Budget 2017: Philip Hammond faces row over tax rises for self-employed - as it happened

Andrew Sparrow and Graeme Wearden

from on 2017-03-08 18:13 (#2F4TE)

Live coverage, reaction and analysis to the chancellor's first, and final, spring budget

6.11pm GMT

Until now Theresa May's government has enjoyed a charmed life in its relations with the Tory press. The Daily Mail adores her, and the Daily Telegraph and the Sun have given her very positive coverage. But, thanks to this budget, relations could be about to sour. Philip Hammond's decision to increase national insurance contributions will affect prosperous self-employed people who might be thought of as archetypal Mail/Telegraph readers and tomorrow's papers could make awkward reading in the Treasury. The Resolution Foundation has welcomed the move, which it says is a progressive proposal which will "ensure the tax system catches up with the modern world of work", but the fact that it breaks a Conservative manifesto commitment will make it particularly hard to defend. How Hammond responds to this row over the next few days will tell us quite a lot about the state of his backbone.

This issue has dominated the headlines this afternoon partly because, in other respects, it was an unexceptional budget, which included relatively minimal spending commitments. At the weekend Hammond was talking about the need to keep enough "gas in the tank" (see 11.36am) to see Britain through any potential Brexit difficulties. He chose not to restate that argument in his statement (possibly because suggesting that the economy might head south is a Brexit thoughtcrime in government circles), but the thinking nevertheless informed his budget. In that respect, it was a bit wait and see.

6.02pm GMT

In summary... the broad economic message from today's budget is that the fiscal journey may be different, but the destination is the same.

Despite the improved growth forecast for this year -- 2%, up from 1.4% -- lower growth in subsequent years means the UK will still probably run a 17bn deficit in five year's time.

Interesting detail from OBR forecasts #Budget2017 . Level of real GDP downgraded by end of forecast relative to November...: pic.twitter.com/YjuLoVfXat

...& level of real GDP per capita also downgraded relative to November: pic.twitter.com/cCVQ8af44F

5.50pm GMT

Professional footballers take note: the taxman is taking a close look at the practice of paying for image rights.

The government is aware that some employers pay image rights in respect of employees under separate contractual arrangements to employment income.

HMRC will publish guidelines for employers who make payments of image rights to their employees to improve the clarity of the existing rules.

"The taxation of image rights, and particularly the image rights of footballers, were a focus of a Public Accounts Committee hearing in December 2016, with a perception that non-domicile footballers playing for UK clubs were able to receive payments for image rights without paying any UK tax.

"The taxation of such rights is currently based on tax case law, so it is hard to see how the tax treatment can be substantially changed without legislation. But for footballers currently benefitting from the favourable treatment of image rights it looks like they may be in the last few minutes of the match and any added time is unlikely."

5.49pm GMT

Often governments are accused of overstating their spending commitments. But, curiously, the budget red book shows that Phillip Hammond has been understating his commitment to the free school building programme, possibly because he is aware of the political opposition to building new grammar schools.

Two days ago the Treasury said the budget would contain a 320m investment that would fund new schools. The red book also mentions this figure, saying it is invesment over this parliament (ie, before 2020).

The prime minister says she wants to support all schools, but the flow of money tells a very different story. She is being as selective with the truth as she is with school admissions policies.

Without fanfare, the chancellor has stashed away a 1bn slush fund to provide for the government's free school and grammar school obsession.

5.28pm GMT

Writing for the Conversation, Prof Costas Milas of the University of Liverpool has said economic forecasts should be treated very cautiously indeed.

He writes:

Policymakers' ability to predict UK GDP growth has been rather poor. This can be seen in the way the forecast moves in the opposite direction to the actual outcome.

This makes two further worrying readings. First, UK policymakers have been overconfident in their predictions. The Bank of England has, on average, over-predicted annual GDP growth by a massive 1.52% over the past nine years. Second - and perhaps much more worryingly - the Bank's officials (and many other economists) completely missed the 2008-09 recession.

So what this tells us is that models are not good - at all - when they are needed the most. If this is indeed the case, what is the purpose of going through the somewhat futile exercise of presenting budget forecasts three to five (or even more) years into the future? Was this train of thought going through Phillip Hammond's mind when he announced that there will only be one, rather than two major budget statements a year?

5.28pm GMT

This is from Gerard Lyons, who was economic adviser to Boris Johnson when Johnson was London mayor.

.The Chancellor was right to praise entrepreneurs & innovators as life blood of the economy; 145m tax hike on self employed seems misplaced

5.25pm GMT

Currently people who rent out a room through Airbnb and other websites can benefit from rent-a-room tax relief. But now it looks as though they could lose that tax break. This is from the red book (page 34).

The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings.

5.17pm GMT

In the Commons some Tories have expressed concerns about the national insurance contributions increase.

Jacob Rees-Mogg said he was "very cautious" about the plan. He told MPs:

I see the logic for why the government wants to do this, that there is an unfairness between self-employment and employment. I'm not sure that making a minor change at the edges is the right way of going about changing the relationship."

It's very important to ensure that we don't disadvantage self-employed people. This party on this side always has been, I hope always will be, the party that supports white van man and, may I say on this particular day (International Women's Day) also white van woman.

