Return to an order of the House of Commons Copy of the Budget Report – March 2020 as laid before the House of Commons by the Chancellor of the Exchequer when opening Ordered by the House of Commons to be

The Budget takes place against the backdrop of the global outbreak of COVID-19. The fundamentals of the UK economy are strong and the government is well prepared to protect people’s health and support their economic security throughout this period of temporary economic disruption. The Budget sets out a plan to support public services, individuals and businesses that may be affected by COVID-19. While the economy continues to face challenges, the government’s careful management of the public finances means that it is able to support the economy in the short term, while investing in the future. The Budget announces investments in the roads, railways and digital networks that will underpin growth over the coming decade, as well as the world-class hospitals, schools, colleges and police forces that people rely on every day. The Budget supports the government’s ambition for a fair and sustainable tax system that helps people and families with the cost of living, funds the first class public services they expect and creates an environment for business to succeed. The government will build on this across the Parliament, creating a tax system fit for the challenges and opportunities of the 21st century. The Budget also sets out a plan to invest in research and development (R&D) and cutting-edge technologies. It provides support for people in every nation and region of the UK to gain the skills that they will need as the economy evolves, so that the nation can seize the opportunities of the next decade and fulfil its potential. In the year that the UK hosts the COP26 UN climate summit, the Budget takes steps to decarbonise the economy and protect the UK’s natural habitats, ensuring that every part of the UK economy is ready for the challenges of decarbonisation, and ready to capitalise on the opportunities to become leaders in the green markets of the future. This is the first Budget of a new government, the first of a new decade, and the first since the UK’s departure from the European Union (EU). It is a Budget that lays the foundations of the UK’s future prosperity and delivers on the government’s promises to the British people. The UK economy has many strengths. It has a globally competitive tax system, it is home to many highly innovative firms, has a world-beating science and research base, and has sound, independent macroeconomic institutions. Employment growth remains strong – the employment rate reached a record high in the three months to December 2019 – and earnings growth remains above inflation. The recent COVID-19 outbreak is creating short-term uncertainty. The Office for Budget Responsibility’s (OBR) economy and fiscal forecast does not reflect the now global spread of COVID-19 nor an outbreak in the UK. The OBR notes that the spread and impact of a COVID-19 outbreak clearly represents a downside risk to the forecast, but the scale is highly uncertain and the economic impact is likely to be temporary. Looking further ahead, the UK also faces challenges in the medium to long term. Productivity remains low compared to other countries and unevenly distributed across the country. And, in common with other advanced economies, the transition to a net zero emissions economy by 2050 will require radical changes in every sector. The Budget lays the foundations to address Outlook for the public finances Over the past decade, the government has taken action to restore the public finances to health, reducing the deficit by four fifths. This, and the historically low cost of borrowing, mean that the government can support the economy in the short term, while providing significantly more investment in public services and infrastructure to support growth in the long term. The Budget launches the Comprehensive Spending Review 2020 (CSR), setting out the overall level of public spending within which the CSR will be delivered. The CSR will conclude in July and will set out detailed spending plans for public services and investment, covering resource budgets for three years from 2021-22 to 2023-24 and capital budgets up to 2024-25. The CSR will prioritise improving public services, levelling up economic opportunity across all nations and regions, strengthening the UK’s place in the world and supporting the government’s ambitions to reach net zero carbon emissions by 2050. It will focus on linking departments’ spending proposals to the real-world outcomes they seek to achieve, and delivering value for money for taxpayers. The policy changes set out in the Budget, including the spending totals that have been set for the CSR, have been delivered while ensuring the current budget is in surplus, public sector net investment does not exceed 3% of GDP and debt is kept under control. HM Treasury will review the fiscal framework ahead of Autumn Budget 2020 to ensure it remains appropriate for the macroeconomic context, while ensuring the sustainability of the Public safety is the government’s top priority in its response to COVID-19 and it is taking firm and comprehensive action, consistent with the best scientific evidence. As well as being focused on safety and the public health response to the outbreak, the government recognises that people will be concerned about the effect it will have on their livelihood, and business will be concerned about reduced demand, potential disruptions to supply chains and export markets, and to their workforce during this temporary period. The Budget announces a £12 billion plan to provide support for public services, individuals and businesses, whose finances are affected by COVID-19. This includes a £5 billion COVID-19 response fund to ensure the NHS and other public services receive the funding they need to respond to the outbreak as the situation develops, and recover and return to normal afterwards.
For individuals it includes extending Statutory Sick Pay (SSP) for those advised to self-isolate, and those caring for others who self-isolate, and support through the welfare system for those who cannot claim SSP , as well as a hardship fund. Finally, the government will support businesses that experience increased costs or disruptions to their cashflow. This includes expanded Business Rates reliefs, a Coronavirus Business Interruption Loan Scheme to support up to a further £1 billion lending to SMEs, a £2.2 billion grant scheme for small businesses, and a dedicated helpline for those who need a deferral period on their

Tackling COVID-19 is a global challenge, and to complement our domestic response the Budget sets out steps the UK is taking to lead a swift and effective global response to deal with the The measures set out in the Budget to support health and other public services, protect people and families and support businesses will be reflected in the public finances at Autumn Funding excellent public services The people of the UK are rightly proud of its world-class public services. The NHS, schools and police provide the security and support that allow the British people to lead safe, prosperous and healthy lives. The government is committed to providing the funding that public services need and ensuring that excellent services are available in every nation and region of Total departmental spending is set to grow twice as fast as the economy over the CSR period. Day-to-day departmental spending is set to grow at the fastest rate over a spending review period since Spending Review 2004. Within this, the government will increase funding for its number one spending the NHS. Compared to 2018-19, NHS England will receive a cash increase of £34 billion a year by 2024. In addition, the Budget commits over £6 billion of new funding over this Parliament, including to create 50 million more GP surgery appointments per year, ensure there are 50,000 more nurses, and fund wider commitments on hospital car parking and support for people with learning disabilities and autism. The Budget also sets out action to ensure that pensions tax rules do not deter doctors from taking on additional shifts. The government will invest in the security of everyone in the UK with additional funding for counter-terrorism policing and the UK intelligence community. The government will keep people safe with strengthened community sentences and increased victim support. Spending Round 2019 committed to a £7.1 billion cash increase in funding for schools by 2022-23. The Budget builds on this by providing £29 million per year by 2023-24 to support primary school PE teaching and help schools make the best use of their sports facilities, as well as £90 million per year to introduce an Arts Premium from September 2021 to help schools provide high-quality arts programmes and extracurricular activities for pupils. Levelling up and getting Britain building The government is committed to levelling up across the UK by raising productivity and growth in all nations and regions, creating opportunity for everyone, and addressing disparities in For too long the UK has under-invested in infrastructure, leaving many people stuck with delays By the end of the parliament, public sector net investment will be triple the average over the last 40 years in real terms. In total, around £640 billion of gross capital investment will be provided for roads, railways, communications, schools, hospitals and power networks across

the UK by 2024-25. The government will publish a National Infrastructure Strategy later in the spring, and the CSR will provide full departmental spending plans. The Budget • the largest ever investment in English strategic roads, with over £27 billion between 2020 and 2025, enough funding to fill in around 50 million potholes across the country, and unprecedented investment in urban transport, with £4.2 billion for five-year, integrated transport settlements for eight city regions on top of £1 billion allocated to shovel-ready • funding for the Shared Rural Network agreement to radically improve mobile coverage in rural areas, and a record £5 billion investment in gigabit broadband rollout in the hardest- to-reach areas of England, Scotland, Wales and Northern Ireland • record funding of £5.2 billion for flood defences between 2021 and 2027, offering better protection from flooding for 336,000 homes and non-residential properties. Additional funding of £200 million will help communities most at risk of flooding recover faster in cases where they are affected by flood damage • a £10.9 billion increase in housing investment to support the commitment to build at least 1 million new homes by the end of the Parliament, and an average of 300,000 homes a • the government will invest £1.5 billion (£1.8 billion including indicative Barnett consequentials) over five years in capital spending to refurbish further education colleges, and has committed to a new £2.5 billion National Skills Fund to improve adult skills (£3 billion including indicative Barnett consequentials). It will also boost science, technology, engineering and maths teaching with capital investment for up to eight new Institutes of Technology and 11 maths schools. The government is committed to giving everyone the opportunity to fulfil their potential, regardless of where they are from. The government is also taking action to review the Green Book, which sets out how decisions on major investment programmes are appraised in order to make sure that government investment spreads opportunity across the UK. The Budget reaffirms the government’s commitment to strengthening the ties that bind the Union. As well as taking action that will support people and businesses in every nation of the UK, and targeted support to each nation, it sets out the funding the government will make available through Barnett consequentials for the devolved administrations to fund public services, infrastructure and other priorities. Supporting people and families The government is committed to taking action to help with the cost of living for everyone across the UK and ensure that the most vulnerable in society get the support they need.
Alongside the Budget, the government is formally announcing a new, ambitious target for the National Living Wage (NLW) to reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024, provided economic conditions allow. Based on the latest OBR forecast, this means the NLW is expected to be over £10.50 in 2024. This builds on the 6.2% increase of the NLW to £8.72 an hour that takes effect from this April, meaning the government is on track to meet its current target of 60% of median earnings by 2020. Since the NLW’s introduction in 2016 real wages have grown fastest for the lowest paid

As people earn more, the government is committed to reducing taxes on their wages. The Budget confirms a tax cut for 31 million working people with the increase in the National Insurance contributions (NICs) thresholds for employees and the self-employed, saving the typical employee around £104 and a typical self-employed person around £78 in 2020-21. Taken together with increases to the NLW and to the Personal Allowance, an employee working full-time on the NLW anywhere in the UK will be over £5,200 better off compared to April 2010. The government is investing a further £9.5 billion in the Affordable Homes Programme which in total will allocate £12.2 billion of grant funding from 2021-22 to support the creation of affordable homes across England. The government is also helping people with the cost of living by freezing fuel duty for the tenth consecutive year, freezing all alcohol duties, applying a zero rate of VAT to e-publications, abolishing the tampon tax, and making it easier for parents of up to 500,000 school-age children to access Tax-Free Childcare. The Budget confirms the end of the benefits freeze and continues the rollout of Universal Credit to support the most vulnerable in society, with extra help for parents of sick or premature babies, carers and victims of domestic violence. The government will invest an additional £1 billion to remove unsafe cladding from residential buildings above 18 metres to ensure people feel safe in their homes. The Budget also includes action to reduce rough sleeping, providing £643 million for accommodation and support services to help people off the streets. From the largest UK-headquartered multinationals to the smallest family-owned firm, businesses are the lifeblood of the UK economy. They have created 3 million new jobs since 2010, giving more people the chance to succeed in life and provide for their families. The UK is one of the best places in the world to do business and the most attractive country for inward investment in Europe. The government is committed to unleashing businesses’ potential, and the Budget supports the development of the high-tech, high-skill jobs of the future. The government wants to ensure that the United Kingdom continues to be attractive to investment and remains a dynamic environment to start and grow a business. To cut the cost of taking on staff the government is increasing the NICs Employment Allowance to £4,000, benefiting 510,000 businesses. At 19% the UK’s Corporation Tax rate remains the lowest in the G7 and G20. The government is reforming Entrepreneurs’ Relief, while continuing to support the vast majority of entrepreneurs and increasing tax incentives for businesses investing in structures and buildings, and R&D. The Budget also announces the launch of a fundamental review of business rates, due to report The Budget will help businesses to take advantage of opportunities for the UK outside the EU, for example through new financial support for British exporters and by investing in additional business support for SMEs through Growth Hubs. The government will also extend the Start-Up Loans Programme to ensure would-be entrepreneurs can access the finance

To ensure that the UK remains a dynamic and competitive regulatory environment, the government is launching a Reforming Regulation Initiative to collect ideas for regulatory reform, as well as implementing the recommendations of the Furman Review of digital competition, publishing further detail on the Financial Services Bill which will ensure that the UK maintains its world-leading regulatory standards and openess to international markets. The UK’s success in the global economy will be rooted in innovation and cutting-edge technology. By driving technological change, the government will create the high quality, highly paid jobs of the future, the Budget sets out plans to increase public R&D investment to £22 billion per year by 2024-25. The government will invest that money in the people, ideas and industries that will cement the UK’s world-leading position in science and technologies ranging from nuclear fusion to electric vehicles and life sciences. This landmark investment is the largest and fastest ever expansion in support of researchers and innovative businesses, taking direct support for R&D to 0.8% of GDP and placing the UK among the top quarter of OECD nations – ahead of the USA, Japan, France and China. Achieving the government’s ambitions on R&D will require investment from the private sector. To boost that investment the government will increase the rate of R&D tax credits and consult on widening the definition of qualifying expenditure to include data and cloud computing. In life sciences, the government will provide the British Business Bank with additional resources to launch a dedicated £200 million investment programme which is expected to enable £600 million of investment, helping to ensure the UK remains a world leader in life The UK has already cut carbon emissions by more than any other G7 country and in 2019 was the first major economy to legislate for a target of net zero greenhouse gas emissions by 2050. As the UK prepares to host this year’s COP26 UN climate summit, the Budget announces a range of policies to reduce emissions, ensure our environment is protected and resilient to climate change, and generate green economic opportunities across the nations Increasing the UK’s use of clean energy is a vital part of reducing carbon emissions and putting the nation at the forefront of new innovative industries.
The Budget announces a Carbon Capture and Storage (CCS) Infrastructure Fund to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030. To encourage more environmentally-friendly ways of heating homes and other buildings, the government will also introduce a Green Gas Levy to help fund the use of greener fuels, increase the Climate Change Levy that businesses pay on gas, and reopen and extend the Climate Change Agreement scheme by two years. Road transport is responsible for 91% of domestic transport emissions, and around a fifth of overall UK emissions. To support drivers to move away from polluting vehicles, the Budget announces investment in electric vehicle charging infrastructure, which will ensure that drivers are never more than 30 miles from a rapid charging station, provides £532 million for consumer incentives for ultra-low emission vehicles, and reduces taxes on zero emission vehicles. In addition, the government will promote air quality improvement by removing the entitlement to use red diesel except for agriculture, fish farming, rail and non-commercial heating. The government will tackle air pollution by providing £304 million to help local authorities reduce nitrogen dioxide emissions and improve air quality. The government will also invest in the natural environment, planting enough trees to cover an area the size of Birmingham, restoring peatlands, and providing more funding to protect the UK’s unique plants and animals. The government will also go further to tackle the scourge of plastic waste by introducing a Plastic Packaging Tax, as well as providing further funding to encourage producers to make their packaging more recyclable. provides further information on the fiscal impact of the Budget. 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Total spending policy decisions -355 -19,255 -40,185 -45,640 -48,780 -49,440 Total tax policy decisions +960 +1,355 +3,755 +7,110 +7,625 +7,520 Total policy decisions +605 -17,900 -36,430 -38,530 -41,150 -41,920 1 Costings reflect the OBR’s latest economic and fiscal determinants. Government spending and revenue to be around £928 billion in 2020-2021. Social protection £285 billion Public order and safety £38 billion Other (including EU transactions) Figures may not sum due to rounding. Illustrative allocations to functions are based on HMT analysis including capital consumption figures from the Office for National Statistics. Office for Budget Responsibility and HM Treasury calculations. expected to be about £873 billion in 2020-2021. National Insurance contributions Excise duties £48 billionCorporation tax £58 billion Figures may not sum due to rounding. Other taxes includes capital taxes, stamp duties, vehicle excise duties and other smaller tax receipts. Other non-taxes includes interest and dividends, gross operating surplus and other smaller non-tax receipts. Office for Budget Responsibility and HM Treasury calculations. 1.1 The UK economy has many a globally competitive tax system, some of the best universities in the world, is home to many highly innovative firms, and its economic prospects are underpinned by a strong macroeconomic framework. Since 2010, the economy has grown faster than France, Italy and Japan. Employment is at a record high and the unemployment rate is the joint-lowest since 1975. In common with other advanced economies, the UK faces economic challenges. In the near term, the outbreak of COVID-19 is expected to have a significant but temporary effect on the economic outlook. Productivity remains weak and is distributed unevenly across the country; and the transition to a net zero economy by 2050 will require radical changes in every sector. 1.2 The Budget announces a plan to support the economy over the short term in response to the COVID-19 outbreak. This includes measures to support public services, individuals 1.3 The Budget builds on the UK’s economic strengths and takes steps to address the UK’s long-standing structural challenges. The government is committed to levelling up across the UK in order to raise productivity and growth in all nations and regions, creating opportunity for everyone and addressing disparities in economic and social outcomes. 1.4 Since 2010, the government has restored the public finances to health after inheriting debt that had nearly doubled in two years. The deficit has been reduced by four fifths from a post-war peak of 10.2%1 of GDP in 2009-10 to 1.8% of GDP in 2018-19. 1.5 With historically low borrowing costs and the public finances in a more secure position, the government can now increase borrowing for investment without compromising fiscal sustainability. The Budget provides significant levels of funding for public services to meet the economic challenges and priorities of today, and to address the long-term challenge of low 1.6 This increase in spending, which provides the envelope for the upcoming CSR, has been delivered while meeting a set of fiscal rules that ensures the government is only borrowing to invest over the medium term, with the current budget in surplus, and that limits public sector net investment to an average of 3% of GDP , to keep control of borrowing and debt. To ensure the fiscal framework remains appropriate for the current macroeconomic environment HM Treasury will undertake a review over the summer and announce any changes by Autumn 1 Details of the sources of all numerical references, including National Statistics, used in this section can be found in ‘Spring Budget 2020 data sources’. 1.7 The OBR’s economy forecast was closed for new data when the spread of COVID-19 was at a much earlier stage. As such, the OBR’s forecast includes an estimate of the impact on global growth, based on the assumption that the spread of the virus would be relatively limited. The forecast does not reflect the now global spread of COVID-19 or an outbreak in the UK. 1.8 The International Monetary Fund (IMF) estimates that the global economy grew by 2.9% The COVID-19 outbreak is expected to reduce global growth this year. The OBR forecasts that annual global GDP growth will be 3.0% in 2020, down from 3.6% in its Spring Statement 2019 forecast.
This includes an assumption that the outbreak would be “relatively limited” and its impact on the forecast “largely confined to a modestly weaker outlook for growth in world trade and the UK’s export markets.” The OBR notes that, since closing its global forecast to new data, “it has become clear that the spread of coronavirus will be far wider than assumed in our baseline forecast, pointing to a deeper – and possibly more prolonged – slowdown.”2 1.9 There have already been clear signs that activity in China, where the outbreak began, has slowed. In its most recent economic assessment published on 2 March 2020, the Organisation for Economic Co-operation and Development (OECD) downgraded its forecast for Chinese growth in 2020 by 0.8 percentage points, to 4.9%. 1.10 Highly integrated just-in-time manufacturing processes across the globe mean that disruption to Chinese output is likely to affect production globally. Lower Chinese growth will affect global demand. There will also be spillovers through financial markets and potential hits to business and consumer confidence. 1.11 The OECD has produced two scenarios. In the ‘baseline’ scenario it assumes the virus is contained largely in China and revised down expectations of global growth in 2020 from 2.9% to 2.4%. In a second scenario, assuming broader contagion, the OECD suggests that global growth could be reduced more significantly in 2020, to 1.5%. 2 ‘Economic and fiscal outlook’, OBR, March 2020.

