South East having higher growth than the UK average for decades. Since , unemployment in the North of England has fallen by a third and the median earnings of full-time employees grew faster in all regions of the North than they did in London. Between and , labour markets in the regions have performed strongly. Unemployment fell and employment rose in every region, with two-thirds of the increase in employment from outside London and the South East.
Labour markets in the regions strengthened in , with every region reaching a record number of people in work. In there were over half a million more businesses outside London and the South East compared to , including nearly , more businesses in the North and over 95, more businesses in the Midlands.
The outlook for world trade continues to be revised down, reflecting both cyclical and structural factors. This weighs on the outlook for UK trade, as the external demand for UK exports is expected to be weaker.
As an open economy, the UK is not immune to developments in the global economy. The OBR have revised down their outlook for UK export markets compared to their November forecast as the inevitable result of lower global growth.
The current account deficit is forecast to narrow gradually over the forecast period. The government position is to recommend that Britain remains in a reformed EU. The Treasury has highlighted openness as a key driver of productivity, wages and living standards. The agreement covered four key areas: Voting to leave the EU would create a profound economic shock and years of economic uncertainty. The associated uncertainty would have a material effect on jobs, the economy and the public finances.
Some of the concerns related to such an outcome are already becoming apparent in financial markets. UK firms and consumers enjoy tariff-free trade and reductions in non-tariff barriers across the EU. The UK is also inside the customs union, eliminating the need for customs compliance for trade between EU member states. A new relationship which gives the UK the access to the single market that it needs would involve contributing financially to the EU , accepting the free movement of people and adopting EU rules without having any say over them.
Remaining in a reformed EU will make the UK stronger, safer and better off. It will allow a reformed EU to continue supporting UK productivity. And it will offer certainty for UK businesses and consumers and those foreign firms investing in the UK.
The Treasury will set out a comprehensive assessment of the costs and benefits of membership of a reformed EU in the coming months. The steps taken by the government to fix the public finances and put banks and household finances on a surer footing have allowed monetary policy to play an active role in supporting the recovery.
The MPC has full operational independence to set policy to meet the inflation target. Budget reaffirms the inflation target of 2. This target is symmetric, meaning deviations below the target are treated the same way as deviations above the target.
Symmetric targets help to ensure that inflation expectations remain anchored and that monetary policy can play its role fully.
Annual growth in the stock of lending to SMEs continues to improve, and reached 1. This is up from a low of This macroprudential role did not feature in the regulatory architecture before the government took action. The FPC is responsible for identifying, monitoring and addressing risks to the system as a whole. Significant progress has been made since in fixing the public finances.
The deficit as a share of GDP is forecast to be cut by almost two thirds from its post-war peak and will reach 3. Net debt as a share of GDP is forecast to fall over this Parliament, reaching The public finances would be in a much worse position had the government not undertaken the fiscal consolidation that has occurred since Analysis in Chart 1.
The chart shows the cyclical improvement in the economy since which would have reduced public sector net borrowing from its post war peak of However, the persistence of the structural deficit means that borrowing would have been higher in every year from However more work needs to be done — the deficit and debt levels are still too high. The government remains committed to continuing the job of returning the public finances to surplus by and running a surplus thereafter in normal times so Britain bears down on its debt and is better placed to withstand future economic shocks.
In a low inflationary environment, with the risk of economic shocks, the only reliable way to bring debt down as a share of GDP is to run a surplus. At the Summer Budget and Spending Review and Autumn Statement , the government set out detailed measures to secure a surplus in The government is maintaining a balanced pace of deficit reduction, with public sector net borrowing forecast to fall as a share of GDP at the same average annual rate over to as was achieved over to The government will build on the measures set out at Spending Review to deliver a surplus and ensure the sustainability of the public finances.
This is equivalent to less than 0. Departmental spending will fall in real terms by an average of 0. The government has already shown that savings can be delivered from spending while protecting core services and that a well-run state can do more for less — crime has fallen by more than a quarter since , there are more young people going to study full time at university than ever before and record numbers of children are now taught in good or outstanding schools.
The Chief Secretary to the Treasury, with the support of the Paymaster General, will lead an efficiency review, which will report in This will review the efficiency of all departmental spending to inform future expenditure decisions. As set out in Spending Review , the defence and overseas aid commitments, the real-terms protections for the NHS in England, schools funding in England, the police and science will be maintained.
