Budget 2017: £2bn for social care and tax rise for self-employed

Chancellor Philip HammondImage copyright HoC

Chancellor Philip Hammond has announced an extra £2bn for under-pressure social care services in England in the Budget.

Mr Hammond also promised to help firms hit by business rate rises – but increased national insurance bills for many self-employed people.

On the economy he said growth was expected to be higher – and borrowing lower – than forecast in November.

Labour leader Jeremy Corbyn said it was "a Budget of utter complacency about the state of our economy".

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The government has been under pressure to offer more resources for social care budgets, with the Local Government Association warning the entire system stands on the "brink of collapse" without an immediate cash injection and a commitment to a long-term solution.

Mr Hammond acknowledged the system was under pressure with an ageing population, and said the new £2bn for services in England would allow councils to "act now to commission new care packages".

He also said the government would set out the options for long-term funding of the social care system later in the year – although these would not include a "death tax".

Other announcements included:

  • An extra £325m for NHS reform programmes
  • Transport spending of £90m for the north of England and £23m for the Midlands to address "pinch points" on roads
  • £270m for maintenance of existing schools
  • Extending free transport to all free school meals pupils who attend selective schools
  • No change to previously-planned upratings of duties on alcohol and tobacco
  • Additional funding of £350m for the Scottish government, £200m for the Welsh government and almost £120m for the Northern Ireland Executive

It is expected to be the last Budget before the UK formally gives notice of its departure from the EU.

Opening his statement, Mr Hammond said although the UK economy "continued to confound the commentators with robust growth", the UK's deficit was still high, and productivity "stubbornly low".

He said the Office for Budget Responsibility had revised up its growth forecasts from 1.4% to 2% for 2017, and that borrowing would be £16.8bn lower than previously forecast.

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Image caption The chancellor posed with his red box before leaving Downing Street to head to Parliament

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Mr Hammond had been under pressure, including from Conservative MPs, to announce help for businesses facing rates rises as a result of a revaluation.

He announced a £300m "discretionary fund" to be used by councils to help companies that are badly hit, and a £50-per-month cap on increases for firms facing the loss of small business relief.

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In a further measure, he said 90% of pubs would be given a £1,000 business rates discount.

The chancellor also announced an increase in National Insurance rates for self-employed people, saying the disparity with the amount paid by employees "undermines the fairness of our tax system".

Class 4 National Insurance contributions will go up to 10% from 9% and to 11% in April 2019, he told MPs.

Several spending announcements were made ahead of Mr Hammond's Commons statement.

These include:

  • A £5m fund to mark the centenary of female suffrage next year
  • An extra £500m for vocational and technical education in England
  • A one-off £320m for 140 new schools in England, which could include grammars
  • Measures to protect people who inadvertently end up subscribing for services after signing up for free trials
  • Plans aimed at helping the North sea oil and gas industry
  • £500m support for electric vehicles, robotics and artificial intelligence

Responding to Mr Hammond, Labour leader Jeremy Corbyn said the Budget ignored the "crisis facing our public services and the reality of daily life for millions of people in this country".

Aside from the Budget, several previously-announced changes come into force in April, including an increase in the personal tax allowance to £11,500, a new inheritance tax allowance, a rise in the annual ISA limit to £20,000 and the introduction of a levy to fund apprenticeships.

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