International Monetary Fund; Office for Budget Responsibility; OECD, baseline scenario. Emerging market & developing economies (IMF Jan ’20) Global economy (OBR Mar ’20)Global economy (IMF Jan ’20) Advanced economies (IMF Jan ’20) Global economy (OECD Mar ’20) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1.12 The OBR closed its forecast before the spread of COVID-19 in the UK, noting that this means “the precise forecasts for the economy … can no longer be regarded as central.”3 As an open economy, the UK will be affected because of the wider impacts the outbreak is having on the global economy. The OBR’s estimate of the impact on global growth, based on the spread of the virus being relatively limited, reduces UK GDP growth by 0.1 percentage points this year. 1.13 The impact of a wider spread outbreak of COVID-19 on the UK economy is highly uncertain. The drivers of any economic impact are health-related factors, including how many people get infected, the persistence of an outbreak and measures put in place to protect public health and prevent the spread. There will likely be significant, temporary disruption to the economy. Disruption could include temporary absences from work and interruptions to global supply chains, both of which would constrain the UK’s productive capacity for a temporary period. In addition, the economy could be affected by a reduction in consumer spending and lower business investment, largely reflecting the response to measures to contain the outbreak, and weaker demand for UK exports. 1.14 The Office for National Statistics (ONS) estimates that the UK economy grew by 1.4% in 2019, 0.1 percentage points higher than in 2018. Delays to the UK’s departure from the EU affected the profile of economic activity throughout 2019, leading to volatility in quarterly 1.15 Growth is distributed unevenly across the UK. England has historically had the highest GDP growth, averaging 2.2% between 1998 and 2018. Over the same period, Wales grew at an average rate of 1.7%, while Scotland and Northern Ireland both grew at an average rate 3 ‘Economic and fiscal outlook’, OBR, March 2020.

of 1.9%. Growth is also uneven at a regional level – London has seen the fastest growth of all regions, averaging 3.1% between 1998 and 2018, while the North East of England had an average growth rate of 1.5%, the slowest of all regions. 1.16 Over the forecast, the OBR has revised down its forecast for cumulative GDP growth by 0.5 percentage points, largely reflecting downward revisions to potential productivity and net migration. The OBR expects GDP growth of 1.1% in 2020, revised down from 1.4% in its Spring Statement 2019 forecast, with weaker contributions from both consumption and business investment growth. The OBR expects annual consumption growth to be 1.1% and for there increase to 1.8% in 2021 before slowing slightly, reaching 1.4% in 2024. Office for National Statistics and Office for Budget Responsibility. 2010 2012 2014 2016 2018 2020 2022 2024 Private consumption Fixed investment Net trade The labour market and earnings 1.17 Employment is at a record high. The number of people aged 16 years and over in paid work was 32.8 million in 2019 and was at a record high of 32.9 million in the three months to December 2019. The employment rate – the proportion of people aged 16 to 64 who are expects the employment level to increase further over the forecast period, reaching 33.4 million

Office for National Statistics. 1 Employed people as a percentage of the population (aged 16-64). 2 Unemployed people as a percentage of the economically active population (aged 16+). Unemployment rateEmployment rate 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 1.18 The unemployment rate – the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed – was 3.8% in the three months to December 2019, the joint-lowest in over 40 years. The OBR expects the annual unemployment rate to remain at 3.8% in 2020 and 2021, before rising to 4.1% by 2024. 1.19 Every nation and region of the UK has higher employment and lower unemployment than in 2010. Wales has seen the largest reduction in its unemployment rate since 2010, of 5.6 percentage points. There are 3.9 million more people in work than in 2010, with over 60% of the increase taking place in UK nations and regions outside London and the South 1.20 Earnings growth remains above inflation.
Nominal wage growth (including bonuses) and regular nominal wage growth (excluding bonuses) were 2.9% and 3.2% respectively in the final quarter of 2019. Over the same period, real total pay growth was 1.4% and real regular pay growth was 1.8%. The OBR forecasts average earnings to grow by 3.3% in 2020 and rise to 3.6% in 2021.4 It then expects growth to fall back to 3.1% by 2024. 1.21 Rising real wages have helped to support the growth of real household disposable income (RHDI) per head, a measure of living standards. RHDI per head grew by 0.3% in the year to Q3 2019, down from 1.0% in the year to Q2 2019. The OBR expects annual growth in RHDI per head of 0.6% in 2020, before reaching 1.1% by 2024.5 4 The OBR uses wages and salaries divided by employees to estimate wage growth, and so this will not necessarily correspond to the ONS headline Average Weekly Earnings measure. 5 The OBR’s measure of RHDI per head differs from the ONS’s by including households and non-profit institutions serving households (NPISH) in the calculations, whereas the ONS measure refers to households only. Employment rate Unemployment rate Yorkshire & the Humber 73.3 -3.2 4.5 0.7 East Midlands 78.4 1.9 3.6 -0.2 West Midlands 75.5 -1.0 4.4 0.6 East of England 78.6 2.1 3.3 -0.5 Northern Ireland 72.4 -4.1 2.4 -1.4 United Kingdom 76.5 0.0 3.8 0.0 1 Employed people as a percentage of the population (aged 16-64). 2 Unemployed people as a percentage of the economically active population (aged 16+). Office for National Statistics. 1.22 UK labour productivity (measured as output per hour) did not grow at all in 2019, following subdued growth of 0.5% in 2018. This weakness has partly contributed to the OBR’s judgement to revise down potential productivity growth – the underlying rate that determines how quickly productivity can grow sustainably – by an average of 0.1 percentage points per year across the forecast.6 The OBR does note that “the significant planned increase in public investment potentially boosts productivity by raising the public capital stock, but we have assumed that the effect is likely to be felt mainly beyond our forecast horizon.”7 1.23 The UK’s level of productivity has been lower than that of other advanced economies since the 1960s. The UK’s level of productivity is more than 20% lower than other major advanced has slowed more since the financial crisis than other advanced economies. UK productivity growth has averaged 0.3% since 2008, slowing from 2.3% in the decade prior. By comparison, growth across the G7 has averaged 0.8% since 2008, compared to 1.9% in the decade prior. 6 The OBR’s productivity growth forecast is based on Non-North Sea Gross Value Added (GVA) per hour, which is different from the ONS productivity 7 ‘Economic and fiscal outlook’, OBR, March 2020. Data drawn from Bergeaud, Cette and Lecat (2016). 1 2010 US$ on a Purchasing Power Parity basis. 1950 1960 1970 1980 1990 2000 2010 1.24 There is wide variation in productivity within the UK. As measured by output per hour, the only two areas with average levels of productivity above the UK average in 2018 were London (31.6% higher than the UK average) and the South East (9.1% higher than average). Productivity can vary significantly within each of the nations and regions as well as between 1.25 In the long term, higher productivity remains the only path to sustainable economic growth and rising living standards. Investing in skills and infrastructure to improve productivity across the UK permits growth by enabling firms to pay higher wages, offer goods and services at lower prices, and increase their profits. Productivity improvements, by enhancing economic growth, are also a fundamental source of long-run growth in tax receipts and the government’s ability to fund public services. A low average level of productivity – as well as significant variation between and within regions – are signs of untapped economic potential. The government is committed to levelling up investment across nations and regions to improve living standards nationally, as well as to address disparities in economic and social outcomes. Office for National Statistics. 1 Estimates are provided for Gross Value Added (GVA) of all NUTS1 areas in the UK – defined as major socio-economic regions that typically have populations of 3 to 7 million. (NUTS = Nomenclature of Territorial Units for Statistics). 2 The ranges show the minimum and the maximum level of nominal productivity within each NUTS1 region, using estimates of the productivity of NUTS2 areas within them. NUTS2 areas are smaller and typically have populations of 0.8 to 3 million. 3 Triangles represent the average productivity for each NUTS1 region. 4 The ONS do not publish GVA per hour for subregional breakdowns in Northern Ireland. Labour productivity (measured by GVA per hour) UK average = 100 1.26 The annual rate of Consumer Prices Index (CPI) inflation was 1.8% in 2019, down from 2.5% in 2018. Inflation fell through much of 2019, reaching 1.4% in the final quarter of the year, before increasing to 1.8% in January 2020. The ONS’s headline measure of inflation, the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was also 1.8% in January 2020.8 The OBR forecasts CPI inflation to be 1.4% in 2020, gradually rising to 2.1% in 2022 and 2023, and settling at 2.0% by 2024. 1.27 Alongside the Budget, the government and UK Statistics Authority (UKSA) are launching a consultation, announced on 4 September 2019,9 on UKSA’s proposal to address the shortcomings of the Retail Prices Index (RPI) measure of inflation. The consultation will cover, among other things, the issue of timing, including whether the UKSA’s proposal might be implemented at a date other than 2030, and if so, when between 2025 and 2030, and issues on technical matters concerning the implementation of its proposal. The consultation will be open for a period of six weeks, closing on 22 April 2020. The government and UKSA will respond to the consultation before the Parliamentary summer recess.
1.28 The current account measures the flow of goods, services, income and transfers between the UK and the rest of the world. In 2018, the current account balance widened to a deficit of 3.9% of GDP from 3.5% in 2017. This was driven by a widening of both the trade and income deficits. The current account deficit averaged 4.7% of GDP in the first three quarters of 2019. The OBR expects the current account deficit for the whole of 2020 to be 3.8%. It is then forecast to remain close to 4.0% of GDP throughout the forecast period. 8 CPIH extends CPI to include costs associated with owning, maintaining and living in one’s own home as well as council tax. 9 ‘Letter from the Chancellor of the Exchequer’, HM Treasury, September 2019. 1.29 The Monetary Policy Committee (MPC) of the Bank of England has operational independence to set monetary policy to meet its primary objective of price stability and, subject to that, to support the economic policy of the government, including its objectives for growth 1.30 Independent monetary policy is a critical element of the UK’s macroeconomic framework, alongside sustainable public finances and a resilient financial system. Low and stable inflation supports living standards and provides certainty for households and businesses, helping them make decisions about saving, investment and spending. 1.31 The Chancellor is responsible for setting the MPC’s remit. In the Budget, the Chancellor reaffirms the symmetric inflation target of 2% for the 12-month increase in the CPI measure of inflation. This target applies at all times.10 The Chancellor also confirms that the Asset Purchase Facility (APF) will remain in place for the financial year 2020-21. earlier, unless otherwise stated)1 GDP growth 1.4 1.1 1.8 1.5 1.3 1.4 GDP growth per capita 0.8 0.5 1.3 1.1 0.9 1.1 Household consumption2 1.3 1.1 1.2 1.2 1.4 1.4 General government consumption 3.6 3.7 2.8 2.1 1.9 2.2 Fixed investment 0.4 -0.8 3.4 2.9 2.0 1.8 Business investment 0.3 0.0 1.8 3.0 2.4 2.3 General government 2.1 1.9 10.9 4.6 1.8 1.2 Private dwellings3 -0.3 -4.2 1.5 1.6 1.3 1.2 Change in inventories4 0.1 -0.1 0.1 0.0 0.0 0.0 Net trade4 0.0 -0.1 -0.3 -0.2 -0.4 -0.3 CPI inflation 1.8 1.4 1.8 2.1 2.1 2.0 Employment (millions) 32.8 33.0 33.1 33.2 33.3 33.4 Unemployment (% rate) 3.8 3.8 3.8 3.9 4.0 4.1 Productivity per hour 0.0 0.9 1.2 1.2 1.1 1.2 not sum to total due to rounding and the statistical discrepancy. 2 Includes households and non-profit institutions serving households. 3 Includes transfer costs of non-produced assets. 4 Contribution to GDP growth, percentage points. Office for National Statistics and Office for Budget Responsibility. 10 ‘Monetary policy Budget 2020’, HM Treasury, March 2020. 1.32 Since 2010, the government has restored the public finances to health after inheriting a deficit at a post-war high and debt that had nearly doubled in two years. The deficit has been reduced by four-fifths from a peak of 10.2% of GDP in 2009-10 to 1.8% of GDP in 2018-19.11 now at a post-war low, due to historically low interest rates on government borrowing. 1.33 With low borrowing costs and the public finances in a more secure position, the government can support the economy and fund the response to COVID-19 in the short-term and take action over the medium-term to drive growth and improve public services, without compromising fiscal sustainability. In addition to short-term support for the COVID-19 response, the Budget provides for a significant medium-term increase in day-to-day spending on public services. With historically low borrowing costs, it is right that the government borrows to invest in the country’s future and address challenges. The government is therefore borrowing to fund a new set of growth-enhancing policies focused on delivering a step-change in infrastructure investment, which aims to raise the UK’s productivity growth in the long-run. Office for National Statistics, Office for Budget Responsibility and HM Treasury calculations. The debt interest to revenue ratio is defined as public sector net interest paid (gross interest paid less interest received) as a proportion of 11 Public Sector Finances, January 2020; Office for National Statistics; February 2020. Benchmark 10-year Treasury gilt yield from 1989 to year end 2019. 1.34 This Budget has been delivered to meet the following fiscal • to have the current budget at least in balance by the third year of the rolling five-year • to ensure that public sector net investment (PSNI) does not exceed 3% of GDP on average over the rolling five-year forecast period • if the debt interest to revenue ratio is forecast to remain over 6% for a sustained period, the government will take action to ensure the debt-to-GDP ratio is falling 1.35 The Budget also sets the spending envelope for the upcoming CSR within these rules, which allow for significant investment in growth-enhancing infrastructure while maintaining control of day-to-day spending. They allow policy to meet the economic demands of today while debt has stabilised after the sharp rise driven by the financial crisis and is expected to be broadly stable across the forecast period. The rules also provide the flexibility to respond fully to near- term shocks to the economy and public finances such as from COVID-19. Office for National Statistics and Office for Budget Responsibility. 1.36 Interest rates are expected to remain at very low levels for an extended period. This has prompted an international debate around the implications of this environment for fiscal sustainability and the role of fiscal policy. In this context, the Chancellor has announced that HM Treasury will conduct a review of the UK’s fiscal framework, • ensure that it remains appropriate for the current macroeconomic environment • support the ambitious new policy agenda of the government to invest in and level up every • keep the United Kingdom at the leading edge of international best practice in 1.37 The review will report back by Autumn Budget 2020, to allow the government to confirm its fiscal objectives for the Parliament.
It will be undertaken by HM Treasury and will involve broad consultation with external experts from across the UK and internationally. The review will be guided by the following • fiscal policy should support the government’s economic objectives, while maintaining the sustainability of the public finances by keeping control over borrowing and debt • low and stable inflation should be supported, as an essential pre-requisite to deliver the government’s economic objectives • the UK’s existing institutional strengths in fiscal policy making – the independent Office for National Statistics (ONS) producing official economic and fiscal statistics, and the independent OBR producing the official economic and fiscal forecasts and assessing the government’s performance against its fiscal objectives – should be preserved and built on