I hope very much we can have some reassurance from the Treasury frontbench later on that plumbers and electricians and plasterers and people of that sort are not going to be disadvantaged.

5.12pm GMT

Here is Stewart Hosie, the SNP's Treasury spokesman, on the budget.

This is a right-wing Tory government which remains wedded to austerity, driving the biggest inequality since Thatcher, and the biggest threat to the economy- the Brexit shambles the UK is facing- was the elephant in the room.

Today we see that forecast debt, deficit and borrowing levels are as bad or have barely changed since last autumn - with little hope for any significant improvement.

5.07pm GMT

Britain has lost 800m in tax revenue because wealthy people shifted their dividend payments to avoid paying more to the Treasury.

That's according to the Office for Budget Responsibility, which has investigated the reaction to the abolition of the 10% tax credit on dividends in the July 2015 budget.

On the basis of the counterfactual we have used, our latest estimate is that dividend income shifting increased 2016-17 self assessment receipts by 4.0 billion (higher than the initial estimate of 2.6 billion) but will reduce future receipts by 4.8 billion.

This implies that pre-announcing the policy allowed taxpayers to reduce their bills by around 0.8 billion at the same cost to the Exchequer.

Government ballses up change to dividend tax. Costs public purse 800m. And hands average bonus of 1.14m to each of 100 wealthy tax dodgers pic.twitter.com/rAKCqBs85B

5.05pm GMT

Ed Miliband, the former Labour leader, has retweeted this from David Cameron.

I've ruled out raising VAT. Why won't Ed Miliband rule out raising National Insurance contributions? Labour always puts up the Jobs Tax.

Not so much..... https://t.co/og3HtERpM9

5.04pm GMT

I just had a chat with Matthew Taylor, the former Tony Blair adviser who's carrying out a review of the changing face of the labour market for the government. He says one central thrust of his review will be that over time we should move to a system of taxing labour, not employment; so eventually it won't matter if you're self-employed or an employee - you would be taxed at the same rates.

He revealed that he wrote to the chancellor at the weekend, pointing out that the abolition of Class 2 NICs, which is due to happen in April, would move in the opposite direction, widening the gap between the self-employed and salaried workers, and urging Hammond to take action.

There is clearly an issue about the tax gap between the treatment of employees and the self-employed people, which encourages businesses to shape their business model around tax arbitrage. Over the medium-term, the government should move from taxing employment to taxing labour ... [Hammond has] done it in a way which is progressive.

4.23pm GMT

Here is John McDonnell, the shadow chancellor, commenting on the budget.

Philip Hammond has used his first budget to claw 2bn in tax on those self-employed who are on low and middle incomes. But he continued to boast about the 70bn worth of tax giveaways at the top announced by his predecessor.

Labour will oppose this unfair 2bn sole traders tax on the self-employed low and middle earners.

4.14pm GMT

The chancellor's team took a mauling from journalists at the "huddle" afterwards, in which they go through the budget red book line by line and take questions.

Hammond's special adviser, pressed repeatedly, insisted the chancellor's decision to increase class 4 National Insurance Contributions for the self-employed did not breach the Conservatives' manifesto - because "tax lock" legislation, published after the election, did not include details about which classes of NICs were included."

4.12pm GMT

What the Budget lacked in policy changes it made up for with jokes - mainly at the Labour party's expense.

This gag had Tories rolling on the green benches:

Mr Deputy Speaker, a strong economy needs a fair, stable and competitive tax system, creating the growth that will underpin our future prosperity.

My ambition is for the UK to be the best place in the world to start and grow a business.

4.06pm GMT

Net migrants will make up most of the Budget's projected extra 700,000 people who will be in employment in Britain over the next three years, according to the Office of Budget Responsibility.

The OBR says that despite the expected post-Brexit tightening of immigration policy net inward migration will account for three-quarters of that projected rise in employment.

The latest estimate for net inward migration in the year to September 2016 was 273,000 - the first time it has fallen below 300,000 since the year to September 2014.

4.02pm GMT

One of the few certainties in economics is that most forecasts will be revised (or 'wrong', to be blunt).

The Office for Budget Responsibility address this by showing how likely a particularly outcome is:

The OBR's flamethrower of uncertainty gets its budget day moment pic.twitter.com/xdDNsZvHyo

Asked why we should believe new fcasts, OBR's Charlie Bean notes "we don't even know what's happened in the past" (data will get revised) pic.twitter.com/lPu5e2UUhI

4.01pm GMT

According to the OBR (on page 60 of its report), household disposable incomes are forecast to "stagnate" in 2017. It says:

Relatively weak earnings growth, together with higher CPI inflation, means that real household disposable incomes are expected to stagnate in 2017.

We expect gross household debt - which includes both mortgage and unsecured debt - to reach 153 per cent of household disposable income by the start of 2022, up slightly from 149 per cent in our November forecast. This reflects a small upward revision to the stock of household debt and a downward revision to household disposable income.

Overall, average household income per person is now expected to be 900 lower at the start of 2021 than was forecast at last March's Budget pic.twitter.com/puMaBr37Ua

3.47pm GMT

Bosses have hit out at the chancellor for not doing more to mitigate the upcoming rise in business rates.

David Jones, a senior director at property consultancy GVA, said:

"The chancellor has simply not listened to the majority of business facing significant uplifts from the 2017 revaluation."

