This article needs to be updated. Please help update this article to reflect recent events or newly available information. (October 2018)
2018 (2018) United Kingdom budget
PresentedMonday 29 October 2018
Parliament57th
PartyConservative Party
ChancellorPhilip Hammond
Total revenue£810 billion
Total expenditures£842 billion
Deficit£32 billion
WebsiteBudget 2018
2020 ›
Chancellor Philip Hammond delivering his Budget Statement

The 2018 United Kingdom budget was delivered by Philip Hammond, the Chancellor of the Exchequer, to the House of Commons on Monday, 29 October 2018. It was Hammond's third as Chancellor of the Exchequer since being appointed to the role in July 2016, and his last before being replaced by Sajid Javid by means of Boris Johnson's cabinet reshuffle upon becoming prime minister in July 2019. Following the budget in March 2017 the government moved the annual budget to the Autumn, with the following budget held on 22 November of the same year. On 26 September 2018, Hammond announced that the 2018 budget would be held earlier, in October, so as to avoid clashing with the final stage of Brexit negotiations.[1] On 28 October he suggested that a second budget would be needed in the event of a failure to negotiate a Brexit deal, since the scenario would require a "different response", with a need for "fiscal buffers" to provide support for the economy.[2]

Delivering the budget statement, Hammond said that the era of austerity was "finally coming to an end".[3] In response to pressure from Conservative MPs, the Chancellor announced an increase in Universal Credit for households with children, and people with disabilities, partially reversing reductions announced in 2015. The post-tax work allowances will increase by £1,000 per year, representing an extra £630 of income for about 2.4 million households in employment, ultimately at a cost of about £1.7 billion per year. Extra transitional support for claimants being moved to Universal Credit was also announced.[4][5] Hammond announced that a fifty pence piece would be created to mark the UK's exit from the European Union.[6]

Paul Johnson of the Institute for Fiscal Studies said that the budget did not end austerity. "Many public services are going to feel squeezed for some time to come. Cuts are not about to be reversed." Johnson also said, "If I were a prison governor, a local authority chief executive or a headteacher, I would struggle to find much to celebrate in the budget. I would be preparing for more difficult years ahead." The IFS maintains that "Total spending outside protected government departments is essentially flat, while it will fall on a per capita basis." The Resolution Foundation maintained that cuts to income tax would "overwhelmingly benefit richer households", and nearly half would go to the top 10% of households. Poorer households would continue to be affected by welfare cuts, despite Hammond claiming austerity was coming to an end.[7][8]

Spending impact

Taking advantage of Office for Budget Responsibility forecasts of increasing tax revenues from economic growth,[3] the budget was largely a spending budget with a cost of £103 billion over the next six years.[5]

The major tax and spend policy decisions in the budget, by their financial cost over 6 years, were:

Major policy decision financial impact (£ millions)[5]
2019-20 2023-24 2018-24
(over 6 years)
National Health Service spending increase -7,350 -27,610 -83,580
Income Tax threshold increase -2,790 -1,780 -9,555
Universal Credit increase to work allowance -545 -1,695 -5,635
Local Authority Housebuilding borrowing cap removal -385 -1,235 -4,655
Fuel Duty increase frozen 2019-20 -840 -935 -4,420
Capital allowance for new structures and buildings -165 -585 -1,905
Universal Credit revised implementation schedule -95 +250 +2,065
Extend anti-avoidance tax reforms to private companies -150 +725 +2,965
Total spending policy decisions -10,905 -30,520 -98,360
Total tax policy decisions -4,180 -40 -5,110
Total policy decisions -15,085 -30,560 -103,465

Other measures

The budget included notice of a plan to consult on a new tax on produced or imported plastic packaging, to be applied where recycled content was less than 30% of the packaging material.[9]

References

  1. ^ "Chancellor calls early Budget to fit round Brexit talks". BBC News. BBC. 26 September 2018. Retrieved 26 September 2018.
  2. ^ "Philip Hammond: No-deal Brexit would require new Budget". BBC News. BBC. 28 October 2018. Retrieved 28 October 2018.
  3. ^ a b "Budget 2018". BBC News. 29 October 2018. Retrieved 29 October 2018.
  4. ^ Sandhu, Serina (30 October 2018). "Universal Credit: what the Budget means for the controversial benefits system". i News. Retrieved 30 October 2018.
  5. ^ a b c Budget 2018 (PDF) (Report). HM Treasury. 29 October 2018. pp. 36–39 (Table 2.1), 77–78. Retrieved 30 October 2018.
  6. ^ Nelson, Christian (29 October 2018). "UK's new Brexit 50p leaves Britons less than enthusiastic". The National. Abu Dhabi: International Media Investments. Retrieved 31 October 2018.
  7. ^ IFS says Hammond's budget is gambling with public finances The Guardian
  8. ^ Jeremy Corbyn berates Theresa May for 'broken-promise budget' The Guardian
  9. ^ HM Treasury, Budget 2018: Single-use Plastics, published 2018, accessed 19 January 2023
Categories