Hammond bets the house: Chancellor ends austerity with £25bn Budget splurge SCRAPPING stamp duty on £300,000 homes for first-time buyers and pumping £3bn into Brexit plans to save his job

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Philip Hammond effectively ended austerity today with a £25billion Budget splurge that abolished stamp duty for most first time buyers and pumped £3billion into preparing for Brexit.

The Chancellor ditched his 'Spreadsheet Phil' reputation for tight money management as he fought to save his job - turning on the spending taps to meet a bewildering array of challenges.

Despite the OBR fiscal watchdog slashing growth forecasts, Mr Hammond ploughed £2.8billion more into the NHS, £1.5billion into heading off anger about the new Universal Credi rollout, and paved the way for significant public sector pay rises.  

But the most radical move came as he did away with stamp duty on properties worth up to £300,000 in a bold appeal to Millennial voters. Homes worth up to half a million pounds in 'high value' areas will also be covered - meaning buyers will only face charges on the £200,000 difference.

In total around a million first-time buyers are expected to benefit over the next five years, 95 per cent of the total. Those purchasing an average £208,000 property will benefit to the tune of £1,660, while some will be £5,000 better off, according to the Treasury.

Mr Hammond said the cut - which will cost the Exchequer £600million a year and come into force immediately - would be teamed with a wider £44billion push to build 300,000 extra new homes a year by the mid 2020s, including in five new 'garden towns', and should 'revive the home-owning dream'.

But the independent OBR watchdog warned that the main gainers from the stamp duty break would actually be existing homeowners - as it would drive prices up. 

Chancellor Philip Hammond set out an optimistic view of Brexit, but admitted that growth forecasts had been slashed

Mr Hammond was warmly congratulated by Damian Green (left) and Mrs May after his speech in the House today

Growth has been downgraded but national debt is thought to have peaked and will shrink as a share of the economy from 2019 (pictured left). The debt forecast is better than it was in March (pictured right). Blue bars show the new forecast 

The overall package amounted to £25billion net of extra spending over the next five years - and together with his notably more optimistic language on Brexit might well have won him a stay of execution after fevered speculation he could be sacked.

Mr Hammond insisted that despite the extra outlay he did not need to drop his target for eradicating the deficit by the middle of the next decade.

Among the key announcements in Mr Hammond's crucial second Budget were:

• Pump billions into tackling the housing crisis, including a new target to build 300,000 homes a year and measures to make it easier for councils to build. Said the government would carry out 'direct intervention' to ensure there was land available for construction;
• Wooed younger voters with a cut in stamp duty for first-time buyers, and the extension of the young person's railcard to all under-30s;
• Vowed £28million to eradicate homelessness in cities by 2027 and devoted more money to addressing mental health conditions;
• Allocate £2.8billion more to the NHS over the next two years, but well below the £4billion that has been requested by senior managers in the health service;  
• Mr Hammond insisted public sector workers must improve their productivity in return for an easing of the 1 per cent pay cap. Mr Hammond did not allocate more money to fund pay rises, but said he was ready to if required;
• Announced a 40 per cent increase in research and development spending to make the UK a world leader in areas such as driverless cars and robotics;
• The Chancellor bowed to pressure not to increase fuel duty, and froze most alcohol duties apart from strong cider;
• Seriously wounded troops will get £4.5million from the last of the Libor fines levied on misbehaving banks; 

The housing drive commits an additional £15.3million in capital funding for the housing market, which will be made available over the next five years in loans and guarantees - bringing the total support offered by the government to £44billion.

'House prices are increasingly out of reach for many,' Mr Hammond said. 'It takes too long to save for a deposit and rent absorb too high a portion of monthly income...

'When we say we will revive the home owning dream in Britain we mean it.' 

The Chancellor said fixing the housing market was a 'crucial part' of ensuring the younger generation were not the first since the Black Death to be less prosperous than their parents.

He promised the Government would do 'whatever it takes' to get homes built including cracking down on 'land-banking' and underwriting loans to small house builders.

There will be direct state intervention, including a programme of buying land, and local authorities will be able to charge a 100 per cent council tax premium on empty properties.

As part of a 'long term battle to achieve and sustain affordability', he said New Town Development Corporations would be used to 'kick-start' five new Garden Towns in 'areas of demand pressure'. 