3.44pm GMT

The budget red book suggests that tax on diesel vehicles is likely to go up next year. (For many, obviously, this would be a rare example of good news being buried in the small print.) This is what it says (on page 48.)

The government is committed to improving air quality, and will consult on a detailed draft plan in the spring which will set out how the UK's air quality goals will be achieved. Alongside this, the government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at autumn budget 2017.

3.40pm GMT

Our economics editor Larry Elliott has magisterially declared that this was a pretty boring budget.

He suspects chancellor Hammond is holding back the fireworks for his new autumn budget - in case negotiations with the EU go badly.

Brexit was not mentioned in the speech although it was the 1,000lb gorilla in the room. Hammond has no idea how the economy will be affected by the two-year article 50 negotiations but is less gung-ho about the outcome than some of his colleagues. He has kept his powder dry in case the economy takes a bigger growth hit than the OBR expects.

3.34pm GMT

Here is the full budget scorecard, showing what every measures costs or raises in revenue over the next five years, from the Treasury's red book.

3.28pm GMT

Robert Chote, who runs the Office for Budget Responsibility, is briefing the press about the budget right now.

He's explaining that the OBR's overall forecast for the UK economy is little changed over the next five years, with stronger growth this year but a slowdown from 2018.

OBR setting out ta latest forecasts, which see U.K. Economy growing 2% this year followed by a slowdown in 2018 pic.twitter.com/PEJuLBBxky

Presenting OBR forecasts, head Robert Chote says latest PMI surveys might point to a lower growth number than OBR had thought at start 2017 pic.twitter.com/cqUUSV9FfU

As it assesses what latest budget measures mean, fiscal watchdog OBR says welfare spending is lower across all years vs Nov Autumn statement pic.twitter.com/75cQbG9qDl

OBR head Chote says this was "a relatively small budget" (ie not many measures to have to assess)

3.26pm GMT

Rupert Harrison, who was chief of staff to George Osborne when Osborne was chancellor, has used Twitter to suggest that Philip Hammond should not be distracted by the row about NICs.

Some thoughts from the front line of the 2012 omnishambles Budget: just because a Budget measure gets bad front pages on day 1 doesn't...

...mean it is doomed. In 2012 the next day front pages were all about the 'granny tax' - eliminating the age rated allowance - which...

...ended up being passed and is now gone (a rare piece of tax simplification). Pasty tax, caravan tax & charity tax didn't emerge for weeks

And this budget has far fewer measures. Plus the NICS changes are progressive and have a compelling argument - so HMT will make the case

Of course the government now also has a much smaller majority, but I wonder if conservative MPs will want to give the Labour Party a victory

3.24pm GMT

Bad news... the Office for Budget Responsibility has trimmed its forecasts for wage growth, because it thinks more people will become self-employed over the next five years.

It says:

On the income side of GDP, wages and salaries are forecast to grow by 3.4 per cent a year on average between 2016-17 and 2021-22, down slightly from November. This partly reflects changes to our forecast of the composition of employment growth, which has been tilted towards more self-employed and fewer employees, in line with recent trends.

3.21pm GMT

Labour will oppose the increase in class 4 national insurance contributions, John McDonnell, the shadow chancellor, says.

Labour will oppose the 2bn Tory tax on self employed low and middle earners. #Budget2017

3.17pm GMT

This is what the Conservative party manifesto (pdf) said about not increasing national insurance. The manifesto repeats this promise four times.

A Conservative government will not increase the rates of VAT, Income Tax or National Insurance in the next parliament.

The intent of the manifesto commitment was legislated for [in the government's tax lock legislation], and that covered class 1 national insurance contribution, which is the rate that applies to employees. It didn't cover class 4, which is what we are increasing today.

One of the reasons for that was at the same time we were abolishing class 2. So you've got to remember that for most self-employed people, if you look at all the reforms to National Insurance contributions that we are making over the next couple of years most of them will be paying less in National Insurance contributions, not more. The relatively higher earners will be paying more - that is true. But the majority of self-employed will pay lower levels of NICs in three years' time than they do today.

"The manifesto is not the place you should be looking, you should be looking for it in the legislation", says Hammond's spox on NICs pledge.

Treasury getting monstered right now in post-Budget briefing over NIC general election promise being breached.

Treasury insists NICs change is all about fairness. But when spkswoman says: 'This Govt has kept its manifesto promises' laughter all round

Methinks...Bottom line is Tory election manifesto broken on NICs. End of. #Budget2017

Treasury seem completely blind sided by broken manifesto row. Looks like their political antennae gone seriously wonky. #Budget2017

3.12pm GMT

The OBR has given the government three ticks, and one cross, for today's budget:

The Government does not appear to be on track to meet its stated fiscal objective to "return the public finances to balance at the earliest possible date in the next Parliament".

The deficit falls little in 2020-21 and 2021-22, while the ageing population and cost pressures in health are likely to put upward pressure on the deficit in the next Parliament.

3.06pm GMT

Could this be tomorrow's headline?

LibDems have branded it the OmNICshambles. We can all go home.

2.58pm GMT

Here's some reaction to the Budget from the voluntary sector, from Hannah Terrey, Head of Policy and Campaigns at the Charities Aid Foundation:

"The Chancellor today affirmed that he has listened to the voice of businesses in setting out the country's post-Brexit financial plan. Government now needs to listen to the voice of charities and set out a post-Brexit social plan.