1.38 The review will consider the following • The low interest rate It has been argued that, given persistently very low interest rates, there is further fiscal space to borrow for investment. This needs to be weighed against the risks posed by high levels of public debt, for example from rapid changes in economic conditions and from longer-term fiscal pressures. The review will look at how to balance the opportunities and risks within the fiscal framework. • Macroeconomic The review will consider the case for a more active role for fiscal policy in stabilising the economy, especially if there is reduced space for monetary policy due to low interest rates. This will be judged alongside consideration of the extent to which active fiscal policy can provide timely and effective demand management, and the implications for wider policy objectives and fiscal sustainability. The review will look at how to reflect these trade-offs within the fiscal framework. • Incentives for value for money The fiscal framework should support the prioritisation of public investments which most enhance growth. The review will consider whether some well-evidenced spending, beyond what the current international frameworks class as capital investment, is currently disincentivised. This will include an assessment of the practical challenges in evolving the including measurement issues, consistency with internationally recognised statistical and accounting frameworks, how other countries have approached these issues, and the need to balance fiscal sustainability objectives. • Developments in the management and measurement of the balance Completion of HM Treasury’s Balance Sheet Review discussed in Box 1.A in the summer provides an opportunity to consider its conclusions and options to improve the management of loans, guarantees, contingent liabilities, and wider balance sheet transactions. The review will also consider the strengths and limitations of using broader balance sheet measures to assess fiscal sustainability. • Mitigating fiscal risks and The review will consider how to further support the effective management of fiscal pressures and risks, through a framework which can provide operationally-effective controls on the short and medium-term fiscal position, and can address and mitigate the challenge of longer-run pressures on fiscal sustainability, including from the ageing population and the actions needed to achieve net zero by 2050. • Building on the strength of the UK’s world class The review will consider options to support and strengthen the practices and institutions that deliver the UK’s fiscal framework, including the independent OBR and ONS, and advisory bodies such as the National Infrastructure Commission. The review will also consider the case for strengthening the legislative underpinning for the UK’s system of public 1.39 When the review is concluded, HM Treasury will lay before Parliament a new Charter for Budget Responsibility; the Autumn 2016 Charter therefore remains in force at the current time.12 The Budget has been delivered within the fiscal rules set out above in paragraph 1.34. The Chancellor wrote to the OBR ahead of the Budget to ask it to assess the government against these rules, in addition to those set out in the Autumn 2016 Charter.13 12 Charter for Budget autumn 2016 update; HM Treasury, January 2017. The government manages assets worth £2 trillion alongside £4.6 trillion of liabilities on behalf of citizens.14 The Balance Sheet Review (BSR) was launched in 2017 to identify opportunities to dispose of assets that no longer serve a policy purpose, improve returns on retained assets, and reduce the risk and cost of liabilities. This work aims to put the UK at the forefront of the international drive to reduce waste and deliver improvements in the cost-effective management of public wealth, as recognised by the IMF in its October 2018 Fiscal Monitor. The BSR will conclude and report at this year’s Comprehensive Spending Review. Strengthening the assessment of balance sheet transactions The BSR has highlighted the importance of considering the impacts on the government’s balance sheet, as well as on income flows over the longer term, when deciding to buy or sell assets and settle or incur liabilities. The government is therefore considering a new framework to evaluate the case for proceeding with significant balance sheet transactions. This will take into account impacts across a range of fiscal metrics, including Public Sector Net Debt (PSND), Public Sector Net Financial Liabilities (PSNFL) and Public Sector Net Worth (PSNW). The government will work with the ONS and OBR to further develop statistics and forecasts for PSNW and depreciation in the public sector finances, as well as assessing how these reconcile with the Whole of Government Accounts (WGA). This will inform the fiscal framework review set out in paragraphs 1.36 to 1.39. Managing risk from contingent liabilities The government is exposed to £192 billion of contingent liabilities, including guarantees and insurance provided to the private sector. 15 The BSR has developed proposals to improve the management of these liabilities and address a key balance sheet risk recognised by the OBR in its July 16 The government is publishing a report alongside ‘Government as insurer of last resort’ providing more detail on the policy approach. To improve social, economic and financial returns from its c.£150 billion17 of knowledge assets in the public sector, and following publication of a report at Budget 2018,18 the government will establish a new unit and fund to develop knowledge assets.
1.40 Borrowing this year is forecast to be £47.4 billion, £0.2 billion lower than the OBR’s restated March 2019 forecast. Underlying receipts are forecast to be £4.9 billion higher, driven by a combination of stronger National Insurance contributions (NICs), capital gains tax and onshore corporation tax receipts. The strength in receipts is offset by higher spending, which is forecast to be £5.3 billion higher and is largely due to an increase in local and public corporations’ capital expenditure, an increase in company tax credits and lower than expected underspends by government departments. Policy decisions made by the government at Spending Round 2019 and at Budget, and described in Chapter 2, decrease borrowing by 14 ‘Whole of Government Accounts 2017 to 2018’; HM Treasury; May 2018. 16 ‘Fiscal Risks Report 2019’; Office for Budget Responsibility; July 2019. 17 ‘Measuring Intangible Capital in the Public Sector’; SPINTAN; December 2016. 18 Getting smart about intellectual propery and other intangibles in the public Budget 2018; HM Treasury; October 2018 19 ‘Economic and fiscal outlook’, OBR, March 2020. 1.41 Across the rest of the forecast, compared to the OBR’s restated March 2019 forecast, the underlying forecast for borrowing is expected to be higher by £3.1 billion on average from 2020-21 onwards. The changes in the underlying fiscal outlook are due to a combination of the • A downward revision to underlying receipts from 2020-21 onwards that is predominantly driven by downward revisions to growth in GDP and its components. Excluding a fiscally neutral switch that means that customs duty revenues previously remitted to the EU are now recognised in both receipts and spending, receipts are lower by an average of £3.0 billion a year from 2020-21 onwards. Lower wage growth, consumer spending and profits, and an adjustment to fuel efficiency assumptions have downward effects on income tax and NICs, VAT, corporation tax and fuel duty receipts respectively. Lower interest rates reduce the interest received from government assets. • Underlying spending (excluding debt interest expenditure) is forecast to be higher in every year from 2020-21 onwards. Excluding the fiscally neutral change to the treatment of customs duties, non-interest spending is higher by an average of £7.4 billion. Higher expenditure on welfare, company tax credits, capital transfers associated with new student loans, and capital spending by local government are the main reasons for this increase. • However, underlying debt interest expenditure has been revised down by £7.4 billion on average from 2020-21 onwards. This is due to downward revisions in the forecasts for RPI 1.42 The most significant changes to the forecast since restated March 2019 are the decisions taken by the government in the Budget and described in Chapter 2, which increase borrowing across the forecast. On average they increase borrowing by £21 billion from 2020-21 onwards. The direct cost of the measures is partly offset by the positive short-term impact on the fiscal position of the higher economic growth that is generated as a result of the Budget package. Higher growth in the short term, and a medium-term increase in nominal GDP leads to increased tax revenues. This is partly offset by the effect of higher borrowing, interest rates and inflation which increase debt interest and welfare spending. into their final post-measures forecast. The government has not asked the OBR to incorporate the fiscal and economic impacts of the government’s plan to tackle the economic impact of COVID-19 into their final forecast. This reflects that the OBR’s baseline forecast does not incorporate the most recent estimate of the likely economic and fiscal impacts of a spread of COVID-19 and to do so would have introduced an inconsistency between the baseline forecast and the policy package. Moreover, given the fast-developing situation, the government will continue to adapt its policy to best respond to the latest circumstances. The OBR has said that, relative to their Budget forecast, COVID-19 is likely to put upward pressure on borrowing in the short term but expect limited impact over the medium and longer term. 1.44 The government will therefore reflect the costs of its response to COVID-19 at a future fiscal event alongside an updated OBR forecast. The current fiscal framework provides the near-term flexibility to respond fully to the challenge of COVID-19, and the government has built headroom against the medium-term rules should it be needed. 2019-20 2020-21 2021-22 2022-23 2023-24 Restated March 2019 47.6 40.2 37.6 35.4 33.3 Total underlying forecast changes since restated March 20191 0.4 2.3 5.1 3.6 1.5 Receipts forecast2 -4.9 1.0 3.5 4.1 3.5 Debt interest forecast -2.0 -6.7 -6.6 -7.7 -8.5 Other spending forecast2 7.3 7.9 8.2 7.1 6.5 Total effect of government decisions since March 20191 -0.6 12.3 24.0 22.5 25.4 Direct effects -0.6 15.6 31.1 32.2 33.8 Indirect effects 0.0 -3.3 -7.1 -9.7 -8.4 Total changes since restated March 2019 -0.2 14.6 29.1 26.0 26.9 Budget 2020 47.4 54.8 66.7 61.5 60.2 Figures may not sum due to rounding. 2 Excludes a fiscally neutral change to the treatment of customs duty revenues previously remitted to the EU. Office for Budget Responsibility and HM Treasury calculations. 1.45 Compared to the restated March 2019 forecast, borrowing is lower in 2019-20, but higher in every other year of the forecast. It rises over the forecast period from 2.1% of GDP in 2019-20 to 2.8% of GDP in 2021-22, before falling to 2.2% in 2024-25. 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Public sector net borrowing 1.8 2.1 2.4 2.8 2.5 2.4 2.2 Cyclically-adjusted public sector net borrowing 1.9 2.2 2.4 3.0 2.7 2.5 2.2 General government net borrowing1 1.8 2.2 2.5 3.1 2.6 2.4 2.4 Output gap2 0.3 0.0 0.1 0.4 0.4 0.1 0.0 1 Consistent with Manual on Government Deficit and Debt, Eurostat, 2019. 2 Output gap measured as a percentage of potential GDP . Office for National Statistics and Office for Budget Responsibility.
1.46 Compared with the restated March 2019 forecast, debt is lower in 2020-21, it is then higher in all the remaining years of the Budget forecast as a share of GDP , largely as a result of higher borrowing. Public sector net debt is expected to continue to fall over the forecast, from 79.5% in 2019-20, to a low of 75.0% in 2021-22 before rising slightly to 75.2% in 2024-25. Public sector net debt ex Bank of England is broadly stable across the forecast. 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Public sector net debt1 80.6 79.5 77.4 75.0 75.4 75.6 75.2 Public sector net debt ex Bank of England 1 72.3 71.9 71.9 72.3 72.9 73.1 72.9 Public sector net financial liabilities1 67.4 66.7 65.9 65.3 64.9 64.5 63.4 General government gross debt2 84.1 83.2 82.9 83.2 83.3 83.3 83.0 1 Debt and liabilities at end of March; GDP centred on end of March. 2 Consistent with Manual on Government Deficit and Debt, Eurostat, 2019. Office for National Statistics and Office for Budget Responsibility. forecast as a percentage of GDP 2019-20 2020-21 2021-22 2022-23 2023-24 Restated March 2019 81.3 78.2 74.3 73.6 72.7 Total forecast changes since restated March 20191 -1.8 -0.8 0.7 1.9 2.9 Change in nominal GDP2 -1.0 -1.1 -1.2 -1.0 -0.9 Change in cash level of net debt -0.8 0.4 1.9 2.9 3.8 Budget 2020 79.5 77.4 75.0 75.4 75.6 Figures may not sum due to rounding. 2 Non-seasonally adjusted GDP centred end of March. Office for Budget Responsibility. 1.47 The OBR’s ‘Economic and Fiscal Outlook’ shows that the government is forecast to meet the fiscal rules set out above in paragraph 1.34. There is a current budget surplus of £11.7 billion in 2022-23, providing headroom against this rule. Net investment is expected to average 2.9% of GDP over 2020-21 to 2024-25 – below the 3% target – while the debt interest to revenue ratio remains below 6%. 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Current budget deficit (% of GDP) -0.1 -0.2 -0.1 -0.5 -0.7 -0.8 Public sector net investment (% of GDP) 2.2 2.6 2.9 3.0 3.0 3.0 Debt interest to revenue ratio1 3.8 3.3 3.5 3.3 3.1 2.9 1 The debt interest to revenue ratio is defined as public sector net interest paid (gross interest paid less interest received) as a proportion of Office for Budget Responsibility. 1.48 The government’s significant progress in restoring the public finances to health over the last decade means it can now afford to support the economy in the short term while investing to support long-term growth. The new fiscal framework allows for a significant increase in growth-enhancing infrastructure investment, while maintaining control of day-to-day spending and the commitment to long-term fiscal sustainability. 1.49 At Spending Round 2019, the government increased departmental spending by 4.1% in real terms between 2019-20 and 2020-21, delivering the fastest planned growth in day-to- day departmental spending in 15 years.20 Spending Round 2019 funded vital public high-quality, readily accessible healthcare; schools and colleges that ensure every child receives a superb education; and action to cut crime and help keep our streets safe. 1.50 Individual budgets for all departments have been set until 2020-21 for both departmental capital totals (CDEL) and departmental resource totals (RDEL). Longer-term settlements have already been announced for the NHS and schools, which have confirmed budgets until 2023-24 20 Spending Round 2019; HM Treasury; September 2019. Health and Social Care 7.1 8.2 Law Officers' Departments 0.0 0.0 Single Intelligence Account 0.6 0.8 Foreign and Commonwealth Office 0.1 0.1 International Development1 2.0 4.8 MHCLG Housing and Communities2 8.4 13.1 MHCLG Local Government 0.0 0.0 Business, Energy and Industrial Strategy4 11.2 12.3 Digital, Culture, Media and Sport 0.6 0.6 Environment, Food and Rural Affairs 0.8 0.9 HM Revenue and Customs 0.3 0.4 Small and Independent Bodies 0.4 0.5 Adjustment for Budget Exchange8 0.0 -0.6 Remove CDEL not in PSGI9 -11.2 -13.3 Allowance for shortfall10 0.0 -3.9 Public Sector Gross Investment in CDEL 59.9 71.2 1 Figures for 2020-21 do not reflect all transfers which will be made from DfID to other government departments. 2 MHCLG’s CDEL budget in 2020-21 includes technical adjustments along with Budget announcements since Budget 2018. 3 DfT’s CDEL budget in 2020-21 includes a net reduction due to business rates retention pilots. 4 BEIS and other government departments’ CDEL budgets increased in 2020-21 to account for the reclassification of R&D in the National Accounts. 5 This includes the 5% needs-based Barnett formula uplift. 6 This includes the 2.5% VAT abatement. 7 2020-21 adjusted to account for a change in the accounting treatment of leases. This money will be allocated to departments through the 8 Departmental budgets in 2020-21 include amounts carried forward from 2019-20 through Budget Exchange, which will be voted at Main Estimates. These increases will be offset at Supplementary Estimates in future years so are excluded from spending totals. 9 Capital DEL that does not form part of public sector gross investment, including financial transactions in Capital DEL. 10 The OBR’s forecast of underspends in Capital DEL budgets. Resource DEL excluding depreciation1 Health and Social Care 133.3 139.8 of NHS England 123.7 129.9 Law Officers’ Departments 0.6 0.7 Single Intelligence Account 2.4 2.1 Foreign and Commonwealth Office2 2.4 1.1 International Development2 8.0 9.6 MHCLG Housing and Communities3 2.6 1.7 MHCLG Local Government3 5.2 8.2 Business, Energy and Industrial Strategy 2.5 2.5 Digital, Culture, Media and Sport 1.6 1.7 Environment, Food and Rural Affairs4 2.1 3.9 HM Revenue and Customs 4.0 3.9 Small and Independent Bodies 1.5 2.2 Adjustment for Budget Exchange8 0.0 -0.1 Total Resource DEL excluding depreciation 330.4 360.6 OBR allowance for shortfall9 -0.5 -3.2 OBR resource DEL excluding depreciation forecast 329.9 357.3 1 Resource DEL excluding depreciation is the Treasury’s primary control total within resource budgets and the basis on which Spending Round 2 Figures for 2020-21 do not reflect all transfers which will be made from DfID to FCO and other government departments.
3 MHCLG Housing and Communities DEL in 2020-21 excludes the New Homes Bonus, reflecting a transfer to Local Government (LG) DEL. LG DEL increase in 2020/21 is also driven by the ending of the 2019/20 75% Business Rates Retention pilots. 4 DEFRA’s RDEL ex budget in 2020-21 increases due to the domestic replacement of Common Agricultural Policy spending. 5 Block grant adjustments have been agreed with the Scottish Government for tax and welfare devolution and with the Welsh Government for tax devolution as part of this respective fiscal framework. 6 This includes the 5% needs-based Barnett formula uplift. 7 This includes the 2.5% VAT abatement. 8 Departmental budgets in 2020-21 include amounts carried forward from 2019-20 through Budget Exchange, which will be voted at Main Estimates. These increases will be offset at Supplementary Estimates in future years so are excluded from spending totals. 9 The OBR’s forecast of underspends in Resource DEL budgets. The Spending Envelope and Comprehensive Spending Review 2020 1.51 The Budget marks the start of an ambitious programme of investment in communities across the country, many of whom feel left behind. The Budget launches the CSR, which will The Comprehensive Spending Review envelope 1.52 The CSR will set Resource DEL budgets for three years to 2023-24 inclusive and Capital DEL funding for departments to 2024-25. The CSR will be delivered within the fiscal rules set out in paragraph 1.34. The Budget sets the overall spending envelope for resource and capital spending within which the CSR will be delivered. Total departmental spending is set to grow twice as fast as the economy over the CSR period. Day-to-day departmental spending is set to grow at the fastest rate over a spending review period since Spending Review 2004. 1.53 Having left the EU, from 2021 the UK will no longer contribute to the EU budget as a Member State, leaving only payments due as part of Financial Settlement obligations. The government has accounted for this when setting its spending plans, allowing it to determine how an additional £14.6 billion22 of spending by 2024-25 can be allocated to its domestic priorities, rather than be sent in contributions to the EU. The implementation period (IP) will end on 31 December 2020. The baseline scenario is that the UK will exit the IP at this time without a future relationship being agreed with the EU. HM Treasury will ensure that all necessary funding is made available to prepare for this outcome at the end of 2020. Capital DEL from 2019-20 to 2024-251,2,3 (£ billion, unless otherwise stated) 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 depreciation 330.4 360.6 384.6 400.7 417.6 435.5 3.3% OBR allowance for shortfall -0.5 -3.2 -3.9 -4.1 -4.3 -4.4 depreciation forecast 329.9 357.3 380.8 396.6 413.3 431.1 Total Capital DEL 71.1 88.5 101.7 107.5 109.1 112.8 6.9% OBR allowance for shortfall 0.0 -3.9 -7.3 -7.8 -8.0 -8.1 OBR capital DEL forecast 71.2 84.6 94.3 99.6 101.1 104.7 (Total DEL) 401.5 449.0 486.3 508.1 526.8 548.3 4.0% 1 Budgeting totals are shown including the Office for Budget Responsibility (OBR) forecast Allowance for Shortfall. 2. Resource DEL excluding ring-fenced depreciation is the Treasury’s primary control within resource budgets and is the basis on which departmental Spending Review settlements are agreed. The OBR publishes Public Sector Current Expenditure (PSCE) in DEL and AME. A reconciliation is published by 3. Capital DEL is the Treasury’s primary control within capital budgets and is the basis on which departmental Spending Review settlements are agreed. The OBR publishes Public Sector Gross Investment (PSGI) in DEL and AME. A reconciliation is published by the OBR. 4. DEL in 2019-20 and 2020-21 is reduced by Business Rates Retention pilots that switched spending into AME. To ensure consistency, growth rates for Resource DEL and Capital DEL have been adjusted to reverse this DEL-AME switch. 5. Resource DEL from 2020-21 onwards is increased by the devolution of areas of welfare spending to the Scottish Government which has caused a decrease in the Block Grant Adjustment and subsequent increase in Resource DEL. To ensure consistency, growth rates for Resource DEL and Capital DEL have been adjusted to reverse this switch. 6. Capital DEL from 2020-21 onwards includes a provision for the impact of the IFRS16 reclassification of leases on departmental capital budgets. To ensure consistency, growth rates have been adjusted to reverse this provision. 21 The government will keep the timing of the CSR under review in the coming weeks, given the inherent uncertainty over the operational impact 22 The OBR have removed the assumed spending in lieu of EU transfers from the forecast. This is a difference of £4.3 billion, increasing to £14.6 billion by the end of the forecast period. 1.54 The CSR will see an increase in day-to-day spending from £360.6 billion in 2020-21 to £417.6 billion by 2023-24. Overall Resource DEL spending will increase by 2.8% per year on average in real terms over the CSR period. Over the Parliament, it will grow by 3.3% on average Office for National Statistics, Office for Budget Responsibility. Additions to RDEL ex. real growth rate since Spring Statement 2019RDEL ex Real growth rate Planned real terms growth of RDEL ex 1 Resource DEL excluding ring-fenced depreciation is the Treasury's primary control within resource budgets and is the basis on which departmental Spending Review settlements are agreed. The OBR publishes Public Sector Current Expenditure (PSCE) in DEL and AME. A reconciliation is published by the OBR. 2 RDEL ex growth rates from 2010-11 to 2023-24 are sourced from Spring Statement 2019 data, with additions since Spring Statement 2019 sourced from Spring Budget 2020. Data for the years 2002-03 to 2010-11 are sourced from the published document that set out planned 3 Resource DEL in 2019-20 and 2020-21 is reduced by Business Rates Retention pilots that switched spending into AME. To ensure consistency, growth rates for Resource DEL have been adjusted to reverse this DEL-AME switch.
4 Resource DEL from 2020-21 onwards is increased by the devolution of areas of welfare spending to the Scottish Government which has caused a decrease in the Block Grant Adjustment and subsequent increase in Resource DEL. To ensure consistency, growth rates for Resource DEL have been adjusted to reverse this switch. This significant increase in spending means that by 2024-25, public sector net investment will be 1.56 This spending will provide world-class infrastructure and public services, delivering value for money and focussing on efficient delivery. The CSR will allocate capital funding for projects across the UK to drive growth, level up economic opportunity, decarbonise the economy, and maintain and build high quality public infrastructure, including schools and hospitals. The Budget sets out plans to increase public R&D investment to £22 billion per year by 2024-25, taking public spending on R&D to 0.8% of GDP . 1.57 These allocations will be informed by early findings from the review of HM Treasury’s Green Book, which will consider how the design and use of project appraisal affects the ability of all areas to achieve their economic potential. The review will enhance the strategic