Budget sets out that the recent assessment has resulted in a reduction in the discount rate which will increase the contributions employers pay to the schemes from onward. This will ensure that the costs of providing pension benefits in the future are fairly reflected in the contributions paid by employers, and that the pension promises made today are on a sustainable basis to ensure fairness to future tax payers.
As set out in the Spending Review, the government will continue to meet the commitment to spend 0. In line with the commitment, the ODA budget will be adjusted to reflect the latest economic forecasts, taking existing plans into account. At Spending Round , the government announced a control total to limit payments under PFI and PF2 contracts in nominal terms in each future Parliament.
The Spending Review prioritised long term investment over day-to-day spending. This will include bringing forward funding for the Highways Maintenance Challenge Fund and the Pothole Action Fund, and enabling the delivery of thirteen thousand shared ownership homes two years early. This is supplemented by a target for debt as a share of GDP to be falling in each year until The simplicity and clarity of the metrics ensure that governments will be held to account for their fiscal policy when the economy is performing well.
This provides flexibility to allow the automatic stabilisers to operate freely when needed. Following a shock, the government of the day will be required to set a plan to return to surplus, including appropriate fiscal targets.
The framework does not prescribe what the targets should be, allowing the government of the day to respond to the circumstances. The fiscal mandate is supplemented by a target for public sector net debt to be falling as a share of GDP in each year to Public sector net debt is forecast to fall from to the end of the Parliament, reaching Debt as a share of GDP is forecast to rise to The government has also delayed the sale of the remaining shares in Lloyds Banking Group as a result of market conditions.
The government introduced the Welfare Cap at Budget to strengthen control of welfare spending, support fiscal consolidation and improve Parliamentary accountability for the level of welfare spending. The cap applies to welfare spending in Annually Managed Expenditure AME with the exception of the state pension and the automatic stabilisers. It is assessed at Autumn Statements. Summer Budget and Autumn Statement announced reforms to ensure that the welfare system is both fair and sustainable.
The Welfare Reform and Work Bill legislates for the majority of these reforms. As announced by the Secretary of State for Work and Pensions, the Department for Work and Pensions DWP will continue to deliver Personal Independence Payments PIP in line with their original intention of supporting claimants with the greatest need in helping them meet the extra costs of their disability or long-term health condition.
The Charter for Budget Responsibility requires the Treasury to set out the level of the welfare cap in the Budget Report. This is in Table 1. The government is committed to returning the financial sector assets acquired in to the private sector. As there is no longer a policy need for the government to hold these assets, it will seek to dispose of them, reducing PSND while maximising value for taxpayers. The government is committed to launching a retail sale of Lloyds Banking Group shares and to fully returning its stake to the private sector in The process to transfer the Green Investment Bank to private ownership has begun and the government will shortly consult on options to move the operations of the Land Registry to the private sector.
In addition, the government is continuing to pursue the sale of the pre income contingent repayment student loan book, with a first sale in The Budget puts the next generation first, providing security and opportunity from childhood to working age and through to retirement.
This means building an economy based on lower taxes, so that people can take home more of what they earn. It also means investing in education to equip the next generation for the future, tackling childhood obesity and investing in school sports. It means building the housing Britain needs and it means providing the next generation with better incentives to save, and more choice and flexibility as they do so.
The Budget continues to reform public services in a way that is fair. The policies of this government mean that the richest are paying an increasing share of taxes, with those lower down the income distribution continuing to pay less. This continues to ensure that no-one working 30 hours per week on the National Minimum Wage NMW will pay income tax in , and will bring the total number of taxpayers taken out of income tax since the start of this parliament to 1.
The government also wants to ensure that the tax system encourages individuals to progress. This Budget goes further. This will be the biggest above inflation cash increase to this threshold since it was introduced by Lord Lawson in In , there will be , fewer higher rate taxpayers than at the start of the parliament. Budget announces that, for the 6th successive year, the government will freeze the main rate of fuel duty at This marks the longest fuel duty freeze in over 40 years.
Pubs play an important role in their local communities. The British Beer and Pub Association report that beer duty rate changes since Budget have helped support both pubs and over 19, jobs. The Scotch whisky industry is a great British success story. The duty rates on most ciders will also be frozen this year in recognition of the important role cider makers play in rural communities.
Other alcohol duty rates will rise by inflation. Beer and wine duties will continue to be broadly similar. Childhood obesity is a national problem. The UK currently has one of the highest overall obesity rates amongst developed countries. Sugar consumption is a major factor in childhood obesity, and sugar-sweetened soft drinks are now the single biggest source of dietary sugar for children and teenagers.