"Although the Chancellor did not mention the Prime Minister's vision of a 'Shared Society', his pledge to make Britain stronger, fairer and better will require the Government to work hand in hand with charities in order to deliver this promise and to bring a divided country back together.

2.54pm GMT

And here is a panel from Guardian Comment on the budget, with verdicts on it from Zoe Williams, Faiza Shaheen and Kate Maltby.

2.52pm GMT

Here is the page on the Treasury website with all the budget documents. Here is the budget red book (pdf), the main document.

And here is the OBR's Economic and fiscal outlook (pdf), its budget report.

2.49pm GMT

The Resolution Foundation thinktank have calculated that the changes to national insurance rates will hit higher earners hardest:

Here's full distributional impact of National Insurance changes. Summary: average losses for the top half of the income distribution pic.twitter.com/PQQlKDanC4

Dear the left: stop attacking a broadly progressive tax rise that also removes an incentive to game self-employment & hit revenues. Thanks.

2.48pm GMT

When George Osborne introduce the "national living wage", he said he expected it to be worth at least 9 an hour by 2020.

But the OBR has now revised down its forecast of what the NLW is likely to be. This is what it says in a footnote on page 58 of its report.

The level of the National Living Wage consistent with our forecast has been revised down slightly since November - from 8.80 to 8.75 an hour in 2020, reflecting revisions to our earnings growth forecast.

2.40pm GMT

Last week Liz Truss, the justice secretary and lord chancellor, announced changes to the way personal injury compensation payments are calculated. We were told this would cost the NHS an extra 1bn a year, which the government will fund.

The OBR report (page 96) says the actual cost to the public sector will be 1.2bn a year.

2.39pm GMT

The pound and stock market both recovered some of their earlier falls during the course of Hammond's speech, but the reaction is muted.
Sterling, down 0.38% at $1.2153 against the dollar and 0.25% at a1.1519 at the start of the speech, recovered to $1.2178, 0.25% lower, and a1.1543, down 0.03%, as the chancellor sat down.

2.33pm GMT

Liberal Democrat leader Tim Farron reckons the rise in national insurance bills for the self-employed will hurt an important political demographic....

Targeting the self employed, hitting White Van Man with a tax hike betrays Theresa May's pledge to help the just about managing. #Budget2017

2.31pm GMT

There are few surprises on education in the budget, with "T-levels", investment in technical education and more money for free schools, including grammars, all well covered in recent days. But any hard-up head teachers hoping against hope for an announcement from the chancellor of more money for their schools will be disappointed.

"Schools are being pushed beyond breaking point. The budget today does nothing to change that."

"School budgets have been cut to the bone, class sizes have increased, subjects have been dropped from the curriculum, materials and resources are scarce yet nothing has been done to address this very serious problem.

"Instead of tackling this crisis of their own making, we now learn that extra funding will pour into the opening of new free schools and grammar schools for which there is absolutely no need. Parents and teachers will be deeply dismayed at this flagrant and irresponsible waste of money."

"This is unbelievable. Two weeks ago the free schools programme was shown to have overspent to the tune of billions of pounds, at the same time as existing schools struggle to pay for books, cut teachers and their buildings decay around them.

"The Tories absolutely have their priorities wrong on education, if they think this is the right way to spend money. Investing in free schools and grammars is only going to make the divides between local areas, and between richer and poorer children, worse."

2.24pm GMT

Health groups, including the body representing children's doctors, have welcomed the chancellor's confirmation of the rates that will be slapped on sugary drinks through the "sugar tax" that his predecessor George Osborne announced in what turned out to be his last budget last year. It will be 18p per litre on drinks containing between five and eight grams of sugar per 100ml and rise to 24p per litre for drinks containing more than eight grams per 100ml, as originally proposed by the OBR.

Lucozade and Irn Bru have already been reformulated to ensure that they escape the new tax, which will be introduced in April 2018, and Tesco have also decided to strip excess sugar out of their fizzy drinks to ensure they do not have to pay the levy either.

2.21pm GMT

Despite the 435m of fresh help announced today, UK firms will be paying billions more in business rates over the next few years.

The OBR's new forecasts show business rate income rising to 33.7bn in 2021-22, up from 28.8bn in the current financial year.

3.17 The government will also introduce a 1,000 business rate discount for public houses with a rateable value of up to 100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2017.

Hmmm, looks like there is a catch to biz rates relief for pubs. It is "subject to state aid limits for businesses with multiple properties"

2.15pm GMT

The net impact of the measures in today's budget is quite small.

There is an increase in spending of 1.5bn in the next financial year (mainly the extra support for social care), but this is balanced by tax increases from 2019.

2.14pm GMT

The budget red book runs to just 64 pages. Last year's was 146 page long.