Some £28million is being committed to a goal of ending homelessness in cities by 2027, Mr Hammond said.  

But his housebuilding plans fell short of Local Communities Secretary Sajid Javid's recent call to borrow £50bn to fund a massive house building programme.

The stamp duty move - which will only apply in Scotland if the government there approves it - was also called into question by the OBR.

Despite the Treasury saying first time buyers of a £500,000 house could save £5,000, and a cost to the Exchequer of around £600million a year, the watchdog's analysis said the gains were likely to be passed on to sellers in higher prices.

'The main gainers from the policy are people who already own property, not the first time buyers themselves,' the OBR said.

Official figures this week showed more than 217,000 homes were built last year - nearly a third less than Mr Hammond's new target. 

The initial reaction at Westminster was that the Chancellor appeared to have done enough to get a stay of execution, after rumours he was destined for the axe in a New Year reshuffle.

A gaffe-ridden package could spell disaster for Mrs May's government, which is reeling from sex harassment scandals, Cabinet resignations and the threat of defeat on the Brexit Bill. 

Eurosceptic MPs were cheered that Mr Hammond immediately took a more upbeat approach on the UK's future outside the EU, after he came under heavy fire for an 'Eyeore' attitude. In his most optimistic remarks for months, Mr Hammond said the UK would 'run towards the future' of Brexit.

'While we work to achieve this deep and special partnership… …we are determined to ensure that the country is prepared for every possible outcome,' he said.

'We have already invested almost £700million in Brexit preparations and today I am setting aside over the next two years another £3billion and I stand ready to allocate further sums if and when needed.

'No one should doubt our resolve.' 

Mr Hammond admitted at the weekend that his ambitions for this afternoon did not stretch beyond presenting a 'balanced' Budget. Downing Street was so concerned about the lacklustre details briefed to journalists overnight that it stepped in to insist more information about education announcements were released. 

Mrs May tried to downplay the tensions this morning by tweeting a supportive message with a picture saying Mr Hammond would be setting out the government's blueprint for the future.

But the Chancellor had little room for manoeuvre on the government's finances as the economy has slowed down, while productivity gains have stayed stubbornly low. 

In his speech, Mr Hammond said that 'for the first time in decades, Britain is genuinely at the forefront of a technological revolution, not just in our universities and research institutes, but this time in the commercial development labs of our great companies and on the factory floors and business parks across the land'.

'So we must invest to secure a bright future for Britain, and at this Budget that is what we choose to do,' he will add. 

Mr Hammond said he had previously set aside £26billion as a Brexit warchest, adding: 'Now I choose to use some of the headroom I established then so that as well as reducing debt, we can also invest in Britain's future, support our key public services, keep taxes low, and provide a little help to families and businesses under pressure. 

'A balanced approach, that will prepare Britain for the future, not seek to hide from it.' 

Mr Hammond said the tight economic landscape would not stop him being bold about Brexit and pledged to use some of the money.

'An economy that continues to grow, continues to create jobs than ever before and continues to confound those who seek to talk it down. An economy set on a path to a new relationship with our European neighbours and a new future outside the EU,' he said.

'A future full of change, new challenges and above all full of new opportunities.

'And in this Budget, we express our resolve to look forwards not backwards. To embrace that change to meet those challenges head on…and to seize those opportunities for Britain.

'The negotiations on our future relationship with the EU are in a critical phase. The Prime Minister has been clear that we seek a deep and special partnership, based on free and frictionless trade in goods and services…close collaboration on security.'

Setting out the cash for the NHS, Mr Hammond said he recognised that services were 'under pressure right now'. 

'I am therefore exceptionally, and outside the Spending Review process, making an additional commitment of resource funding of £2.8billion to the NHS in England - £350million immediately to allow trusts to plan for this winter and £1.6billion in 2018-19, with the balance in 2019-20, taking the extra resource into the NHS next year to £3.75 billion in total.' 

Overall, the Chancellor is spending £25billion more over the next five years.

Treasury sources said: 'what the Government is committed to do is to meet its fiscal rules. It's not austerity for austerity's sake.

'We are meeting the fiscal rules by some margin. One rule is to get debt falling by 2021 - it's falling in 2018, 19, 20 and 2021.