Budget announces a new soft drinks industry levy targeted at producers and importers of soft drinks that contain added sugar. The levy will be designed to encourage companies to reformulate by reducing the amount of added sugar in the drinks they sell, moving consumers towards lower sugar alternatives, and reducing portion sizes.
Under this levy, if producers change their behaviour, they will pay less tax. The OBR expect that this number will fall over time as the total consumption of soft drinks in scope of the levy drops, in part as a result of producers changing their behaviour and helping consumers to make healthier choices. In England, revenue from the soft drinks industry levy over the scorecard period will be used to:.
The government is committed to increasing the quality and quantity of apprenticeships, and will deliver 3 million apprenticeship starts by As announced at the Autumn Statement , an apprenticeship levy will be introduced in April , and employers that are committed to training will be able to get out more than they put in. The government will set out further details on the operating model in April and draft funding rates will be published in June. The digital revolution is transforming the world of work.
As working lives lengthen and jobs change, adults will need more opportunities to retrain and up-skill. This Budget announces that, for the first time, direct government support will be available to adults wishing to study at any qualification level, from basic skills right the way up to PhD. The government will launch a technical consultation on the detail. To promote retraining and prepare people for the future labour market, the government will review the gaps in support for lifetime learning, including for flexible and part-time study.
The government will bring together information about the wages of graduates of different courses and the financial support available across further and higher education to ensure that people can make informed decisions about the right courses for them. The government will continue to free up student number controls for alternative providers predominantly offering degree level courses for the academic year. The best providers can also grow their student places further through the performance pool.
The government has taken significant steps to support savers. It has nearly tripled the amount of cash that people can save in ISAs and made them more flexible, abolished tax on savings for 17 million people through the introduction of the Personal Savings Allowance, 85 and given people the freedom to take their pension savings in a way that best suits their needs without being bound by the straitjacket of having to buy an annuity.
Since their launch, the Help to Buy: ISA with someone signing up every 30 seconds. Young people in particular are not saving enough, often because they feel they have to choose between saving for their first home and saving for retirement.
Building on the success of the Help to Buy: ISA , Budget gives the next generation a brand new opportunity to save in one place for a home and for retirement, and introduces new support for those who find it hardest to save. The government wants to help young people save flexibly for the long term and ensure they do not have to choose between saving for retirement and saving for their first home.
Contributions can continue to be made with the bonus paid up to the age of Funds can be used to buy a first home with the government bonus at any time from 12 months after opening the account, and can be withdrawn from the Lifetime ISA with the government bonus from age 60 for use in retirement. This limit will apply nationally. People can continue to open a Help to Buy: ISA until November , as planned. They can also choose to open a Lifetime ISA , but will only be able to use the government bonus from one of their accounts to buy their first home.
During the tax year, those who already have a Help to Buy: Whilst this is a product aimed at encouraging saving for the long term, the government understands that circumstances change so wants to ensure that people can access their own money if they need it whilst also keeping an incentive to leave funds invested for the long term.
The government will consider whether Lifetime ISA funds plus the government bonus can be withdrawn in full for other specific life events in addition to buying a first home. The government will also explore with the industry whether there should be the flexibility to borrow funds against the Lifetime ISA without incurring a charge if the borrowed funds are fully repaid. To help the people who find it hardest to save, the government will introduce a new Help to Save scheme for those on low incomes who wish to regularly set aside some of their income.
The scheme will be open to 3. People will be able to use the funds in any way they wish. As people work longer and change jobs more often, pension savings can become confusing. The average person will move employers 11 times over their working life, meaning they could end up with 11 or more private pensions by the time they retire. This will mean an individual can view all their retirement savings in one place. The government welcomes the recommendations of the Financial Advice Market Review FAMR , 94 which aims to support the provision of affordable and accessible advice for everyone, at all stages of their lives.
The government commits to implement all of the recommendations for which it is responsible, and will:. The government supports home ownership and first time buyers. In addition to helping young people to buy their own home through the Lifetime ISA and Help to Buy, the Budget sets out further measures to deliver more housing.
This constitutes the most ambitious affordable housing programme since the s. To deliver on these plans the Budget announces:.