Thin stuff? This year's Sping Budget red book compared to last year's pic.twitter.com/iRd03NQHod

2.06pm GMT

The independent Office for Budget Responsibility will hold a press conference to discuss today's statement at 3pm - here's their initial response:

We have revised up GDP growth in 2017 from 1.4 to 2.0% following greater momentum at the end of 2016 #Budget2017 pic.twitter.com/sFWq8u4em7

Borrowing forecast revised: down by 16.4 bn in 2016-17 but smaller changes in later years of the forecast #Budget2017 pic.twitter.com/yrA0lqBxto

2.04pm GMT

At least one promise was kept: we were told this would be a relatively dull budget, and Philip Hammond delivered. The headline announcement was an extra 2bn for social care (the Treasury had been happy to let people expect 1.3bn), but this is over three year and, in relative terms, it is about the bare minimum of what he needed to announce without generating another raft of "care in crisis" headlines. The extra money to alleviate the impact of the business rates revaluation will be welcome, although he was not talking huge sums, and the spending announcements for health and education, were minimalist. You can tell the chancellor did not have much money to spray around because he even highlighted some announcements worth a mere 5m, which, in Treasury terms, is a figure so measly as to amount to little more than an accounting error.

But there were at least two unexpected features. Hammond made a very bold claim for his new T levels, saying they would once and for all establish parity between academic education and technical education. This is something that policy makers have been aspiring towards for generations. On the basis of what Hammond proposed, it is hard to believe that a technical qualification will achieve equal status to a university degree, but he has set the government a high standard by which it wants to be judged.

2.00pm GMT

A Treasury spokesperson is denying that the rise in national insurance rates for the self-employed is a breach of the 2015 manifesto.

Political editor Heather Stewart has the details:

Hammond's spox denies NICs rise breaks manifesto pledge, because Class 4 NICs not mentioned in Osborne's (gimmicky) "tax lock" legislation.

"The manifesto is not the place you should be looking, you should be looking for it in the legislation", says Hammond's spox on NICs pledge.

1.54pm GMT

You can see all the Treasury documents here.

Find all the #Budget2017 information in one place. https://t.co/vF2oWflFnq

1.39pm GMT

Jeremy Corbyn is responding to the budget. He says that this was a budget of utter complacency.

He says millions wake up not knowing if their jobs are safe, and millions wake up struggling to make ends meet.

1.36pm GMT

Philip Hammond made a good fist of presenting today's economic forecasts - peppered with a few jokes that went down terribly well on the Tory back benches (Labour probably enjoyed the line about Norman Lamont getting the boot in 1993 too).

But things only look marginally brighter than after Autumn Statement. True, Britain is on track to borrow 26bn less than expected over the next five years (this is the headroom against the headline target of a deficit of 2% of GDP).

Budget deficit of 16 billion half way into the NEXT parliament. The deficit was meant to be eliminated at the end of the LAST parliament

As percentage of GDP, borrowing levels by end of the forecast horizon identical to Autumn Statement. Budget not consolidating any faster.

1.31pm GMT

Hammond says the government is continuing with its plan to improve the economy.

It wants to make Britain the best place in the world to do business.

1.31pm GMT

Here's some instant reaction to the 2bn in social care help, from Labour's Alison McGovern...

2bn over 3 years for care. Welcome, but in the end, too little too late. #Budget2017

2bn over *three* years really not going to close the social care funding gap #Budget2017

Hammond announces 2bn over next 3 years for social care. Big announcement, but over 3 years and with huge demand, won't go far. #Budget2017

1.29pm GMT

Hammond turns to health.

1.28pm GMT

Hammond says some NHS sustainability and transformation plans (STPs) will be available before the autumn. He says 325m will be available for them.

1.27pm GMT

Hammond says just 24 local authorities are responsible for half of all delayed discharges.

So measures will be taken to ensure more joined-up working, he says.

1.25pm GMT

Hammond turns to social care.

The system is under pressure, he says, putting pressure on the NHS.

1.23pm GMT

Hammond says the Department for Education will pilot different approaches to encourage lifelong learning.

1.23pm GMT

Hammond says there is still a lingering doubt about the parity of esteem between academic education and technical education.

1.21pm GMT

The BBC's Laura Kuenssberg reckons Hammond can claim he is not breaking a manifesto commitment on national insurance, because he is only raising it for the self-employed.

But will voters feel the same?

Back on NIC - actual legislation to forbid NIC rises only stipulated no Class 1 rises - feels a flimsy get out when manifesto was so clear

1.20pm GMT

Hammond says the academic route in the UK is one of the best in the world.

But technical education is near the bottom of the international league.

Chancellor confirms maintenance loans for part time undergraduates and doctoral loans in all subjects for the first time #Budget2017 pic.twitter.com/LPjntewgfV

1.19pm GMT

Hammond says 1.8 million more children are being taught in good or outstanding schools than in 2010.

The government will create more selective free schools, so academically gifted pupils can benefit.

1.17pm GMT

Caroline Lucas, the Green MP for Brighton, has also welcomed the new support for business ratepayers.

I campaigned for hardship fund to help #brighton businesses facing rates hike so welcome more support - devil will be in detail #budget2017

Increasing higher rate threshold to 50k is tax giveaway to top 15% of earners. Is that an 'economy that works for everyone'? #Budget2017

In gig economy making self employed pay more risks increasing insecurity. Only fair tax system is one where rich pay fair share. #Budget2017

1.17pm GMT

Hammond turns to schools.

Investing in education and skills helps tackle the productivity gap, and delivers greater fairness, he says.

1.15pm GMT

Hammond announces measures on congestion.

