Philip Hammond introduces 'digital services tax' targeting big tech

Philip Hammond

The Chancellor said the amount of money that would be spend on public services would be decided in the spending review next year.

The outlook for the United Kingdom economy has improved in 2018, according to the latest round of Office for Budget Responsibility (OBR) forecasts, suggesting the lacklustre growth rates seen earlier in the year won't be repeated going forward.

A "no deal" or "disorderly" Brexit "could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances", it warns.

It added: "The scale would be very hard to predict, given the lack of precedent".

In his Budget statement this afternoon, Chancellor Phillip Hammond revealed a two percent "digital services tax" on large tech firms such as Amazon, Facebook and Google.

Younger minimum wage workers will receive the following pay rises: £7.38 to £7.70 for 21-24 year olds, £5.90 to £6.15 for 18-20 year olds and £4.20 to £4.35 for 16-17 year olds.

Around 32 million Britons will be given an income tax cut as Mr Hammond announced that promised increases in the tax-free personal allowance will happen in April 2019 rather than 2020.

Tottenham MP and former culture minister David Lammy said: "We should not be supporting tax cuts that disproportionately help the wealthy".

Mr Hammond said his Budget was aimed at helping "the strivers, the grafters and the carers" and would pave the way for a "brighter future".

Labour leader Jeremy Corbyn then gets the first response, before MPs debate the Budget.

"The chancellor referred to his proposals as part of setting a timeline for global action and that's always been something that we've supported", O'Donovan told the committee.

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But conceded that the "commitment we have made to health" - ie the £20bn boost for the NHS - meant that the Government would be lest with "a flat real spending available for all other departments".

He said: "We are not going to oppose it on the basis it will put more money in people's pockets".

The higher rate threshold, the income at which someone becomes liable to pay the 40% tax rate, will rise to £50,000 from £46,350 at the same time. It will come into effect in April 2020… …and is expected to raise over 400 million pounds a year.

Though S&P said its base case remains that Britain and the European Union will come to some sort of agreement over their future economic relationship, it said it sees an "increasing risk that the United Kingdom will secede from the European Union and, importantly, the European Union single market, without any deal at the end of March".

But Theresa May's official spokesman said that the Chancellor was indicating that he was ready to use his "fiscal firepower" to shore up the economy if the United Kingdom withdraws without a deal.

The chancellor also suggested that a Brexit deal could trigger more tax cuts and increased public service spending.

This lost output will not be recovered before year-end according to the OBR although the independent body does project the economy will then pickup once into the 2019 year with GDP growth rising by 1.6%.

He insisted he was not "abandoning fiscal rectitude", and said the deficit will decline in every year of the forecast period.

An additional £1 billion was announced for the Ministry of Defence for the remainder of the year, and Hammond specifically referred to cyber capabilities and the sea deterrent Dreadnought programme.

Martin Reeves, Solace spokesperson for local government finance, said: "Unlike the NHS, which has been offered both multi-year funding and a commitment to a 10-year plan, local services have to make do with sticking plasters yet again".

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