The government has undertaken a series of reforms to streamline and simplify the planning system. Annual housing starts are now at an 8-year high and planning permission was granted for more than , homes last year alone. Budget therefore announces:. The government is committed to bringing more land into the planning system to ensure more families have a chance to own a home. The government will now go even further to release public sector land for housing:.
The government supports the construction of a new wave of garden towns and cities across the country, with the potential to deliver over , homes. The Budget announces that the government will legislate to make it easier for local authorities to work together to create new garden towns, as well as consult on a second wave of Compulsory Purchase Order CPO reforms with the objective of making the CPO process clearer, fairer and quicker.
For areas that want to establish smaller settlements, the government will provide technical and financial support to areas that want to establish garden villages and market towns of between 1, to 10, homes. The government will shortly announce what planning and financial flexibilities will be offered to local authorities that submit proposals for settlements that deliver a significant number of additional houses.
The higher rates will be 3 percentage points above the current SDLT rates and will apply to purchases of additional residential properties in England, Wales and Northern Ireland.
Following consultation , the government has decided:. This funding will support wider work to reform and refocus the system on preventing homelessness. To further support rough sleepers off the streets and to help those who are recovering from a homelessness crisis, Budget The government recognises the important work of providers of supported accommodation, including the providers of homelessness shelters and other services for those who may otherwise be sleeping rough. On 1 March the government confirmed that the date from which Local Housing Allowance caps apply to new tenancies in the supported accommodation sector will be delayed by one year.
It will now apply to tenancies in this sector signed after 1 April The evidence review of the supported accommodation sector, due to report in the spring, will provide a foundation to support further decisions on protections for the supported housing sector in the long term. A productive, dynamic economy is one that makes full use of its workforce, ensuring that as many people as possible can benefit from a growing economy and higher wages.
The government has set out an ambition to achieve the highest employment rate among major economies by the end of the parliament. Much of the contribution to the increase in working-age employment seen over the last parliament came from substantial reductions in unemployment. Unemployment is at a 10 year low. In particular, the government wants to remove the barriers to work for key groups — notably women and the disabled, building on the progress made in the last parliament.
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In November , it was announced that Greater Manchester, along with several other city regions , would elect a ' metro-mayor ' with similar powers to the Mayor of London. The first Greater Manchester mayoral election was held on 4 May The Greater Manchester Combined Authority GMCA  is the highest tier of the organisation and is made up of 11 members indirectly elected councillors derived from the councillors of Greater Manchester's constituent authorities, together with the Mayor of Greater Manchester.
Each member has one vote with the chair not possessing a deciding vote, each council nominates one member and one stand-in member in the case of absence. The constituent council may at any time terminate the membership of its nominee, the nominee will also cease to be a member if at any time they should cease to be an elected representative and a new nominee must be selected as soon as possible.
All questions arising before the GMCA are decided by a simple majority vote, and if a vote is tied it is considered to be lost. Several subjects however require an enhanced majority of seven votes in favour, these are:. Transport for Greater Manchester TfGM  is the executive body of the GMCA for the execution of transport functions and will be the executive agency responsible for the running of Greater Manchester's transport services and infrastructure such as Metrolink , subsidised bus and rail services as well as carrying out transport and environmental planning.
It is supervised by the members of the TfGMC. These councillors have voting rights on most transport issues despite not being members of the GMCA however some decisions would still require approval by the GMCA, the functions which are referred but not delegated to the TfGMC include making recommendations in relation to:. In anticipation of the combined authority seven commissions were set up to handle the new responsibilities, six commenced operation between May and August  they are:.
The current intention is that each of the Commissions except Improvement and Efficiency which consist entirely of local authority members are formed of a mixture of elected members and representatives from other partners, including the private sector, other public sector agencies and the voluntary sector. Seats are shared out amongst all the local authorities as equally as possible, with no local authority having more than one seat on each Commission with the exception of the Improvement and Efficiency Commission which will have all authorities represented.
A partnership board has been established consisting of members of the GMCA, the Chair of TfGMC and senior members of neighbouring authorities to discuss matters of common interest. The GMCA is made up of 11 constituent members: The mayor is also supported by a non-constituent Deputy Mayor for Policing and Crime - the only salaried portfolio holder and in Lord Smith of Leigh continued in his lead role for Health after retiring from his leadership of Wigan Council.
In most cases, the council's nominee is the leader of the authority, although there is no requirement for them to be so. Colour key for political parties: From Wikipedia, the free encyclopedia. Combined authority of Greater Manchester. Andy Burnham , Labour Since 8 May