690 million competition for local authorities to tackle urban congestion and get local transport networks moving again #Budget2017 pic.twitter.com/Q4i4Q8j0W7

1.13pm GMT

Hammond says there will be 200m for projects to get private sector investment in full-fibre broadband networks.

1.13pm GMT

Hammond says rising living standards must be at the heart of an economy that works for everyone.

Today he is allocating 300m to support the brightest research talent, including for 1,000 PhD students in Stem subjects. He also will invest in driverless technology, a project the Labour party knows something about.

270 million to keep the UK at the forefront of disruptive technologies like biotech, robotic systems and driverless cars #Budget2017 pic.twitter.com/3Lne20UYDB

16 million for a new 5G mobile technology hub #Budget2017 pic.twitter.com/x8AsuThh9D

1.12pm GMT

Lies, damn lies, and manifesto commitments, eh?

2015 Tory manifesto ruled out any NI rise pic.twitter.com/C9NpwcihIV

In the fuller text, tax lock law only applied to Class 1 Nics, but still.. https://t.co/7tmA88oPkj

1.11pm GMT

Hammond says he is taking steps to boost consumer rights.

These were briefed at the weekend.

1.10pm GMT

Hammond says Jeremy Corbyn is so far down a black hole that even Steven Hawking has disowned him.

1.10pm GMT

Labour MPs are criticising Philip Hammond for hiking the national insurance rate paid by self-employed people.

Here's the former shadow chancellor Chris Leslie.

Real blow for 5 million self-employed with NICs rise - breaking Tory manifesto promise of "no increase in National Insurance contributions"

Tories raise Nics in self employed. Breaking their 2015 election pledge. And will still be borrowing 100bn more than forecast #budget2017

1.09pm GMT

Hammond says he can announce three additional measures for women, although the prime minister has announced two of them, he says.

Theresa May can be heard saying: "It's international women's day."

A further 20m of funding to support the campaign against Violence Against Women and Girls #Budget2017 #IWD2017 pic.twitter.com/4nFObuLngG

5m to promote 'returnships' to the public & private sector, helping people back into employment after a career break #Budget2017 #IWD2017 pic.twitter.com/siaAQbDXLZ

1.08pm GMT

The Conservative MP James Berry is pleased that Hammond isn't spending the windfall in today's fiscal forecasts.

National debt amounts to 62,000 per household - why the Chancellor is not going to borrow more money to pay for additional spending #Budget

Pleased to see the Chancellor announcing measures to help small businesses to continue to thrive #Budget2017 #businessrates

Tories stunned by reduction of tax free allowance for dividends, Gov MPs already messaging their accountants - lead weight budget.

1.07pm GMT

Hammond says the NS&I bond announced in last November's autumn statement will be available from this autumn and pay 2.2% on deposits up to 3,000.

1.07pm GMT

Hammond turns to pay.

The national living wage will rise to 7.50 in April, he says.

The personal allowance will rise for the seventh year in a row to 11,500 #Budget2017 pic.twitter.com/NDUtqn0xtx

1.04pm GMT

Hammond turns to duties and levies.

He says he is pleased to announce a reduction in the revenue from the sugar tax. That is because producers are reducing the amount of sugar in drinks.

#Sugartax: I can confirm today the final rates of 18 and 24 pence per litre for the main and higher bands respectively #Budget2017 pic.twitter.com/bnA7BJnYAp

1.02pm GMT

Hammond turns to corporate taxation.

He does not want people forming companies just to reduce tax.

1.00pm GMT

Hammond turns to the self-employed. There has been a big increase in the number of people working like this.

He has been self-employed, he says. There are good reasons for being self-employed.

12.55pm GMT

Hammond says he wants taxes to be fair.

That means people have to pay what is due.

12.54pm GMT

Hammond turns to business rates.

Business rates raise 25bn a year, he says. So they cannot be abolished.

12.49pm GMT

Hammond says he has accepted industry calls for reduction in burdens affecting R&D tax reliefs.

12.48pm GMT

Hammond says the UK needs a fair tax system. He wants it to be the best place to start a business.

Under the last Labour government - "by the way, they don't call it the last Labour government for nothing" - corporation tax was higher, he says.

"From April this year, it [Corporation Tax] will fall to 19%, the lowest rate in the G20. In 2020 it will fall again to 17%" #Budget2017 pic.twitter.com/QnM6iQVrw2

12.47pm GMT

Hammond says some have argued that lower borrowing justifies more unfunded spending.

But he disagrees. Britain has a national debt of nearly 1.7 trillion, equivalent to 62,000 for every household.

We on this side will not saddle our children with ever-increasing debt.

12.45pm GMT

Hammond turns to debt.

12.44pm GMT

Hammond says borrowing is forecast to be 16.4bn lower than forecast in the autumn.

Here's a snapshot of economic data announced by the Chancellor #Budget2017 pic.twitter.com/m3Lq5e1VtQ

"Public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year." #Budget2017 pic.twitter.com/WaOQWn084h

12.42pm GMT

Hammond says the employment rate has risen. Unemployment has fallen fastest in Yorkshire and Wales.

He says inflation is forecast at 2.4% this year, 2% next year and 2% in 2019.

12.42pm GMT

Hammond's gag about Norman Lamont getting sacked in the 1990s has caused a stir:

PHILIP HAMMOND HAS TOLD A JOKE #Budget2017

12.41pm GMT

He turns to the OBR forecast. This is the spreadsheet bit, he says. But bear with me, he says, he has a reputation to defend.