'There is a commitment to get the finances back in balance by the middle of the decade. ' 

Mr Hammond bowed to pressure from motorists not to slap additional tax on petrol and diesel in the Budget.

Campaign group FairFuelUK said that more than 30,000 supporters had emailed the Chancellor over 48 hours with a plea for him not to hit families and businesses who are 'struggling to make ends meet' in order to win green credentials for his Budget.

He announced a £180million investment in maths teaching, arguing that better workplace maths skills are essential to ensure the UK 'remains a competitive force in the global marketplace'. Schools and colleges will receive an additional £600 for every extra pupil studying maths A-level, allowing them to invest in better provision.

Teachers in underperforming schools will be offered training grants worth up to £1,000 each to improve their skills.

Mr Hammond set aside more than £80million to train an extra 8,000 computer science teachers.

Treasury sources hailed an 'innovative and novel' extension to the so-called Google tax.

Reforms established by George Osborne allowed HMRC to collect tax on revenues earned on UK digital search activity even if it was generated via software working off shore.

Companies, including search engines such as Google and social media firms, got around the new tax by running the activity via a third country.

The new measure allows the UK to exploit bilateral tax agreements with more than 100 countries to lay a claim to the revenue - raising more than £500million in extra tax over the next five years.

The source admitted the third country could collect the tax themselves and stop it being returned to Britain meaning revenues decline over time. 

The OBR fiscal watchdog had dramatically slashed growth estimates for the coming years - including from 2 per cent to 1.5 per cent this year (left). Mr Hammond said the deficit would still fall every year, but by less than previously thought

Mrs May was flanked by the Chancellor as she took PMQs in the House before the Budget was delivered

Labour leader Jeremy Corbyn said he believed the Budget package would quickly unravel as he responded in the House 

Health and social protection dominates the government's spending (left). The Tories have promised to raise the higher tax rate threshold, but the plans may be pushed back towards the end of the parliament

Last year Mr Hammond ditched George Osborne's target of eradicating the deficit by 2019, instead saying it must go by the mid-2020s. It will still be £25billion in 2023 on the new forecast (pictured left). Families have been feeling the squeeze as inflation has risen faster than wages over recent months (pictured right)

But they said the Treasury hoped the internet firms would be forced to effectively on-shore activities taking place in Britain anyway.

The source said: 'This is not a silver bullet for all of the public's concerns about the digital economy.

'There is much more to do but this is a sensible and pragmatic measure.' 

He made clear his determination to pitch for Millennial votes by announcing plans to get 300,000 homes built a year.

Mr Hammond is regarded as on a final warning after his first Budget package in March unravelled within days over a proposed hike to national insurance contributions for more than 2.4million self-employed.

The Chancellor initially seemed unaware that the plan smashed a Tory manifesto pledge - and amid a massive backlash Mrs May humiliatingly forced him to drop it.

He has also enraged Brexiteers with gloomy pronouncements on Britain's future outside the EU, with some openly demanding Mrs May replace him with a more optimistic figure. 

There had been strong signs that Mr Hammond was destined for the chop after the election. But Mrs May's poor showing left her too weak to make dramatic changes to her top team.

The Chancellor has again been tipped for the sack in a new year reshuffle if this week's Budget is a flop.

Jeremy Corbyn predicted the package would unravel within days, warning 'misery' will continue for people across the country. 

The Chancellor and Mrs May sent coordinated tweets today as they tried to play down claims of tensions

Mrs May is hoping the Budget can get her government back on track after a series of crises that saw the resignations of Sir Michael Fallon (front row, third from left) and Priti Patel (middle row on the right) from Cabinet. Mrs May's deputy Damian Green (front row on the left of the PM) is still under investigation over sleaze claims

Mr Hammond has been coming under pressure from motorists not to slap additional tax on petrol and diesel in the Budget after years of freezes (left). The 20 per cent and 40 per cent thresholds have been rising slowly over recent years (right) 

The Labour leader said pay was lower than in 2010 and wages were falling, adding that economic growth in the first three quarters of this year was the lowest since 2009.

He told the Commons: 'It's a record of failure with a forecast of more to come.'

