Philip Hammond has delivered his spring statement – here are the main points, with political analysis

This article is more than 1 year old

This article is more than 1 year old

Growth

• Forecast of 1.2% growth for 2019.

• Then 1.4% in 2020, 1.6% in 2021, 2022, and 2023.

• In October, growth was forecast at 1.6% for 2019, 1.4% for 2020, 1.4% in 2021, 1.5% in 2022 and 1.6% in 2023.

• Hammond says the economy has defied expectations.

Peter Walker, political correspondent: Hammond is, politically, having his cake and eating it – talking up what he says are achievements with growth and jobs, while noting what he called the “cloud of uncertainty” after last night’s Brexit vote.

Spring statement: Philip Hammond reveals state of UK's economy and finances - live Read more

Borrowing

• Forecast for borrowing to be £3bn lower in 2018-19 than forecast at the autumn budget.

• Borrowing forecast to be £29.3bn in 2019-20, then £21.2bn in 2020-21, £17.6bn in 2021-22, £14.4bn in 2022-23 and £13.5bn in 2023-24.

• In October, borrowing was forecast to be £25.5bn in 2018-19, then £31.8bn in 2019-20, £26.7bn in 2020-21, £23.8bn in 2021-22, £20.8bn in 2022-23 and £19.8bn in 2023-24.

• Hammond says this is provided we avoid leaving without a deal and provided Labour does not come to power. The UK has “genuine and sustainable choices about its future”.

Debt

• Debt is forecast to be 82.2% as a share of GDP in 2019-20.

• Debt as a share of GDP is forecast to fall to 79% in 2020-21, 74.9% in 2021-22, 74% in 2022-23 and finally 73 % in 2023-24.

Spending review

• Hammond says the Treasury will conduct a full spending review before the summer recess, to be concluded before the autumn budget.

• The chancellor says this is “assuming the Brexit deal is agreed over the next few weeks and the uncertainty hanging over our economy is lifted”.

• He says that there will be a “deal dividend” from lifting business uncertainty, encouraging firms to invest. The government would also be able to spend some of the money left in reserve for a no-deal scenario.

PW: Hammond’s announcement of the three-year spending review – and the condition that this will only happen if there is a Brexit deal – is a reminder to rebellious Tory MPs that there is a world of other political decisions to make, beyond endless arguments about the Northern Ireland backstop. Austerity will end, he says, but not with a no-deal Brexit.

Brexit

• Hammond says the £15.4bn headroom in the public finances that could be used in a no-deal Brexit has increased to £26.6bn.

• The chancellor warns that a no-deal Brexit would cause the economy to be smaller and weaker in future. There would be higher prices for consumers.

• Hammond says a no-deal Brexit would mean a “short to medium-term reduction in the productive capacity of the economy”.

• Tax and spending responses and Bank of England policy changes could only ever be temporary to handle a no-deal Brexit, he says, to avoid higher levels of inflation.

• Hammond says in a message to Brexiters: “The idea there is some readily available fix to avoid the consequences of a no-deal Brexit is just wrong.”

PW: This is the chancellor the Tory hard Brexiters detest, in full flow. A no-deal Brexit would make the economy smaller, he says, and there are factors (not least borders) over which the UK would be dependent on others. Hammond has always held this view, but after last night’s vote the warning is all the more urgent.

Global Britain

• The chancellor says that from June the government will begin to abolish the need for paper landing cards at UK points of entry, including airports and Eurostar terminals, for countries including the US, Australia, Canada, South Korea and Japan.

• Hammond says PhD level roles will be completely exempt from visa caps.

Productivity

• Hammond says the spending review this summer will set capital budgets to protect “record levels” of spending, while ensuring this will boost productivity.

• He says that the government aims to “slay once and for all the twin demons of low productivity and low wages and build an economy that works for everyone”.

• There are investment packages for laser technology and nuclear research, as well as funding for a new supercomputer at Edinburgh University.

Tech companies

• Hammond says the government will make technology companies “pay their fair share” and protect consumers from online harm.

• He says: “This government will lead the world in delivering a digital economy that works for everyone.”

• His comments come after a review conducted for the Treasury by Jason Furman, formerly Barack Obama’s chief economic adviser, which concluded that the dominance of the big digital players was curbing innovation and reducing consumer choice.

Housing

• The chancellor says he can announce £3bn in funding to help deliver 30,000 affordable homes.

• Hammond also says there is £1bn for small and medium-sized builders of homes and £117m from the housing infrastructure fund to unlock up to 37,000 new homes in Cheshire, London, Didcot and Cambridge.

PW: The housing section of the speech has just a brief, passing mention of the help-to-buy scheme – perhaps Hammond is mindful of the recent reports about how one of its major apparent effects has been to boost housebuilders’ dividend payments.

Climate change

• Hammond says there will be a “future homes standard” to mandate the end of fossil-fuel heating systems in all new houses from 2025.

• There will also be a comprehensive review of the link between biodiversity and the economy by Prof Partha Dasgupta from Cambridge University.

Period poverty

• The chancellor says he will make free sanitary products available in secondary schools in England from the next school year.

PW: Another pointed reminder from the chancellor to his MPs that there are more important policy priorities than Brexit, and that perhaps the government could be allowed to finally get on with thinking about a few of these.

Policing

• The chancellor says he will make available immediately an additional £100m over the course of the next year, ringfenced to pay for extra police overtime targeted specifically at knife crime.

• Hammond calls the knife crime issue an “epidemic”.

PW: This is a hugely politically difficult area for the government, whatever Hammond’s insistence that police funding is rising. This was billed overnight in the newspapers as a victory for Sajid Javid – either way, it will be a popular move.

Final comments

The chancellor issued a direct message to parliament that building a stronger country was only possible by avoiding no-deal Brexit. Before the vote later this evening on whether to pursue a no-deal Brexit, he said of such a stronger Britain: “Tonight let’s take a decisive step towards seizing it.”