12.40pm GMT

He thanks the OBR for its report received today. And he thanks his ministerial team.

12.39pm GMT

But there is no room for complacency, he says.

Debt is too high. Too many young people leave school without skills. And too many families are feeling the squeeze.

12.38pm GMT

Hammond says in 2016 the UK's growth was second only to Germany in growth amongs the major economies.

There is now a higher proportion of women at work than ever before, including in the parliamentary Conservative party.

12.37pm GMT

Hammond says this is the last spring budget.

The Treasury reminded him he is not the first chancellor to announce this. Norman Lamont made the same pledge 24 years ago. But 10 weeks later he was sacked.

12.36pm GMT

Hammond says the economy has continued to confound the commentators with robust growth.

He says the budget extends opportunity to the young, delivers investment in public service and continues the task of getting Britain to live within its means.

12.35pm GMT

Philip Hammond is about to start his statement.

12.35pm GMT

Whispers that Hammond cash for social care could be as much as 2 billion directly to DCLG not NHS -not confirmed

12.28pm GMT

May mentions the returnship scheme that is getting extra funding today. (See 10.23am.)

12.28pm GMT

While we wait for chancellor Philip Hammond, here's a reminder of the turbulent 12 months since the last budget.

Here's how the pound has fared since the last Budget #Budget2017 pic.twitter.com/8SwwBVEuTp

12.26pm GMT

May says new money will go into schools as a result of today's announcement.

But this is not about creating binary choice in the eduction system.

12.24pm GMT

Snap PMQs verdict: The recording that emerged yesterday about the Surrey council leader suggesting that he had a "gentleman's agreement" with the government about extra funding for the council suggests there is something distinctly fishy about this whole affair, and raises questions about quite how honest Theresa May was being when she dismissed the whole thing at PMQs a few weeks ago, but to actually prove at PMQs that May was in the wrong would have required great forensic skill, and Corbyn was not up to the task. Robin Cook might have managed it, or Yvette Cooper could have had a good go, but May brushed aside Corbyn aside with her first, lawyerly-worded answer, and Corbyn then never got much further. It is not easy to see how he could have done better, but perhaps he could have focused on when Surrey was told it could pilot the business rates retention system (before others?). Or pressed her as to how much this would benefit Surrey financially? After that Corbyn moved on to grammar schools, but although he had a perfectly good point to make, he could not convert this into a question that unsettled May. So, all told, she had a very easy run (which will be forgotten about as soon as the budget starts.)

12.20pm GMT

12.13pm GMT

Corbyn says May did not answer the question about new school places.

May says she wants to increase the number of good school places. There will be diversity. She wants parents to have a choice. Corbyn wants parents to take what they are given.

12.10pm GMT

Corbyn asks, if there is no special deal, why Surrey is the only council joining the business rate retention pilot.

May says this pilot is coming into effect in April. In 2019-20 it will be available to 100% of councils. As for next year's pilot, all councils can apply.

12.08pm GMT

Jeremy Corbyn starts by wishing all women a happy day. Labour has more women MPs than all other parties combined.

He says he raised the question of leaked texts between Surrey council and the government a few weeks ago. May accused him of peddling alternative facts. But what is the difference between a sweetheart deal and a gentleman's agreement.

12.03pm GMT

Sheryll Murray, a Conservative, says the government has a proud record of tackling domestic abuse. But what more can be done?

May says she takes a personal interest in this. But she wants to do more, and to transform the way these crimes are tackled. Today she has committed an extra 20m to the problem.

12.02pm GMT

Theresa May starts by mentioning international women's day, saying she wants to celebrate the contribution of women, and redouble efforts to address the issues women face.

12.02pm GMT

You can watch PMQ and the Budget by clicking the video at the top of this liveblog (you might need to refresh the page).

12.01pm GMT

PMQs is about to start.

Here is the list of MPs asking questions.

PMQs about to start. Chancellor and PM have just taken their seats. Questions on the Order Paper: pic.twitter.com/KXQhyehNWr

11.57am GMT

Back to Michael Heseltine for a moment. This morning he said he had never met Theresa May. But Number 10 is suggesting his memory may be at fault.

No 10 says PM HAS met Heseltine - awkward...

11.55am GMT

According to Downing Street, Philip Hammond told cabinet that the main themes of the budget would be:

Helping young people get the skills they need to do high-skilled, high-paid jobs in the future;

11.49am GMT

The pound is continuing to suffer some pre-budget jitters, dipping to $1.214 on the currency markets (from $1.22 overnight). That's a new seven-week low.

Budget Day formation, sterling. Bearish.
cc @MalcolmMoore https://t.co/wTQTlxgMuR pic.twitter.com/vb6hJqM5m2

. The pound is hovering just above 31-year lows against the dollar, as investors are vexed over the likely impact on the economy from a hard break from the EU and the trickledown effect of the low pound on consumers and businesses in the form of rising costs is now noticeable in the current structure.

11.44am GMT

Here is the picture of Philip Hammond posing with his Treasury team.

From the left, they are: Lady Neville-Rolfe, commercial secretary to the Treasury, David Gauke, chief secretary to the Treasury, Hammond, Jane Ellison, financial secretary to the Treasury, and Simon Kirby, City minister.