Responding to Mr Hammond's statement, Labour leader Jeremy Corbyn told the House of Commons: 'The reality will be a lot of people will be no better off and the misery that many are in will be continuing.'

Proceedings did not get off to a good start over the weekend as he committed a series of gaffes during TV interviews.

HAMMOND BURNS THE MIDNIGHT OIL AHEAD OF BUDGET DAY 

A lone light shines at the Chancellor's home at No11 Downing Street at 4.30am this morning ahead of Philip Hammond's make or break Budget

Philip Hammond was burning the midnight oil as he put the finishing touches to his 'make or break' Budget in the early hours of this morning.

A single light was on at No11 Downing Street at 4.30am this morning ahead of the Chancellor's big set piece.

Mr Hammond is under huge pressure to deliver a blunder-free Budget today.

Many within the Tory Party have hit out at his 'Eeyore-ish' pessimism and would seize on any gaffe to demand he is sacked from the top job.

While many backbenchers have urged him to turn the spending taps on and signal an end to austerity to stave off the threat from Jeremy Corbyn's Labour.

Today's Budget is widely seen as 'make or break' for the Chancellor.

And if it flops it will be a major blow to Theresa May's authority too as her Government reels from sex scandals, Cabinet resignations and the threat of defeats on the Brexit Bill. 

Mr Hammond was embarrassingly forced to issue a correction after declaring there were 'no unemployed people'.

The comment came as he argued that developments in technology need not lead to mass unemployment. 

'Nobody has a shorthand typist these days, but where are all these unemployed people?' he said. 'There are no unemployed people.'

In a separate interview an hour later, Mr Hammond acknowledged that 1.4million were out of work.

Asked about his error, he said: 'I didn't mean that. There's 1.4million unemployed people in this country and that's 1.4million too many.'

Labour seized on the slip as evidence that the Chancellor was out of touch. Jon Trickett, Labour's Cabinet Office spokesman, said: 'The Chancellor is living on another planet.'

Mr Hammond was also caught up in a row over funding after directly criticising the performance of the Health Service.

NHS chief executive Simon Stevens has called for an extra £4billion in cash to tackle the growing crisis in the healthcare system.

But the Chancellor said he had yet to deliver on efficiency reforms agreed as part of a five-year plan that led to a £10billion increase in NHS funding.

'I'll just remind you that Simon Stevens drew up the NHS Five Year View back in 2014,' he told the BBC's Andrew Marr Show. 'He was the one who set the envelope of resource that he asked the Government for £10billion extra by 2020. We agreed to fund that and that plan is not at the moment being delivered.'

NHS England hit back, highlighting a number of statements from Mr Stevens claiming the NHS 'got less than we asked for' in return for the five-year plan.

Mr Stevens also asked the Government to tackle demand by taking action to address the crisis in obesity and social care, none of which has happened.

Mr Hammond also caused dismay in Downing Street by announcing that he would be taking a ride in a driverless vehicle before the Budget. 

But after a rash of jokes about the fragile state of Theresa May's leadership aides stepped in to ensure the photo opportunity never happened.

Last night Downing Street was forced to rush out an announcement on school funding to off-set concerns over the lack of fanfare surrounding Mr Hammond's Budget.

The Treasury had insisted that no policy announcements would be made, however it was forced into a spectacular U-turn just hours later. 

The Chancellor insisted he did not deserve his gloomy reputation, saying: 'If you stick your head above the parapet there will be people who take pot shots at it.

'I spent most of the year listening to predictions of my demise. In the meantime I'm just getting on with the job.'

The state pension makes up for the bulk of social security spending, but the government has made clear it will not drop the triple lock that ensures they go up by the highest out of inflation, earnings, or 2.5 per cent (left). Unemployment is at a 40-year low despite the relative slowdown in the economy (right)

Owners of new diesel cars will be slapped with higher taxes of up to £500 a year as Hammond announces plans to crack down on air pollution 

Owners of new diesel cars will be hit with higher taxes of up to £500 a year under plans to crack down on air pollution unveiled by Philip Hammond today.

The Chancellor said new polluting diesel cars will rise one bracket up the vehicle excise duty system from April next year.

The tax rise excludes all vehicles bigger than cars - including white vans - to protect small businesses, Mr Hammond said as he unveiled his Budget.