development and assessment of projects, consider how to assess and present local impacts and look to develop new analytical methods for transformative or place-based interventions. It will also consider how project approval decisions are being made and provide clearer guidance and support to practitioners. The government will work with users, academics and others, and a revised Green Book will be published alongside the CSR. Office for National Statistics and Office for Budget Responsibility. Public Sector Net Investment (£bn in 19-20 prices) 1.58 These firm decisions on the Departmental Expenditure Limits (DEL) envelope for the CSR mean that the average annual real growth of Total Managed Expenditure (TME), the total amount of money that the government spends through departments, local authorities, other out planned TME, public sector current expenditure (PSCE) and public sector gross investment of GDP over time, shows that tough decisions made in the aftermath of the financial crisis have restored the public finances to health and the government can now afford to invest more in public services and growing the economy. 1.59 Government spending is now set to be 40.7% of GDP in 2024-25. TME as a percentage of GDP has also increased because of classification and methodology changes that have impacted underlying spending, in particular those relating to student loans, public sector pensions and depreciation.23 These are technical revisions that have been applied to the entire time series of data to ensure comparison to other years can be done on an equal basis. 23 Public Sector Finances, August 2019; Office for National Statistics; September 2019

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Resource AME 426.5 421.6 433.5 443.4 453.2 464.7 Resource DEL excluding depreciation 330.4 360.6 384.6 400.7 417.6 435.5 Ring-fenced depreciation 30.8 33.6 35.9 37.4 39.0 40.6 Total public sector current expenditure 787.7 815.8 854.1 881.5 909.9 940.8 Capital AME 33.6 30.4 26.6 26.9 28.5 29.2 Capital DEL excluding financial transactions 65.5 81.6 96.7 102.3 106.5 110.2 Total public sector gross investment 99.1 111.9 123.3 129.2 135.0 139.4 Total managed expenditure 886.8 927.7 977.4 1010.7 1044.9 1080.2 Total managed expenditure % of GDP 39.8% 40.3% 40.8% 40.8% 40.8% 40.7% 1 Budgeting totals are shown including the Office for Budget Responsibility (OBR) forecast Allowance for Shortfall. Resource DEL excluding ring-fenced depreciation is HM Treasury’s primary control within resource budgets and is the basis on which departmental Spending Review settlements are agreed. The OBR publishes Public Sector Current Expenditure (PSCE) in DEL and AME, and PSGI in DEL and AME. A reconciliation is published by Office for Budget Responsibility and HM Treasury calculations. Office for National Statistics and Office for Budget Responsibility. Total Managed Expenditure (%GDP) Allocations for the Comprehensive Spending Review 1.60 Chapter 2 of this document sets out further detail on the allocations made at the Budget. The overall allocations of total resource and capital funding over the CSR period will be determined at the CSR in July. • levelling up economic opportunity across all nations and regions of the country by investing in infrastructure, innovation and people, to drive productivity and spread opportunity • improving outcomes in public services, including supporting the NHS and taking steps to cut crime and ensure every young person receives a superb education • strengthening the UK’s place in the world • reducing carbon emissions and improving the natural environment 1.62 All new spending will be accompanied by a rigorous new focus on outcomes. To support this the government is conducting an exercise across departments to identify savings and projects that do not provide value for money or support these priorities. The government will redirect this spending through the CSR to help achieve its priorities. The CSR will also set out plans to improve the use of data, science and technology across the public sector, and to ensure all programmes are supported by robust implementation and evaluation plans. 1.63 In conducting the CSR, the government will also build on the lessons of previous spending reviews and ensure that policy issues are considered across departmental boundaries to maximise the effectiveness and value for money of government spending. The Budget announces the first allocation from the Shared Outcomes Fund to pilot improved approaches to supporting adults with complex needs. This fund was established at Spending Round 2019 to pilot new programmes to build an evidence base and test new ways of working collaboratively across the public sector. Further details on this bid can be found in Chapter 2. 1.64 The CSR will be informed by the Integrated Security, Defence, Development and Diplomacy Review (Integrated Review). The government intends to publish the main conclusions of the Integrated Review alongside the CSR. 1.65 At the CSR the government will set out funding to meet commitments to replace the Common Agricultural Policy and EU structural funds.
The government may also choose to participate in certain EU programmes, where it is in UK interests and the contributions are fair Priority outcomes and evaluation 1.66 The government’s spending plans provide for significant real increases in spending on public services. It is crucial that increased government funding leads to real-world improvements that make a difference to people’s lives. At the CSR, the government will establish a new approach to link departments’ spending proposals to the outcomes they intend to achieve as part of a new Public Value Framework (PVF).24 1.67 The government is developing the medium- to long-term priority outcomes that it is seeking to deliver for priorities such as levelling up, as well as the metrics that will be used to measure and improve performance against these outcomes. Assessment of spending’s impact on these priority outcomes will be central to making spending decisions at the CSR. These priority outcomes and metrics will be published as part of the CSR and will include cross-cutting outcomes in areas where closer working between departments could help achieve better results. 24 ‘Public Value Framework and supplementary guidance’; HM Treasury; March 2019

