Hm Treasury
Madam Deputy Speaker
As we mourn the tragic loss of life in Israel and Gaza, the Prime Minister reminded us last week of the need to fight extremism and heal divisions.
So I start today by remembering the Muslims who died in two world wars in the service of freedom and democracy.
We need a memorial to honour them, so following representations from the Rt Hon Member for Bromsgrove and others, I have decided to allocate 1m towards the cost of building one.
Whatever your faith or colour or class, this country will never forget the sacrifices made for our future.
In recent times, the UK economy has dealt with a financial crisis, a pandemic and an energy shock caused by war in Europe.
Yet despite the most challenging economic headwinds in modern history, [political content removed] since 2010
growth has been higher than every large European economy
unemployment has halved
absolute poverty has gone down
and there are 800 more people in jobs for every single day weve been in office.
Of course, interest rates remain high as we bring down inflation.
But because of the progress weve made
because we are delivering the Prime Ministers economic priorities
we can now help families not just with temporary cost of living support
but with permanent cuts in taxation.
We do this to give much needed help in challenging times.
[Political content removed] Lower tax means higher growth.
And higher growth means more opportunity, more prosperity and more funding for our precious public services.
But if we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration.
It can only come by building a high wage, high skill economy.
Not just higher GDP but higher GDP per head.
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the policies I announce today mean
More investment.
More jobs.
Better public services.
And lower taxesin a Budget for Long Term Growth.
Madam Deputy Speaker, I start with the updated forecasts from the OBR, for which I thank Richard Hughes and his team.
First inflation.
When the Prime Minister and I came into office, it was 11%.
But the latest figures show it is now 4% - more than meeting our pledge to halve it last year.
And todays forecasts from the OBR show it falling below the 2% target in just a few months time nearly a whole year earlier than forecast in the Autumn Statement.
That did not happen by accident.
Whatever the pressures and whatever the politics, [political content removed] this government, working with the Bank of England, will always put sound money first.
But we understand that tackling inflation, whilst necessary, is painful.
It means higher interest rates and a period of lower growth.
So we have given the average household 3,400 in cost of living support over the last two years.
Doing so makes economic as well as moral sense.
The OBR predicted real household disposable income per person would fall by 2% in the last year instead after this support it is on track to rise by 0.8%.
Today I take further steps to help families with cost of living pressures starting with measures to help the poorest families.
We have already abolished higher charges for electricity paid by those on pre-payment meters, increased the local housing allowance and raised benefits by double expected inflation.
Today I focus on those falling into debt.
Nearly one million households on Universal Credit take out budgeting advance loans to pay for more expensive emergencies like boiler repairs or help getting a job. To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months.
For some people the best way to resolve debts is through a debt relief order. But getting one costs 90 which can deter the very people who need them the most.
So having listened carefully to representations from Citizens Advice, I today relieve pressure on around 40,000 families every year by abolishing that 90 charge completely.
Next the Household Support Fund. It was set up on a temporary basis and due to conclude at the end of this month.
Having listened carefully to representations from the Joseph Rowntree Foundation, the Trussell Trust and the Hon Members for East Ham, Colchester, Ruislip, Northwood and Pinner and Suffolk Coastal among others, I have decided that - with the battle against inflation still not over - now is not the time to stop the targeted help it offers.
We will therefore continue it at current levels for another six months.
Next, I turn to a measure that will help households and businesses more broadly.
In the Autumn Statement I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%.
But I have listened carefully to my RHFs for Altrincham and Sale West, the Vale of Glamorgan and my RHF from Moray who is a formidable champion of the Scottish Whisky industry. I also listened to Councillor John Tonks, a strong supporter of the wonderful Admiral pub in Ash, who pointed out the pressures facing the industry.
So today I have decided to extend the alcohol duty freeze until February 2025.
This benefits 38,000 pubs all across the UK and on top of the 13,000 saving a typical pub will get from the 75% business rates discount I announced in the Autumn.
We value our hospitality industry and we are backing the great British pub.
Another cost that families and businesses worry about is fuel.
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Lots of families and sole traders depend on their car. If I did nothing fuel duty would increase by 13% this month.
So instead, I have listened again to my RHFs for Stoke-on-Trent North, Dudley North, Witham and others, as well as the Sun Newspapers Keep it Down campaign.
I have as a result decided to maintain the 5p cut and freeze fuel duty for a further 12 months.
This will save the average car driver 50 next year and bring total savings since the 5p cut was introduced to around 250.
Taken together with the alcohol duty freeze, this decision also reduces headline inflation by 0.2 percentage points in 2024-25 allowing us to make faster progress towards the Bank of Englands 2% target.
Madam Deputy Speaker there can be no solid growth without solid finances.
An economy based on sound money does not pass on its bills to the next generation.
When it comes to borrowing, some believe there is a trade off between compassion and fiscal responsibility.
They are wrong.
It is only because we responsibly reduced the deficit by 80% between 2010 and 2019 that we could provide 370 billion to help families and businesses in the pandemic.
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There is nothing compassionate about running out of money.
With the pandemic behind us, we must once again be responsible and build up our resilience to future shocks. That means bringing down borrowing so we can start to reduce our debt.
Todays figures confirm that is happening.
Ahead of my first Autumn Statement in 2022, the OBR forecast headline debt would rise to above 100% of GDP.
Today they say it will fall in every year to just 94.3% by 2028-29.
Underlying debt, which excludes Bank of England debt, will be 91.7% in 2024-25 according to the OBR, then 92.8%, 93.2%, 93.2% before falling to 92.9% in 2028-29 with final year headroom against debt falling of 8.9bn.
Our underlying debt is therefore on track to fall as a share of GDP, meeting our fiscal rule.
We continue to have the second lowest level of government debt in the G7, lower than Japan, France or the United States.
We also meet our second fiscal rule for public sector borrowing to be below 3% of GDP three years early.
Borrowing falls from 4.2% of GDP in 2023-24, to 3.1%, 2.7%, 2.3%, 1.6% and 1.2% in 2028-29.
By the end of the forecast, borrowing is at its lowest level of GDP since 2001.
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Today, this [Political content removed]government brings down taxes with borrowing broadly unchanged in fact slightly lower than planned in the Autumn Statement.
And that is something of particular importance to one very special person. Sir Robert Stheeman is the outgoing CEO of the Debt Management Office and after 20 years of exceptional public service he is in the gallery today thank you Sir Robert.
I now turn to growth.
Just after I became Chancellor, the OBR expected GDP to fall by 1.4% last year. In fact it grew, albeit slowly.
Now, the OBR expects the economy to grow by 0.8% this year and 1.9% next year 0.5% higher than their autumn forecast. After that growth rises to 2%, 1.8%, and 1.7% in 2028.
Since 2010 we have grown faster than Germany, France or Italy, the three largest European economies, and according to the IMF we will continue to grow faster than all three of them in the next five years.
Surveys by Lloyds and Deloitte show business confidence is returning.
In other words, because we have turned the corner on inflation, we will soon turn the corner on growth.
Todays OBR forecasts also show we have made good progress on the Prime Ministers three economic priorities. Compared to when the three pledges were made
Inflation has halved
Debt is falling in line with our fiscal rules
And growth is fully