Current diesel cars will all rise one bracket up the vehicle excise duty system, hitting millions of car owners

The change means drivers of new diesel cars will face rises from £15 for a year to up to £500 for the most polluting diesel vehicles.

Mr Hammond told MPs today that 'no white van man or white van woman' will be hit by the looming rise.

But motoring groups reacted with fury to the looming rise, branding it 'unnecessary' and hits ordinary Britons who rely in their cars and are already feeling the squeeze. 

Chancellor FREEZES duties on beer, wine and whisky but Hammond reveals new levies on 'white ciders' while hiking tax on cigarettes

Philip Hammond froze duties on most alcohol today but announced a new crackdown on cheap 'white ciders' with higher taxes.

The Chancellor said he wanted to cut consumption of high-volume, low cost alcohol and said he would change the law to increase tax on them.

But other products such as beer, spirits and wine will not be increased - allowing the Chancellor to claim a bottle of single malt whisky will be £1.15 cheaper.

Tobacco taxes will continue to spiral, as an escalator of inflation - currently running at 3 per cent - plus 2 per cent will continue.

Products such as beer, spirits and wine will not be increased - allowing the Chancellor to claim a bottle of single malt whisky will be £1.15 cheaper

The Chancellor announced: 'The tobacco duty escalator will continue at inflation plus 2 per cent with an additional 1 per cent duty on hand rolling tobacco this year and minimum excise duty on cigarettes will also rise.

'Excessive alcohol consumption by the most vulnerable people is all too often through cheap, high strength, low quality products – especially so-called white ciders.

'I want to pay tribute to the campaign led by Congleton MP Fiona Bruce on this issue.

'Following our recent consultation we will legislate to increase duty on these products from 2019.

'But recognising the pressure on household budgets and backing our Great British pubs duties on other ciders, wines, spirits and on beer will be frozen this will mean a bottle of whisky will be £1.15 less in 2018.'

Hammond announces a U-turn on Universal Credit saying the six week wait will be cut 

Philip Hammond announced changes to universal credit amid concern about families being forced to use food banks (posed file image) because of payment delays 

Philip Hammond today announced a £1.5billion package of measures to cut the waiting time for Universal Credit after facing a backbench Tory revolt over the benefit. 

The reform brings together six different benefits and ensures that work always pays by tapering off payments.

But the Chancellor faced major pressure to reform the policy after warnings families were being pushed into poverty by the six week wait for their benefit.

Labour MPs and Tory backbenchers had warned that Britons were being forced to use foodbanks as Christmas approaches because of delays in getting their payments.

Unveiling his Budget today, Mr Hammond aid he recognised the concerns that many have over the reforms and announced a package of measures to address them. 

He said the waiting time will be cut from six to five weeks, while payments to claimants needing emergency cash before their benefit comes through will be extend.

Hammond invests £12.8BILLION extra in the NHS to make it 'fit for the future' including £350million more for THIS winter 

Philip Hammond today handed £12.8billion extra to the NHS, insisting he was making the health service 'fit for the future'.

The Chancellor said there would be an extra £2.8billion on top of the current day to day budgets, including £350million to deal with the coming winter.

And he said £10billion in capital would be spent preparing the NHS for the future.  

Mr Hammond hailed a higher than ever number of operations and a 20-year high in patient satisfaction. 

The Chancellor has been under growing pressure both inside and outside Government to deliver the Vote Leave pledge for £350million a week for the NHS. 

The Chancellor has been under growing pressure both inside and outside Government to deliver the Vote Leave pledge for £350million a week for the NHS.

NHS chief executive Simon Stevens has warned the health service is braced for a tough winter and needs more money to deal with long term rises in demand. 

And announcing new cash, he said: 'We will deliver an additional £10 billion package of capital investment over the course of this Parliament.

To support the Sustainability and Transformation plans which will make our NHS more resilient. Investing for an NHS which is fit for the future.

'But we also recognise that the NHS is under pressure right now. I am therefore exceptionally, and outside the Spending Review process, making an additional commitment of resource funding of £2.8 billion to the NHS in England, including £350 million immediately to allow trusts to plan for this winter

'And £1.6 billion in 2018-19, with the balance in 19-20, taking the extra resource into the NHS next year to £3.75 billion in total.'