1.68 In order to ensure government programmes deliver for the public, it is crucial that spending decisions are based on robust evidence and evaluation of their impact. At the CSR, the government will assess the state of evaluation across all departmental spending programmes and require every department to produce plans to improve evaluation of its work. This will lead to more evidence-based allocation of public funding and better outcomes in the long term. 1.69 These reforms will ensure that spending decisions are based on the delivery of outcomes and will put the UK at the forefront of international approaches to driving public value. This will help the government provide world-class public services and the best value for taxpayers’ money. 1.70 Throughout the CSR the government will engage with all regions and nations of the UK to ensure that its policies level up and spread opportunity. The government has started this engagement at Budget by launching a process for individuals and organisations to submit written CSR representations to HM Treasury. 1.71 Some policy measures do not directly affect PSNB in the same way as conventional spending or taxation. These include financial transactions, which predominantly affect the shows the effect of the financial transactions announced since Budget 2018 on CGNCR. Details on the policy decisions made at the Budget can be found in Chapter 2. 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Ending student loan sales programme -2,125 -1,860 -1,740 -1,420 1,985 1,985 UKAR pension scheme 0 0 0 0 240 -35 cash flow impact of postponed accounting 0 -3,555 -180 910 295 -35 Freezing the maximum tuition fee Entitlement to part-time maintenance loans 90 220 350 445 505 555 Nurse maintenance student finance implication 0 -15 -65 -125 -175 -190 Removing student finance residence requirement for domestic abuse victims 0 neg -5 -5 -5 -5 Increase to UK Export Finance Direct Lending Facility 0 -250 -445 -685 -435 -180 Help to policy definition 0 -65 570 650 0 0 Universal extending advances repayment period and reducing maximum debt deductions 0 0 -15 -165 -100 -85 British Business Start Up Loans 0 0 -115 25 25 20 British Business Life Sciences Investment Programme 0 -10 -30 -35 -30 -15 British Business growth capital for innovative business 0 -55 -95 -70 -50 -15 National Security Strategic Investment Fund 0 -50 0 0 0 0 Heat Networks Investment Project 0 0 -70 0 0 0 Nature for Climate Fund 0 -10 0 0 0 0 Total policy decisions -2,035 -5,510 -1,560 -180 2,570 2,325 1 Costings reflect the Office for Budget Responsibility’s latest economic and fiscal determinants, and are presented on a UK basis. 1.72 The application of the Barnett formula to spending decisions taken by the UK government at the Budget will provide each of the devolved administrations with additional funding to be allocated according to its own priorities. To reflect the additional powers devolved to the Scottish and Welsh Governments their block grants will be adjusted as set out in their respective fiscal frameworks. This includes a substantial increase in the Scottish Government’s block grant to reflect the additional welfare responsibilities being devolved from April 2020. The Scottish and Welsh Governments have already set provisional budgets for 2020-2021 using block grant adjustments based on previous OBR forecasts. They have been given the choice of taking on the updated block grant adjustments following the UK Budget or waiting for the outturn reconciliation processes that will take place after the end of 2020-2021. 1.73 While all block grant funding remains in DEL, the Scottish Government now has such substantial self-funding powers (from taxation, borrowing and reserves) that its spending is recorded in Annually Managed Expenditure (AME). 1.74 The welfare cap was introduced in 2014 to limit the amount spent on certain social security benefits and tax credits. It improves Parliamentary accountability for welfare spending and supports the government’s aim of ensuring the welfare system is sustainable. 1.75 The cap was last reset at Autumn Budget 2017, following the OBR’s judgement that the government had successfully met the terms of the welfare cap set at Autumn Statement 2016. The cap applies to spending within its scope in 2022-23, with a 3% margin of flexibility to manage unavoidable fluctuations in spending. 1.76 In accordance with the Charter for Budget Responsibility, as is mandated for the first fiscal event of the Parliament, the OBR has formally assessed spending against the welfare cap in its ‘Economic and fiscal outlook’. Total relevant spending is forecast to be within the welfare cap and margin, and so the fiscal rule is judged to have been met with £3.4 billion of headroom. 1.77 The government is now required to reset the welfare cap for the new Parliament.
The cap will be based on the OBR’s Budget forecast of the benefits and tax credits in scope, as set out in Annex B, and will apply to spending in 2024-25. In the interim years, progress towards the cap will be managed internally, based on monitoring by HM Treasury and the Department for Work and Pensions (DWP) of the OBR’s welfare spending forecasts. As before, there will be a margin rising to 3% above the forecast to manage unavoidable fluctuations in spending. The cap will be breached if spending exceeds the cap plus the margin at the point of assessment. Performance against the cap will be formally assessed by the OBR at the first fiscal event of the next Parliament. This will avoid the government having to make short-term responses to changes in the welfare forecast, while ensuring welfare spending remains sustainable in the medium term. 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Interim pathway 119.3 125.7 127.5 130.5 133.8 - Margin (%) 0.5 1.0 1.5 2.0 2.5 3.0 Cap, pathway and margin 119.9 127.0 129.5 133.1 137.1 141.3 1.78 The government’s financing plans for 2020-21 are summarised in Annex A. They are set out in full in the ‘Debt management report 2020-21’, published alongside the Budget. Supporting those affected by COVID-19 1.79 Since emerging in China in December 2019, COVID-19 has spread widely, with a significant number of cases reported worldwide, including an increasing number in the UK. 1.80 The impact of the outbreak of COVID-19 on the UK economy is highly uncertain, and while the effect could prove significant, it is expected to be temporary. 1.81 As an open economy, the UK will be affected because of the wider impacts the outbreak is having on the global economy. In a domestic outbreak, there could also be direct economic impacts in the UK driven by health-related factors, including how many people are infected and the persistence of any outbreak. Disruption could include temporary absences from work and interruptions to global supply chains, both of which would constrain the UK’s productive capacity for a temporary period. In addition, the economy could be affected by demand-side impacts through a reduction in consumer spending, and lower business investment and exports. The government’s Action Plan on Coronavirus sets out the potential scale of these effects in the 1.82 The government recognises that people will be concerned about the impact COVID-19 could have on their lives, and some businesses will be concerned about reduced demand, potential disruptions to supply chains and export markets, and to their workforce during this temporary period. Therefore, the Budget announces a three-point plan to provide support 1.83 The plan includes a range of timely, targeted and temporary measures to deliver support when and where it is needed, at a total cost of £12 billion. The wider Budget policy decisions support to the economy. Together, the government is taking £30 billion of policy action in 2020-21, equivalent to approximately 1.3% of GDP . 1.84 In addition to the measures set out here, the government will continue to monitor the situation and stands ready to provide further support, should it be needed. Support will be available for as long as it is needed, based on the latest scientific evidence. HM Treasury will continue to work closely with the Bank of England to coordinate the response of the UK authorities to ensure it is as effective as possible. 1.85 The government is working closely with the devolved administrations on this issue and it stands ready to provide further support. Where measures do not apply UK-wide, the devolved administrations will receive a share of any additional funding for support in devolved areas through the Barnett Formula. As set out in the Statement of Funding Policy the devolved administrations can also access the Reserve where they are unable to manage any disproportionate costs from their own resources. 1.86 The government welcomes the statement by UK Finance on behalf of the sector which announced that banks, building societies and credit card providers are ready and able to offer support to consumers, including offering or increasing an overdraft or allowing repayment relief for loan or mortgage repayments. Banks and other providers of SME finance will also provide support for businesses that are facing cash flow disruption and stand ready to help

1.87 Tackling COVID-19 is a global challenge. To complement its domestic response, the UK is leading the way to ensure a swift and effective global response, including by working closely with all our international partners and supporting the most vulnerable countries to deal with the impacts of the virus, including cooperating closely with counterparts in the G7 and G20. 1.88 The Chancellor will continue to co-operate closely with his counterparts in the G7 and G20. G20 Finance Ministers last week committed to monitoring the evolution of COVID-19 including its impact on markets and economic conditions, and highlighted their readiness to take further actions to aid in the response to the virus, support the economy and maintain the resilience of the financial system. 1.89 Public safety is the government’s top priority in its response to COVID-19. The government will ensure that public services receive the funding they need to respond to the outbreak as the situation develops. This includes continuing to ensure our health services have the resources they 1.90 COVID-19 response fund – HM Treasury is creating an emergency response fund, set aside to ensure the National Health Service (NHS) and other public services have the resources they need to tackle the impacts of COVID-19. Initially set at £5 billion, it will fund pressures in the NHS, support local authorities to manage pressures on social care and support vulnerable people, and help deal with pressures on other public services. The size of the fund will be reviewed as the situation develops, to ensure all necessary resources are made available.
1.91 Funding for research and development – The government is providing the National Institute for Health Research with £30 million of new funding to enable further rapid research into the disease. Research is essential in order to understand COVID-19, and it will inform how the NHS frontline service approach tackling the virus. The funding could also allow rapid screening of potential therapeutics and support clinical trials to inform treatment and improve 1.92 Funding for diagnostic testing – The government will increase the capacity and capability of diagnostic testing and surveillance facilitated by Public Health England to support the NHS, by providing an additional £10 million of new funding to DHSC. 1.93 The Budget announces measures to support people who are unable to work because 1.94 Eligibility for Statutory Sick Pay (SSP) – The Prime Minister has already announced that the forthcoming COVID-19 Bill will temporarily allow SSP to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self-isolate, in accordance with government guidelines. The Budget sets out a further package to widen the scope of SSP and make it more accessible. The government will temporarily extend • individuals who are unable to work because they have been advised to self-isolate • people caring for those within the same household who display COVID-19 symptoms and have been told to self-isolate 1.95 Medical Evidence for SSP – The government has already issued guidance to employers, advising them to use their discretion not to require a GP fit note for COVID-19 related absences. This Budget announces that the government and the NHS will bring forward a temporary

alternative to the fit note in the coming weeks which can be used for the duration of the COVID-19 outbreak. This system will enable people who are advised to self-isolate to obtain a notification via NHS111 which they can use as evidence for absence from work, where necessary. This notification would meet employers’ need for evidence, whilst taking pressure away from 1.96 Support for those ineligible for SSP – The government recognises that self-employed people and employees below the Lower Earnings Limit are not entitled to SSP . The best system of financial support for these people is the welfare system and, in particular, ‘new style’ Employment and Support Allowance and Universal Credit. The government is committed to supporting these groups, and the Budget announces further support by making it quicker and • ‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day • people will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend • for the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating according to government advice for duration of the outbreak, ensuring self-employed claimants will be compensated for losses in income 1.97 Hardship Fund – The government will provide Local Authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through 1.98 Some businesses may experience increased costs or disruptions to their cash flow as a result of COVID-19. The Budget announces a set of measures to provide support to businesses during this temporary period by either reducing their costs or bridging cashflow problems arising from the outbreak, and to protect people’s jobs. 1.99 Statutory Sick Pay – The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs. The eligibility criteria for the scheme are as • this refund will be limited to two weeks per employee • employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020 • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19 • employers should maintain records of staff absences, but should not require employees to • the eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force

• while existing systems are not designed to facilitate such employer refunds for SSP , the government will work with employers over the coming months to set up a repayment mechanism for employers as soon as possible 1.100 Business Rates Reliefs – The government has already announced the Business Rates retail discount will be increased to 50% in 2020-21. To support small businesses affected by COVID-19 the government is increasing it further to 100% for 2020-21. The relief will also be expanded to the leisure and hospitality sectors. These temporary measures, taken together with existing Small Business Rates Relief, mean that around 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21. The government has also already announced the introduction of a £1,000 Business Rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To support pubs in response to COVID-19 the discount will be increased to £5,000. Local authorities will be fully compensated for these Business Rates measures. 1.101 Small business grant funding – The government recognises that many small businesses pay little or no business rates because of Small Business Rate Relief (SBRR). To support those businesses, the government will provide £2.2 billion of funding for Local authorities in England.
This will provide £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent. Most properties that are eligible for SBRR will have a lower rateable value, and so this will represent an even greater proportion of their annual rent. 1.102 Time to Pay – The government will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Her Majesty’s Revenue and Customs (HMRC) has set up a dedicated COVID-19 helpline to help those in need, and they may be able to agree a bespoke Time to Pay arrangement. Time to Pay was successfully used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back. These tailored arrangements will give a business the time it needs to pay HMRC to support their recovery while operating through any temporary financial challenges that occur. To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms when needed. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due 1.103 Coronavirus Business Interruption Loan Scheme – The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank. 1.104 The government has already committed £91 million to the international response. The Budget makes available £150 million from the UK’s ODA budget to the International Monetary Fund’s Catastrophe Containment and Relief Trust (CCRT), of which £75 million, with an immediate commitment of £75 million. This demonstrates that the UK can use its ODA budget to directly support our national interest. The government stands ready to provide further support as the situation develops, playing our full part in a well-coordinated global response. 1.105 Alongside the Budget, the government has published information about the support available to individuals and businesses whose finances are affected by COVID-19. This information, which will be regularly updated as the situation develops, can be found

Investing in excellent public services 1.106 The government is delivering world-class public services for hard-working people across the UK. The Budget builds on the significant investment in public services made at Spending Round 2019, with action to make the UK a safer, healthier place to live. 1.107 The NHS is the government’s number one spending priority. The NHS settlement, confirmed in January 2019, provided the largest cash increase in public services since the Second World War – an additional £34 billion per year by 2023-24. 25 Spending Round 2019 confirmed the government’s commitment to the NHS, with £139 billion for health budgets in 2020-21.26 The Budget provides over £6 billion of further funding to strengthen the NHS in England and pay for vital services that will improve people’s health, reaffirming the government’s commitment to health and social care. 1.108 The government will invest to increase staffing, making sure that the NHS has the people it needs. This will include a significant funding package to improve the recruitment, training and retention of nurses in England, ensuring there are 50,000 more in the NHS; and for the recruitment, training and retention of up to 6,000 more GPs and 6,000 more primary care professionals in England, such as physiotherapists and pharmacists. This will create 50 million more GP surgery appointments a year. The government will also change pensions tax rules to ensure that NHS staff across the UK, including senior doctors, whose income is less than £200,000 can work additional hours for the NHS without their annual allowance being reduced. (7) 1.109 The government will invest in our hospitals, including over £100 million in 2020-21 to make progress on 40 new hospital projects, as part of a long-term programme of investment in health infrastructure to ensure the NHS has world-class facilities for patients. will be accompanied by an increase in DHSC’s capital budget of £683 million in the 2020-21 financial year to protect the level of NHS operational capital investment. This will allow Trusts to continue to invest in important capital projects such as estate refurbishments and 1.110 To ensure that new arrivals to the UK contribute to the funding of the NHS, the Immigration Health Surcharge will be increased to £624. The government will also introduce a new discounted rate of £470 for children in recognition of the increased financial impact on 1.111 The government is committed to long-term reform of adult social care and the Secretary of State for Health and Social Care has written to parliamentarians to begin building cross-party consensus on reform. Ahead of those discussions, the government will invest £1 billion of additional funding for social care next year, as announced at Spending Round 2019. The Budget confirms that this additional funding will continue for every year of the current Parliament to continue to stabilise the system.
25 5 year NHS funding plan, Department of Health and Social Care, Her Majesty’s Treasury, June 2018 26 Spending Round 2019, Her Majesty’s Treasury, September 2019 27 Health Infrastructure Plan, Department of Health and Social Care, September 2019