11.36am GMT

Theresa May has told cabinet that the budget provides "a long-term plan for Britain which puts the wheels in motion for a future of growth and prosperity", Downing Street said.

May also said the budget "kept a strong hand on the fiscal tiller while addressing the key issues facing the country".

11.30am GMT

Here's a video clip of chancellor Hammond and team:

A Red Box Budget debut for @PHammondMP , with @HMTreasury team: Gauke, Ellison, Kirby, Neville-Rolfe pic.twitter.com/ksBnhopFwG

11.26am GMT

We posted the picture from the Tory MP Michael Fabricant earlier (see 8.51am) showing MPs queuing up to bag a seat in the chamber for the budget.

Fabricant has now posted a picture of the seat he has reserved with a prayer card.

Got in early this morning to reserve my seat with a Prayer Card for #Budget2017 @HouseofCommons pic.twitter.com/7JjqU25eEr

11.24am GMT

Philip Hammond and his Treasury colleagues has just emerged from 11 Downing Street, clutching the famous red Budget box.

He's posing for a few photos, before hopping into his ministerial limo for the short drive to the Commons.

11.20am GMT

Sky's Ed Conway says Disraeli delivered the shortest budget speech in history.

Is Philip Hammond planning to break Disraeli's record for the shortest Budget speech in history? 45 minutes in 1867. Stay tuned... @SkyNews

11.19am GMT

Sky's Adam Boulton has some potential good news for those us doing the budget live blog frantic typing ...

This could be a record breakingly short #Budget2017 statement

11.15am GMT

PM Theresa May has left Downing Street and headed to parliament for Prime Minister's Questions, at noon, followed by the budget.

11.13am GMT

Britain's accountants are pleased that Philip Hammond is shifting the budget to the autumn, and instituting a simple 'spring statement' from 2018. But they want him to go further.

The Chartered Institute of Management Accountants (CIMA) argues that Britain should just have two big fiscal events per parliament, to limit the disruptive changes to economic, tax and regulation policy.

"Until the Chancellor's Autumn Statement announcement, the UK was the only major advanced economy to make significant changes to the tax system twice a year. This reform was certainly a step in the right direction, but it's not nearly far enough.

"By adopting a Five Year Spending Review and Budget, a mid-Parliament review, and Annual Performance Reviews the Government would introduce a world-leading system that takes a longer term view, meddling less but achieving more.

11.13am GMT

The Financial Times' political editor George Parker has written a good article about the relationship between Philip Hammond and Theresa May (subscription). Here's an extract.

Mr Hammond's friends say he has no wish to run a political empire from the Treasury or to announce policies for other ministers. He wants to run a serious operation for serious times. "Boring is good," he advises colleagues ...

Brexit has caused strains. On several key calls, Mrs May and her team of former Home Office advisers have prevailed: controlling immigration and leaving the jurisdiction of the European Court of Justice are red lines. Despite deep Treasury misgivings, Britain is leaving the single market and customs union ...

11.06am GMT

Over in the City, traders are getting nervous as they await Philip Hammond's big turn.

The uncertainty associated with the forthcoming Brexit negotiations means that Hammond is unlikely to go all out for now, instead holding back capacity to boost the economy if things turn sour down the line.

While Mark Carney jumped the gun, implementing new stimulus immediately after the referendum result, it makes sense for Hammond to withhold his finite resources until they are unmistakably needed.

The independent Institute for Fiscal Studies estimates that to meet pension promises and keep pace with rising demands for health and social care, spending will need to rise by around 20 billion a year in the next parliament.

To tackle this spending challenge, the economy would need to grow faster; public service delivery would have to be fundamentally re-evaluated; and/or taxes would need to rise. Brexit means the Chancellor certainly can't rely on the first, and there's no clear appetite for the second. So the best we are likely to get for now is a hint on the third. Details are likely to be thin on the ground until this year's second Budget, in the autumn.

10.48am GMT

And Labour has tweeted a video message about the budget from John McDonnell, the shadow chancellor, about the budget.

In today's #Budget2017, we're demanding the Tories fix this rigged economy which favours a privileged few. @johnmcdonnellMP explains more a pic.twitter.com/ruT1XnARSW

10.44am GMT

Philip Hammond has posted a picture of the budget document on Twitter.

Here it is. My first (and last) Spring Budget #Budget2017 pic.twitter.com/BZCj8QK6PF

10.30am GMT

Credit rating agency Standard & Poor's has issued a warning that Britain's economy is 'losing momentum'.

"Overall, we think credit supply conditions remain relatively favourable and are supporting the economy, in particular thanks to the BoE's continued very accommodative stance.

"However, these favourable conditions will not be able to completely offset the expected adverse impact of pronounced Brexit-related uncertainty and the inflation squeeze on household budgets in particular."

10.23am GMT

Mumsnet has a budget exclusive. It is international women's day and, partly to mark this, the budget will contain a pledge to spend 20m on tackling domestic violence and abuse and another 5m to extend return to work schemes, for women and men, into areas where they are not in place.

Commenting on the return to work schemes, Theresa May told Mumsnet:

Women are driving our economy forward - securing 77% of new jobs last year, and now represent a higher percentage of FTSE Board membership than ever before.

Returnships are ope

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