Supporting schools and young people 1.112 At Spending Round 2019, the government committed to a £7.1 billion cash increase in funding for schools in England by 2022-23, compared to 2019-20 budgets. This funding settlement included an increase to minimum per-pupil funding levels, a commitment now enshrined in law.28 The minimum per pupil amount will increase to £3,750 for primary schools and £5,000 for secondary schools in 2020-21, with the primary schools minimum then rising to £4,000 in 2021-22.29 The settlement also provides for £780 million extra in 2020-21 to support children and young people with special educational needs, to ensure all can reach 1.113 On average, schools will see an increase of over 4% in funding per pupil compared to 2019-20 budgets.30 The three-year settlement will also allow the government to raise starting salaries for teachers to £30,000 by September 2022. 1.114 This funding settlement reflects the government’s commitment to high quality education for all school children. The Budget sets out new steps the government is taking to support children to have the opportunity of an active and enriching school experience. 1.115 To ensure that children get an active start in life, the government will bring forward an updated School Sport and Activity Action Plan following the Comprehensive Spending Review. Ahead of that, the Budget provides £29 million a year by 2023-24 to support primary school PE teaching and help schools make best use of their sports facilities. The funding will support high quality teacher training and professional development for PE, informed by best practice PE teaching. 1.116 The government also believes in the benefits of participating in the arts and the essential role it plays in all children’s education. The Budget provides £90 million a year to introduce an Arts Premium from September 2021, averaging out as an extra £25,000 a year per secondary school for three years.31 The funding will help schools to provide high quality arts programmes and extracurricular activities for pupils, including those delivered in partnership with arts organisations, as well as supporting teachers to deliver engaging and creative lessons Ensuring people’s safety and security 1.117 Protecting people and keeping them safe from crime and other threats is a principal responsibility of any government. The government announced an extra £750 million of funding at the 2019 Spending Round to begin the recruitment of 20,000 additional police officers, with the first 6,000 officers to be recruited by March 2021. The Budget makes further important investments in the police, security services and justice system. 1.118 In addition, the Budget will include £114 million in 2020-21 for counter-terrorism, to maintain capability and officer numbers in the face of a changing terrorist threat. This includes an extra £83 million for counter-terrorism policing, in addition to the government’s police recruitment commitment, and £31 million for the UK Intelligence Community. The government will also provide an additional £67 million for the UK Intelligence Community which will enable them to develop further their world-leading technological capabilities to protect the UK’s security and help keep the country safe. (9) 28 Minimum funding levels for schools, Department for Education, January 2020 29 National funding formula tables for schools and high 2020 to 2021, Department for Education, October 2019 31 Schools, pupils and their January 2019, Department for Education, June 2019

1.119 The government is committed to increasing support for victims of crime in their experience of the criminal justice system. The government will provide an additional £15 million to improve our offer to victims. This will boost the support available to victims of rape and create a new digital hub to make the criminal justice process in England and Wales easier to understand. The government will also provide an additional £5 million to begin a trial of domestic abuse courts in England and Wales, allowing criminal and family matters to be considered together. To protect victims of severe domestic abuse and their children and reduce the number of serial perpetrators, the government will provide £10 million for innovative new approaches to preventing domestic abuse, working with Police and Crime Commissioners to expand projects like the “Drive” prevention programme. 1.120 The Budget contains an additional £5 million for the Youth Endowment Fund to support the creation of a Centre of Excellence for Tackling Youth Violence. This will create a single evidence hub on what works to divert young people away from criminal activity and improve the effectiveness of our wider investments in crime reduction, including the work of the Youth Endowment Fund and violence reduction units. The Budget will also provide £68.5 million to toughen community sentences, including by increasing the number of offenders who are required to wear an electronic tag. 1.121 The government will also provide £20 million for Fire and Rescue Services to enable them to increase fire inspection and enforcement capability and to build capacity to respond to the Grenfell Tower Inquiry’s findings, by investing in training, equipment and a stronger strategic Improving local services and infrastructure 1.122 The government is committed to supporting the work of local authorities, in delivering high quality local services in communities across the country. The 2020-21 local government finance settlement enables a 6.3% nominal increase in councils’ Core Spending Power.32 1.123 Local authorities also invest billions of pounds of capital finance every year in their communities. The government supports this activity, in part, by offering low cost loans through the Public Works Loan Board (PWLB). However, in recent years a minority of councils have used this cheap finance to buy very significant amounts of commercial property for rental income, which reduces the availability of PWLB finance for core local authority activities. To address this the government will consult on revising the terms of PWLB lending to ensure LAs continue to invest in housing, infrastructure and front-line services.
To further enable high quality investment by local authorities, the government is cutting the interest rates for investment in social housing by 1 percentage point, and making an extra £1.15 billion of discounted loans available for local infrastructure projects. (11) 1.124 Further details and additional announcements relating to public services can be found in 32 Core spending provisional local government finance settlement 2020 to 2021, Ministry of Housing, Communities and Local Government,

Levelling up and getting Britain building 1.125 The Budget sets out the next stage of the government’s comprehensive plan to level up opportunity and share prosperity across the UK. The only sustainable way to drive economic growth and improve living standards in every corner of the country is to boost productivity. The government is therefore investing in people and places – by taking the first steps in its plan to level up skills across the country, ahead of setting out further details at the CSR, and by committing record levels of investment to infrastructure that will directly support productivity. These actions will boost national growth as well as addressing economic and social disparities and restoring the fabric of our towns and cities. 1.126 Infrastructure underpins the it is essential for markets to function effectively, it supports jobs, attracts investment, and it matters to families, communities, towns and cities. Later in the spring the government will publish a landmark National Infrastructure Strategy which will set out plans for a once in a generation transformation of the UK’s 1.127 The government is transforming regional connections through the largest ever investment in England’s motorways and major A roads.33 The second Road Investment Strategy (RIS2) will spend over £27 billion between 2020 and 2025. It will take forward schemes such as dualling the A66 Trans-Pennine and upgrading the A46 Newark bypass to address congestion, and building the Lower Thames Crossing to increase road capacity across the Thames east of London by 90%. 34 RIS2 will be delivered alongside the government’s plans for decarbonising the transport sector, which are set out in the ‘Growing a greener economy’ 1.128 The government is also investing £20 million to develop the Midlands Rail Hub, progressing plans for a major programme of improvements to rail services across these regions. 1.129 The government intends to make an unprecedented investment in urban transport, starting by confirming allocations of over £1 billion from the Transforming Cities Fund. This will deliver a range of local transport schemes, including an iconic new Central Park Bridge in Plymouth, a significant increase in the capacity of the Tyne and Wear Metro, and new cycleways in Bournemouth, Christchurch and Poole. In line with the government’s priorities, this will also include around £800 million for bus and cycling infrastructure. 1.130 Building on the Transforming Cities Fund, the government will also provide £4.2 billion from 2022-23 for five-year funding settlements for eight Mayoral Combined Authorities (in West Yorkshire, Greater Manchester, West Midlands, Liverpool City Region, Tyne and Wear, West of England, Sheffield City Region and Tees Valley). While it will be for elected Mayors to put forward ambitious plans, the government would welcome the opportunity to support a range of schemes, such as the renewal of the Sheffield Supertram, the development of a modern, low-carbon metro network for West Yorkshire and tram-train pilots in Greater Manchester. As a first step, the government will open discussions with Greater Manchester, Liverpool City Region and the West Midlands in the coming months. 33 ‘Departmental update’, Department for Transport, October 2019. 34 ‘Lower Thames Crossing’, Highways England. 1.131 The government also intends to deliver better local transport for towns, rural areas and other cities. In February, the Prime Minister announced £5 billion of new funding for buses and cycling. Further details will be announced at the CSR, alongside a National Bus Strategy. 1.132 Well-maintained roads are important for all road users, including cyclists and bus passengers. To that end, the Budget announces a new Potholes Fund that will provide £500 million a year, resulting in a 50% increase to local road maintenance budgets in 2020-21. Furthermore, the Budget confirms the development of 15 local road upgrades across the country, helping to reduce congestion, improve journey times and unlock housing and employment opportunities in England. These include junction improvements to the A350 in Wiltshire, a link road connecting Chesterfield to Staveley, and a dual carriageway 1.133 The CSR will set out further plans for investment in local transport spending. To inform these plans, the Infrastructure and Projects Authority will lead a study, working with departments, into supply chain capacity, to assess how industry can best deliver the 1.134 Investment in broadband has had significant benefits to the UK economy.35 Forty times faster than standard superfast broadband, gigabit broadband provides a step change in the UK’s digital connectivity. The government is committing £5 billion to support the rollout of gigabit-capable broadband in the most difficult to reach 20% of the country, so that all areas are able to benefit. This investment will level up connectivity across the UK, particularly 1.135 As part of over £1 billion that the government has already committed to next generation digital infrastructure, the Budget announces the next seven areas that have successfully bid for funding from the third wave of the Local Full Fibre Networks Challenge North of Tyne (£12 million), South Wales (£12 million), Tay Cities (£6.7 million), Pembrokeshire (£4 million), Plymouth (£3 million), Essex and Hertfordshire (£2.1 million) and East Riding of 1.136 In too many places, phone reception is not good enough and people lack choice of mobile provider. The Budget announces that the Shared Rural Network agreement has been finalised between the government and industry. The government will commit up to £510 million of funding, which will be more than matched by industry. This means 95% of the UK’s landmass will have high quality 4G mobile coverage by 2025.
1.137 Flooding has a devastating impact on homes, businesses and communities, and the government is currently investing £2.6 billion in flood defences to ensure they are better protected. This winter, the Environment Agency’s flood defences protected 127,000 properties.36 1.138 However, the twin pressures of climate change and population growth mean that further action is needed. The government will double the amount it invests in the flood and coastal defence programme in England to £5.2 billion over six years, better protecting a further 336,000 homes and non-residential properties. According to Environment Agency modelling, this will reduce national flood risk by up to 11% by 2027. This doubling of funding 35 ‘The economic impact of evidence from OECD countries’, Ofcom, April 2018. 36 ‘Flood risk begins to recede but public are warned to be vigilant’, Environment Agency and Department for Environment, Food & Rural Affairs,

exceeds the level of investment recommended by the National Infrastructure Commission. The government is also making available £120 million to the Environment Agency to repair the assets damaged by the storms this winter. 1.139 Where flooding and coastal erosion is inevitable, further action is needed to ensure that communities can respond and recover more quickly. The government will provide £200 million over the next six years for a place-based resilience programme. This will support over 25 local areas, urban, rural and coastal, from the North, the Midlands and the South, to take forward wider innovative actions that improve their resilience to flooding and coastal erosion. Areas will be selected based on a range of criteria, including repeated significant flooding in 1.140 Climate change also makes it even more important that water resources are properly managed and conserved. The government will invest £39 million in the Environment Agency’s network of water supply and water navigation assets. 1.141 As floods do not respect national boundaries, it is right that the devolved administrations will benefit from the Barnett consequentials of this substantial increase in government investment in flood and water infrastructure. 1.142 Everyone should be able to access a safe and affordable home. Increasing housing supply is essential to creating a fairer, more affordable housing market and boosting productivity across 1.143 The government has made good progress in boosting housing supply with over 240,000 new homes created in 2018-19, the highest level in 32 years.37,38 To continue to support the country’s needs the government has committed to creating at least 1 million new homes in England by the end of this Parliament and an average of 300,000 homes a year by 1.144 The Budget sets out an ambitious package of investment to build the high quality and affordable homes the country needs. This includes £12.2 billion for the Affordable Homes Programme and £400 million for ambitious Mayoral Combined Authorities and local areas to establish housing on brownfield land across the country. The Budget also confirms allocations from the Housing Infrastructure Fund totalling £1.1 billion for nine different areas including Manchester, South Sunderland and South Lancaster. 1.145 Land availability, as constrained by the planning system, is the most significant barrier to building more houses. The Secretary of State for Housing, Communities and Local Government will shortly set out comprehensive reforms to bring the planning system into the 21st century, followed by a Planning White Paper in the spring. These reforms will aim to create a simpler planning system and improve the capacity, capability and performance of Local Planning Authorities (LPAs) to accelerate the development process. Where LPAs fail to meet their local housing need, there will be firm consequences, including a stricter approach taken to the release of land for development and greater government intervention. The government will also explore long-term reforms to the planning system, rethinking planning from first principles, to ensure the system is providing more certainty to the public, LPAs and developers. 37 ‘Written question – 292970’, House of Commons, October 2019. 38 ‘Housing Statistical Release’, Ministry of Housing, Communities & Local Government, December 2019. 1.146 Supporting people to improve their skills is a vital part of the government’s aim to level up opportunity across the country. Increasing productivity depends on improving the skills levels of this generation and the next. Achieving this will require vocational and technical education that genuinely responds to the needs of business and the country as a whole. The government will confirm its plans on skills at the CSR. But the first steps come now. 1.147 Further education should be at the forefront of providing all learners with the opportunity and tools to progress into skilled employment. At Spending Round 2019, the government increased day-to-day spending on further education by £400 million in 2020-21, recognising its vital role in equipping people with the skills they need to succeed. 1.148 The Budget goes further, providing £1.5 billion over 5 years (£1.8 billion inclusive of indicative Barnett consequentials) in capital investment to ensure that all further education college estates are in good condition. This investment will ensure that colleges have cutting-edge facilities to train people for jobs in the industries of the future, and is part of the government’s plan to upgrade the nation’s infrastructure. 1.149 Alongside this, adult skills provision must improve to meet the needs of people and business now and in the future. To address this issue, the government has committed to a new £2.5 billion (£3 billion inclusive of indicative Barnett consequentials) National Skills Fund to improve the technical skills of adults across the country. 1.150 The government will consult widely in the spring on how to target this fund most effectively, before confirming details at the CSR.
The government wants to hear directly from people and employers across England to understand what works in the current system and what does not, and to ensure that the fund is focused on helping people gain the skills they need for 1.151 More broadly, the government wants to facilitate two culture changes with this for individuals to be able to train and retrain over the course of their lifetimes; and for employers and the government to increase investment and fill the skills gaps that hold back productivity at a local, regional and national level. 1.152 Apprenticeships also provide the opportunity for people to learn valuable skills and get good jobs. Since its introduction in April 2017, the Apprenticeship Levy has enabled the government to raise the standard of apprenticeships, supporting employers to make a long-term, sustainable investment in training. The government will now look at how to improve the working of the Apprenticeship Levy, to support large and small employers in meeting the long-term skills needs of the economy. In the meantime, the government will ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- and medium-sized businesses. 1.153 The growth of every region and nation in the UK is important for boosting the economy and creating a strong and inclusive society. In addition, the government will publish an English Devolution White Paper in the summer, setting out how it intends to meet its ambition for full 1.154 Towns are home to some of our key businesses and employers. This is why the government has already set up the £3.6 billion Towns Fund to support the regeneration of high streets, town centres and local economies. The government is also supporting our ports, which are major hubs for trade, innovation and commerce – it has launched a consultation on creating up to 10 new Freeports that will work for all of the UK. 1.155 The Budget goes further to support places, regions and nations to grow. As part of this the government has agreed a devolution deal with West Yorkshire to establish a Mayoral Combined Authority with a directly-elected Mayor from May 2021. This deal will provide £1.1 billion of investment for the area over 30 years, as well as devolving significant new decision-making powers on transport, planning and skills. It also underpins the agreement of a long-term intra-city transport settlement for the region starting in 2022-23. This devolution deal is an important step in delivering on our levelling up agenda by giving power and investment to local areas. As part of this, the government is also providing up to £500,000 to support Bradford in its regeneration and development plans to increase the benefits of potential Northern Powerhouse Rail connections. 1.156 In repatriating the EU structural funds, the government has an historic opportunity to design a UK Shared Prosperity Fund to match domestic priorities. The UK Shared Prosperity Fund will replace the overly bureaucratic EU structural funds, levelling up opportunity in each of the four nations of the country. Funding will be realigned to match domestic priorities, not the EU’s, with a focus on investing in people. At a minimum, it will match current levels of funding for each nation from EU structural funds. The government will set out further plans for the Fund, 1.157 The Budget also sets out how the government will make decisions differently in future. To ensure the civil service reflects the public it serves, the government is committed to moving 22,000 civil service roles out of central London within the next decade, the vast majority to the other regions and nations of the UK. The government will establish a significant new campus in the north of England focused on economic decision making, which will include teams from HM Treasury, DIT, BEIS and MHCLG. Furthermore, as the UK’s economics and finance ministry HM Treasury will establish representation in all the nations of the UK, building on its existing presence in Scotland with new positions based in Northern Ireland and Wales for the first time. 1.158 A cornerstone of the government’s levelling up agenda is its commitment to regional connectivity. The aviation industry has an important role to play in connecting the nations and regions of the UK. Following the review of Air Passenger Duty (APD) that has been undertaken by HM Treasury, the government will consider the case for changing the APD treatment of domestic flights, such as reintroducing a return leg exemption, and for increasing the number of international distance bands. These considerations will form part of a consultation on aviation tax reform that will be published in spring 2020. Scotland, Wales and Northern Ireland 1.159 As part of its commitment to levelling up the whole of the UK, the government will support economic growth in each of the four nations and will strengthen the ties that bind them into a prosperous United Kingdom. The government will work closely with the devolved administrations on this agenda, especially where it is possible to achieve better outcomes in partnership with Cardiff Bay, Holyrood and Stormont. 1.160 The Budget announces changes across tax, welfare and public spending that apply across the whole of the UK and so will directly benefit people and businesses in Scotland, Wales and Northern Ireland. This includes steps to upgrade digital infrastructure, support decarbonisation and reduce tax for employees and the self-employed.
1.161 Where Budget measures do not apply across all nations, the devolved administrations will receive significant additional funding through the Barnett formula to invest further in public services, infrastructure and other • the Scottish Government’s block grant will increase by over £640 million through to 2020-21 before adjustments for tax devolution • the Welsh Government’s block grant will increase by over £360 million through to 2020-21 before adjustments for tax devolution, this includes a 5% uplift in Barnett consequentials agreed as part of the Welsh Government’s fiscal framework in 2016 • the Northern Ireland Executive’s block grant will increase by over £210 million through 1.162 The Budget announces £242 million to fund a further four City and Growth Deals across Scotland, Wales and Nothern Ireland. This builds on the £2.5 billion already allocated to existing deals and ensures that every part of Wales and Nothern Ireland benefits from a City or Growth Deal, with another deal that benefits Scotland. 1.163 The government will also take action to improve cross-border links, including improving transport links between North Wales and England by developing the A483 Pant Llanymynech Bypass, and supporting an independent economic review of the Western Gateway, which stretches across Wales and the west of England. 1.164 The Budget announces further support targeted at each of the nations – including a package for the whisky industry, action to allow TV channel S4C to recover in full any VAT it pays, and legislation to provide appropriate exemptions for payments for injuries relating to the 1.165 Additionally, the government is working with the Scottish Government to devolve further tax and welfare powers as set out in the Scotland Act 2016. This includes transferring responsibility to the Scottish Government for around £3 billion of disability benefits in April 2020 and, from 2021, assigning half of the VAT revenues generated in Scotland. 1.166 Further details and additional announcements targeted at levelling up and getting Britain building can be found in Chapter 2. Supporting people and families 1.167 Record employment and rising real wages have benefited households across the country.39 The OBR forecasts employment to rise by 522,000 by the first quarter of 2025 and wages to outpace inflation in every year of the forecast.40 The government’s ambition is to support people and families through a fair and sustainable tax system, that rewards hard work, minimises economic distortions and funds first class public services. 1.168 The Budget announces a range of measures to improve living standards for people across the UK, delivering on commitments to cut taxes and costs, to put more money in 1.169 The government is committed to keeping taxes low, helping hard-working people keep more of what they earn. In less than a decade, the Personal Allowance has increased by over 90% and has taken 1.7 million individuals out of income tax altogether compared to 41,42 The Budget confirms the government’s commitment to increase the National Insurance contributions (NICs) Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, to £9,500 from April 2020.43 (12) 1.170 This increase will benefit around 31 million people,44 with a typical employee saving around £104 and a typical self-employed person around £78 in 2020-21.45 Around 1.1 million people will be taken out of paying Class 1 and Class 4 NICs entirely.46 This is the first step in meeting the government’s ambition to increase these thresholds to £12,500, which would save a typical employee over £450 per year. 47 Taken together with increases to the National Living Wage (NLW) and previous increases to the Personal Allowance, an employee working full-time on the NLW anywhere in the UK will be over £5,200 better off compared to April 2010. reform is in line with the government’s ambition to support hardworking people and families through a fair and sustainable tax system. 1.171 By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work. Junior ISAs (JISAs) and Child Trust Funds (CTFs) are tax-advantaged accounts for children, designed to encourage a long-term savings habit. The Budget announces that the amount families can save into a JISA or CTF will be more than doubled in 2020-21, increasing from £4,368 Fairer wages for the lowest paid 1.172 Since its introduction in 2016, the NLW has supported rapid earnings growth for the lowest earners. Supported by the NLW, real wages have grown fastest for the lowest paid full–time workers, by 11% above inflation between 2015 and 2019.49 Following the recommendations of the Low Pay Commission (LPC), the government announced in December 39 See ‘Budget 2020 data sources’. 40 ‘Economic and Fiscal Outlook’, OBR, March 2020. 41 HMRC analysis based on Survey of Personal Incomes (SPI) 2017-18 data, and Budget 2020 OBR forecast. 43 ’31 million taxpayers to get April tax cut’, HM Treasury, 30 January 2020. 44 HMRC analysis based on Survey of Personal Incomes (SPI) 2017-18 data, and Budget 2020 OBR forecast. 45 HM Treasury analysis, see ‘Budget 2020 data sources’. 46 HMRC analysis based on Survey of Personal Incomes (SPI) 2017-18 data, and Budget 2020 OBR forecast. 47 HM Treasury analysis, see ‘Budget 2020 data sources’. 48 HM Treasury analysis, see ‘Budget 2020 data sources’. 49 HM Treasury analysis of ONS Annual Survey of Hours and Earnings, 2015 results and 2019 results. ‘Lowest–paid full–time workers’ defined as those at the fifth percentile of the earnings distribution. 2019 that it will increase the NLW by 6.2% from £8.21 to £8.72 from April 2020, which is projected to meet its current target of 60% of median earnings by 2020.50 In total, the annual gross earnings of a full-time worker on the NLW will have increased by over £3,680 since the introduction of the NLW in April 2016. HMT analysis of ONS Annual Survey of Hours and Earnings 2015 and 2019.
5th 10th 15th 20th 25th 30th 35th 40th 45th 50th 55th 60th 65th 70th 75th 85th80th 95th90th across the UK, 2015 to 2019, at example percentile points 1.173 The Budget commits to a new, ambitious target for the NLW to reach two-thirds of median earnings and extending this to workers aged 21 and over by 2024, provided economic conditions allow. This emergency brake will ensure that the lowest-paid workers across the UK continue to see pay rises without significant risks to their employment prospects. 1.174 The government will introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, which will make it clear that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts. The government expects the publishing industry, including e-booksellers, to pass on the benefit of this relief to consumers. It should benefit all who read digitally, including children from poorer nearly 1 in 4 pupils on free school meals read fiction digitally, compared to 1 in 6 of their peers who are not eligible for free school meals.51 1.175 In recognition of the rising cost of living, the government will freeze fuel duty for a record tenth year in a row, saving the average car driver a cumulative £1,200 compared to what they would have paid under the pre-2010 fuel 1.176 Now that the UK has left the EU, it can reduce the cost of essential sanitary products for women in the UK. From 1 January 2021, the tampon tax will be abolished through the application of a zero rate of VAT on women’s sanitary products. (17) 50 51 ‘Children, young people and digital reading’, National Literacy Trust, April 2019. 1.177 The Budget also announces that the government will freeze duty rates on beer, spirits, wine and cider, meaning that a pint of beer is 1p cheaper than it would have been if it 1.178 The government is announcing a service improvement that will make Tax-Free Childcare (TFC) compatible with school payment agents. This will allow parents of up to 500,000 school-aged children across the UK to access TFC and use it towards the cost of their 1.179 Recognising housing costs are the biggest pressure on household finances for low income households, these measures go alongside other substantial new packages of support to increase housebuilding and improve the affordability of housing, as detailed in Levelling Up and getting Britain building.53 Supporting the most vulnerable 1.180 The government is delivering on its commitments to provide a clear route to work and support the most vulnerable through the welfare system. This government is ending the benefit freeze and increasing working age benefits by 1.7% from April 2020. Providing further support for Universal Credit (UC), the government will help ensure claimants can repay debts in a more sustainable and manageable way by reducing the maximum rate at which deductions can be made from a UC award from 30% to 25% of the standard allowance and giving claimants up to 24 months to repay advances. 1.181 The government will give people with disabilities greater certainty over their award levels for longer, by guaranteeing that Personal Independence Payment claimants will not have an award period of less than 18 months. (19) 1.182 The government will create an entitlement to Neonatal Leave and Pay for employees whose babies spend an extended period of time in neonatal care, providing up to 12 weeks paid leave so that parents do not have to choose between returning to work and taking care of their vulnerable newborn. In addition, the government will consult on the design of a new in-work entitlement for employees with unpaid caring responsibilities, such as for a family member of dependents. (20) 1.183 The government is committed to helping people in problem debt and, from early 2021, will introduce breathing space. This will provide a period of up to 60 days, where people in problem debt will be protected from enforcement action by their creditors and the charging of further interest and fees on their debts. This includes debts owed to central and local government. To support that, the government will invest an additional £12.5 million in HMRC in 2020-21 to begin work immediately on the implementation of 1.184 The government will commit £46 million from the Shared Outcomes Fund to provide improved support to individuals overcoming multiple complex needs, such as homelessness, reoffending and substance misuse. 1.185 Following the Grenfell tragedy, one of the government’s most important objectives is to ensure residents feel safe and secure in their home. Having taken expert advice, the Budget confirms an additional £1 billion to remove unsafe cladding from residential buildings above 18 metres to ensure people feel safe in their homes. 53 HM Treasury analysis, see ‘Budget 2020 data sources’. 1.186 The government wants to support alternatives to high-cost credit such as payday loans, particularly for the most financially vulnerable consumers, by improving access to social and community lenders. The Budget announces the three winners of the £2 million Affordable Credit Challenge Fund, which is designed to harness the UK’s world-leading fintech expertise to develop tech solutions to the challenges faced by the affordable lending sector, making it easier and quicker to access their products. 1.187 The Budget also announces that the government will provide protection against misleading sales tactics for consumers who are planning for their funeral, ensuring that all pre-paid funeral plan providers are subject to robust regulation by bringing the market 1.188 The Budget announces that the government will bring forward legislation to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the long-term. 1.189 The government is committed to ending rough sleeping in this Parliament.
Government action is already having an impact, with the latest annual count for England published in February showing a 9% fall on the previous year.54 The Budget seeks to build on this progress with £643 million for accommodation and support services to help people off the streets and to start rebuilding their lives. Money raised from a 2% non-UK resident Stamp Duty Land Tax surcharge will be used to help fund policies to reduce rough sleeping in England. (22, 47) 1.190 The government is introducing additional exemptions from the Shared Accommodation Rate (SAR) for Universal Credit and Housing Benefit claimants to protect those at risk of homelessness. This will enable rough sleepers aged 16-24, care leavers up to the age of 25, and victims of domestic abuse and human trafficking to live on their own, supporting their recovery from homelessness. (21) 1.191 Further details and additional announcements targeted at supporting people and families 54 Rough sleeping snapshot in autumn 2019, Ministry of Housing, Communities & Local Government, February 2020. 1.192 Businesses provide the jobs that hard-working families depend on today, and through investment and innovation they will create the jobs of tomorrow. Backing business is vital to levelling up the economy across the regions and nations of the UK and boosting 1.193 The government is committed to making the UK the best place to start and grow a business, supporting enterprising businesses to succeed while attracting established businesses to locate and invest in the UK. In order to do so, the government is investing in the priorities of the business community by improving transport networks and digital connectivity and by investing in people’s skills and health. The government will ensure that the UK’s tax system remains competitive and that the regulatory regime supports competition and innovation, along with improving business support and ensuring the UK becomes a 21 Business and enterprise support 1.194 Supporting enterprise is an important part of the government’s ambition to level up opportunity across the UK. The government will do this directly by extending the funding of the British Business Bank’s Start-Up Loans programme to the end of 2021-22, supporting up to 10,000 further entrepreneurs across the UK to access finance to start 1.195 To ensure that all businesses have access to high quality support and advice in their region, the government will invest £10 million to increase Growth Hub capacity and provide high-quality, core business advice and guidance across all 38 Growth Hubs. 1.196 In addition, the government will invest £13 million to expand the British Library’s network of Business and Intellectual Property Centres to 21 cities and 18 surrounding local library networks across England, providing entrepreneurs with business support, free access to market intelligence, IP workshops and one-to-one coaching. (29) 1.197 The government will use the forthcoming CSR to make it easier for businesses to access the information and support that is relevant for them. As a first step, BEIS will lead the development of a digital service to provide businesses with tailored information about appropriate sources of support. 1.198 The UK is a global financial centre, with world-leading finance hubs in London, Edinburgh, Birmingham and Leeds that support jobs across the country. To maintain the competitiveness of the UK financial services sector, the government will be taking a number of steps to ensure that the UK’s regulatory regime remains proportionate and effective. These will enhance coordination between regulators and ensure the UK continues to lead the way on financial services innovation and the use of technology, including on the regulation of payments and cryptocurrencies. The government will also introduce a Financial Services Bill later in the session which will ensure that the UK maintains its world-leading regulatory standards and remains open to international markets. 1.199 The government has reviewed how support for the self-employed can be strengthened. It will improve access to finance and credit for self-employed people, by extending funding for the Start-Up Loans programme as above and by exploring how to improve the guidance available for self-employed people applying for a mortgage. will also benefit from the government’s continued efforts to tackle late payments. BEIS will shortly publish a consultation on the merits of strengthening the powers of the Small 1.200 The government will make it easier for self-employed people to find the information and guidance that is relevant to them and their business. The Budget announces that HMRC will launch new interactive guidance in summer 2020 which will make it easier for self-employed taxpayers to navigate the tax system. They will also benefit from the new digital support service described above. Self-employed people working in rural and hard to reach areas will benefit from the £5 billion for gigabit-capable broadband rollout and funding to improve mobile coverage that the Budget announces. 1.201 Additionally, the government will consider how to provide appropriate support to self-employed parents so that they can continue to run their businesses, as part of its wider review of Parental Pay and Leave. 1.202 Competition is essential to drive innovation, produce better outcomes for consumers and allow new entrants to the market to grow. The UK is at the forefront of designing smarter and more flexible regulation that allows competition to flourish and minimises unnecessary burdens 1.203 To empower consumers and boost competition, the government will accept all six of the Furman Review’s55 strategic recommendations for unlocking competition in 1.204 To reduce regulatory barriers for businesses and ensure that regulation is sensible and proportionate now that the UK has left the EU, the Budget launches the Reforming Regulation Initiative to invite ideas from business and the public for regulatory reform.
Boosting regulators’ capacity is also essential to unlock the potential of emerging technologies and help businesses to develop innovative products and services, and the Budget announces that the government will invest £10 million in a second round of the Regulators’ 1.205 The government intends to introduce a levy to be paid by firms subject to the Money Laundering Regulations to help fund new government action to tackle money laundering and ensure delivery of the reforms committed to in the Economic Crime Plan. These reforms will help safeguard the UK’s global reputation as a safe and transparent place to conduct business. The levy will be additional to ongoing public sector funding. The government will publish a consultation on the levy later this spring. 1.206 The UK is an outward-looking and open economy. The government is implementing an independent trade policy for the first time in over 40 years, continuing to support businesses seeking to export and encouraging investors to choose the UK. The Budget takes further steps to enhance this support for trade and investment. 1.207 To strengthen the global ties of our digital technology sector, DIT and the Department for Digital, Culture, Media and Sport (DCMS) will pilot a Digital Trade Network in the Asia Pacific region, helping innovative UK companies to access opportunities in major new markets. 55 ‘Unlocking digital competition, Report of the Digital Competition Expert panel’, HM Treasury, March 2019. DIT will establish local champions based at key overseas posts to support exporters from the Northern Powerhouse, Midlands Engine, and Western Gateway, and will increase the number of international trade advisers outside London. 1.208 The Budget also announces further support for exporters by extending and increasing the lending capacity of UK Export Finance (UKEF). This will make permanent the additional £2 billion provided to UKEF at Budget 2018 as well as provide a new £2 billion lending facility for projects supporting clean growth and a new £1 billion to support overseas buyers of UK defence and security goods and services. UKEF will also expand its face-to-face support for exporters focused on clean growth in the North of England and Scotland where energy supply chains are economically important. 1.209 The government will support the UK’s world-leading fintech sector, along with the wider digital economy. The Budget announces a review of the UK fintech sector led by Ron Kalifa OBE to support growth and competitiveness in the sector. In addition, the government will convene a summit looking at what further data needs to be made accessible to make it faster and easier for SMEs to shop around for credit. 1.210 The government will maintain a sustainable and efficient business-friendly tax environment in which innovative and enterprising businesses can grow and thrive. 1.211 By confirming that the headline corporation tax rate will remain at 19% in 2020, the lowest in the G20,56 the Budget ensures that the UK will continue to be an attractive place to do business while allowing the government to take action to address the most important challenges businesses face and increase funding for infrastructure and vital public services. An increase in the annual rate of the structures and buildings allowance to 3% will provide over £1 billion in additional relief for businesses by the end of 2024-25. Together with measures to incentivise spending on R&D, this will unlock new investment and further enhance the international competitiveness of the UK tax system. The Budget also announces reforms to the intangible fixed assets regime to reinforce the attractiveness of the UK as a place for businesses to own and manage intellectual property, a review of the UK funds regime, as well as an industry working group on the future of VAT and financial services. (45, 23, 28) 1.212 Small businesses play a crucial role in driving the economy and creating jobs. The government will help small businesses take on extra staff to fulfil their potential and boost employment by delivering on its commitment to increase the Employment Allowance to £4,000. As a result, businesses will be able to employ four full-time employees on the National Living Wage without paying any employer National Insurance contributions (NICs). This measure will benefit around 510,000 businesses, including around 65,000 businesses which will be taken out of paying NICs entirely.57 From April, over 650,000 businesses will have been taken out of paying NICs since the introduction of the Employment Allowance in 2014.58 The government will also meet its commitment to introduce a National Insurance holiday for employers of veterans in their first year of civilian employment. (25,16) 1.213 The government will continue to use the tax system to support genuine risk-taking and creativity where it is proven to be effective. In response to evidence that Entrepreneurs’ Relief has primarily benefited a small number of very affluent taxpayers and done little to generate additional entrepreneurial activity,59 the government will reduce the lifetime limit on gains 57 HMRC analysis based on Pay As You Earn Real Time Information, the ONS Inter-Departmental Business Register. 59 ‘Capital Gains Tax Entrepreneur’s Behaviours and Motivations’ IFF Research, May 2017.

eligible for relief to £1 million. This will ensure that enterprising small business owners will continue to benefit, leaving over 80% of those using the relief unaffected,60 while making the tax system fairer and more sustainable. (46) 1.214 The government is committed to supporting businesses which form an important part of our communities and high streets. The Budget confirms that the government will support shops, pubs, cinemas, and music venues in England by increasing and expanding the business rates discount for retail properties, introducing a new pubs discount, and extending the local newspaper discount. To support businesses affected by COVID-19, the government has gone further than previously announced, as detailed earlier in the chapter. A fundamental review of business rates will consider further reforms to the business rates system and will report in the autumn.
(26, 27) 1.215 The government wants to make the most of the opportunity of leaving the EU to make our VAT and excise system more business-friendly, while continuing to recognise the significant contribution of VAT and excise towards the public finances. The Budget meets the government’s commitment to review the alcohol duty regime to ensure it works for UK producers and consumers. Postponed VAT accounting will also change the time when import VAT is due to HMRC, providing an important cash flow advantage to businesses across the country that are integrated in international supply chains as they adapt to the UK’s position as an independent 1.216 The Budget announces a set of targeted measures to ensure that businesses pay the tax they owe, ensuring fairness for everyone. This includes measures to crack down on tax abuse in the construction industry, illicit tobacco, and among big business, as well as measures to tackle the promoters of tax avoidance schemes. (57) 1.217 Further details on how the government is backing business can be found in Chapter 2. 60 Internal HMRC analysis of Entrepreneur’s Relief data. 1.218 The UK has a long and rich history as a hub for scientific discovery and transformative technological progress. From the foundations of scientific investigation and the development of the laws of motion, through the industrial revolution and into the modern digital age – for centuries the UK has led the world. With less than 1% of the world’s population, the UK hosts 4 of the world’s 20 best universities,61 has produced up to 14% of the world’s most impactful research62 and has the second highest number of Nobel Laureates of any nation.63 Today, UK researchers and businesses are cutting carbon emissions, curing genetic diseases and pushing the frontier of artificial intelligence. The UK is also home to some of the world’s foremost technology-pioneering businesses, and UK research attracts significant foreign 1.219 Research and innovation lead to better products, services and processes. These drive growth and prosperity across the country, and generate ideas and tools to tackle global challenges such as climate change and an ageing population. That is why the government set the objective of increasing economy-wide investment in R&D to 2.4% of GDP by 2027, and why the Budget puts science, innovation and technology at the heart of the UK’s investment strategy. 1.220 The Budget sets out ambitious plans to increase public R&D investment to £22 billion per year by 2024-25. This landmark investment is the largest and fastest ever expansion of support for basic research and innovation, taking direct support for R&D to 0.8% of GDP and placing the UK among the top quarter of OECD nations – ahead of the USA, Japan, France and China.64 This unprecedented increase in investment will support a range of • supporting world-leading research in all regions and nations of the UK, including by cutting bureaucracy, experimenting with new funding models, and establishing a new funding agency to focus on high-risk, high-reward research • meeting the great challenges facing society, including climate change and an ageing population, and providing funding to pursue ‘moonshot’ scientific missions • investing in the government’s own strategic science capability and improving • backing businesses to invest and innovate so that they can compete in the global 1.221 Details of how this funding will support these and other objectives will be set out at the forthcoming CSR, but the Budget announces a set of measures that will have an Supporting world-leading research in all regions and nations 1.222 The UK has excellent universities in every region and nation that attract business investment, deepen the skills and knowledge of the population, and drive economic growth. The government is providing an immediate funding boost of up to £400 million in 2020-21 for world-leading research, infrastructure and equipment. This will help build excellence in research institutes and universities right across the UK, particularly in basic research and physical sciences. The government will also provide £300 million for experimental 61 Times Higher Education World University Rankings 2020. 62 ‘International Comparison of the UK research base, 2019’, Department of Business, Energy and Industrial Strategy, July 2019. 63 USA is 1st with 368, followed by the UK with 132. Nobelprize.org 64 Based on most recent available OECD Main Science and Technology Indicators. mathematical research to attract the very best global talent over the next five years. This will double funding for new PhDs and boost the number of maths fellowships and 1.223 In addition, the government will invest at least £800 million in a new blue-skies funding agency here in the UK, modelled on the extraordinary ‘ARPA’ in the US.65 This agency will fund high-risk, high-reward science. 1.224 In recognition of their excellence and global reach, the government will increase funding for the UK’s foremost specialist institutions by £80 million over the next five years. This will support world-leading organisations such as the London School of Hygiene and Tropical Medicine, the Royal College of Art and the Institute of Cancer Research among others. At the CSR, the government will examine how R&D funding as a whole can best be distributed across the country to help level up every region and nation of the country. Overcoming societal challenges 1.225 The UK is a world leader in many of the scientific fields that are essential for responding to society’s greatest challenges. For example, 25 of the world’s top 100 medicines were discovered in the UK,66 and the UK is the second largest expert contributor to the Intergovernmental Panel on Climate Change (IPCC).67 The Budget is backing UK scientists and businesses to maintain and build on this international leadership. 1.226 As part of this, to help meet the challenge of net zero and ensure that the UK is at the forefront of new decarbonisation technologies, the Budget commits to at least double the size of the Energy Innovation Programme. 1.227 The government is also committed to deepening understanding of how to reduce the burden of illness in the future.
To this end, the government is committing an extra £12 million for the National Institute for Health Research in 2020-21. This increased investment will target research into preventable diseases to work towards solving a range of Invest in government science capabilities and public science estate 1.228 Cutting-edge science and innovation can also help the government to ensure that it is sufficiently equipped to foresee challenges and opportunities and improve public services. The government will therefore invest £2 million in 2020-21 to expand the cross-cutting strategic science and resilience capabilities provided by the Government Chief Scientific Adviser and the Government Office for Science. Furthermore, by investing £1.4 billion over 10 years in the animal health science facility at Weybridge, the government will enhance this world-class capability, underpinning agricultural trade and protecting the UK from the increasing threats of current and emerging animal diseases. 1.229 In recognition of its global scientific significance, the Budget provides £180 million over 6 years for a new state-of-the-art storage and research facility for the Natural History Museum at Harwell Science and Innovation Campus. This upgrade will put the facility at the forefront of natural sciences research and international collaboration, housing and increasing access to around 40% of this world-leading biological collection. 65 Advanced Research Projects Agency. 66 BMI Research (2016) United Kingdom Pharmaceuticals & Healthcare Report Q1 2016, p61. 67 Royal Society, “Investing in UK R&D”, pg.2. Calculated from the annex of author and expert reviewers in the IPCC’s Fifth Assessment Report. Backing businesses to innovate and grow 1.230 Private investment will be crucial to meeting the government’s objective of increasing economy-wide investment in R&D to 2.4% of GDP by 2027, and to creating an innovation- intensive and technology-driven economy. The Budget will support and encourage this by increasing the rate of Research & Development Expenditure Credit from 12% to 13%. The government will also consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing. (24) 1.231 The government is committed to ensuring that the UK’s fast-growing and innovative businesses continue to have access to the finance they need to invest and grow. The Life Sciences Investment Programme will provide the British Business Bank with additional resources to make up to £200 million in equity commitments to support the UK’s most innovative health and life sciences firms over the next five years. Invested alongside private sector capital, this is expected to enable £600 million of finance to create high-quality jobs and help UK patients benefit from more ground-breaking treatments and care. This funding will build on the £350 million of finance to life sciences firms currently supported by the British Business Bank by supporting large-scale venture growth funds. The programme will launch within a year. The government will also provide the British Business Bank with the resources to make up to £200 million of additional investment in UK venture capital and growth finance in 2020-21. 1.232 The Budget will also invest over £900 million to ensure UK businesses are leading the way in high-potential technologies. This will involve commercialising nuclear fusion technology, offering potentially limitless clean energy, and supporting the government’s ambitious National Space Strategy and space innovation fund. A portion of this funding contributes to a wider investment of up to £1 billion to develop UK supply chains for the large-scale production of electric vehicles, as announced in September. 1.233 Further details on the support offered in the Budget for innovation can be found in

1.234 Reducing carbon emissions and enhancing the environment are major government priorities. The UK is already a leader in climate change and clean growth, having reduced emissions faster than any other G7 nation since 1990,68 and being the first major economy to legislate for net zero greenhouse gas emissions. 1.235 This year, as the UK prepares to host the COP26 Climate Summit,69 the government is raising its ambition to decarbonise the economy. This will level up green economic opportunities in every nation and region and boost innovation, whilst also improving the natural environment. 1.236 The Budget sets out ambitious action on tree planting, ultra-low emission vehicles, heat decarbonisation and carbon capture and storage. Further climate policy measures will follow in 1.237 HM Treasury will also publish two reviews this year – one into the economic costs and opportunities of reaching net zero, the other led by Professor Sir Partha Dasgupta into the Decarbonising power, industry and heat 1.238 Research and innovation will reduce the costs of meeting net zero and put the UK at the forefront of the new technologies needed to decarbonise the world economy. The Budget therefore commits to at least doubling the size of the Energy Innovation Programme. But innovation alone is not enough. Whilst new technologies are being developed, the government will continue to take action to reduce emissions now. 1.239 The government has already made significant progress in reducing carbon emissions from electricity generation, driven by the switch from coal to gas and the growth in renewable energy. Costs have fallen so quickly that offshore wind, onshore wind and solar are likely to be the UK’s primary source of electricity in the future. However, the power generated by these renewable sources is dependent on the weather, so the UK also needs reliable low carbon power from technologies such as nuclear, gas with carbon capture and storage (CCS), and hydrogen. 1.240 To meet the net zero target, the UK must also decarbonise industry. There are a number of possible routes – from using low carbon energy sources like hydrogen or electricity, to capturing industrial emissions and storing them safely under the ground. This challenge provides opportunities not only to reduce emissions, but also to enable our manufacturing heartlands to become leaders in the green markets of the future. 1.241 Carbon capture and storage will be important to decarbonising both power and industry. It can provide flexible low carbon power and decarbonise many industrial processes, whilst also offering the option for negative emissions at scale.
The Budget announces a CCS Infrastructure Fund to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030. Using consumer subsidies, the government will also support the construction of the UK’s first CCS power plant. 1.242 The heating of our homes will need to be virtually zero carbon by 2050, replacing natural gas and other fossil fuels with low carbon alternatives – likely to be primarily a mix of green gas, heat pumps and heat networks. To meet this challenge, the Budget accelerates the greening of the gas grid by announcing a new support scheme for biomethane, funded by a Green Gas Levy. The government will also support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme. Recognising the energy 68 ‘Reducing UK 2018 Progress Report to Parliament’, Committee on Climate Change, June 2018. 69 26th Conference of the Parties to the United Nations Framework Convention on Climate Change. efficiency benefits of heat networks, the Budget confirms funding for the Heat Networks Investment Project for a further year to 2022 and provides £270 million of new funding to enable new and existing heat networks to adopt low carbon heat sources. 1.243 To encourage businesses to operate in a more environmentally friendly way, the government is raising the Climate Change Levy on gas in 2022-23 and 2023-24 (whilst freezing the rate on electricity) and reopening and extending the Climate Change Agreement scheme by two years. (40, 41) 1.244 Meeting the UK’s net zero commitment will require emissions reductions across all modes of transport. However, road transport is responsible for 91% of domestic transport greenhouse gas emissions70 and is one of the biggest contributors to poor air quality in the UK’s towns and cities. The government has set ambitious targets to increase the number of zero emission vehicles on the road and is currently consulting on bringing forward the phaseout date for the sale of new petrol and diesel cars and vans from 2040. Meeting these targets will require a combination of spending, regulation and taxes. 1.245 Consumer incentives support the development of markets for new transport technology. The government is considering the long-term future of incentives for zero emission vehicles alongside the 2040 phase-out date consultation. Until then, the government will provide £403 million for the Plug-in Car Grant, extending it to 2022-23. Recognising that the market for other ultra-low emission vehicles is still very small, the government will also provide £129.5 million to extend the Plug-in Grants for vans, taxis and motorcycles to 2022-23. In addition, the Budget announces the exemption of zero emission cars from the Vehicle Excise Duty (VED) ‘expensive car supplement’ and the publication of a call for evidence on VED, which will include how it can be further used to reduce vehicle 1.246 Access to high quality, convenient charging infrastructure is critical for drivers to make the switch to electric vehicles confidently. The government is therefore providing £500 million over the next five years to support the rollout of a fast-charging network for electric vehicles, ensuring that drivers will never be further than 30 miles from a rapid charging station. This will include a Rapid Charging Fund to help businesses with the cost of connecting fast charge points to the electricity grid. To target spending from this fund effectively, the Office for Low Emission Vehicles will complete a comprehensive electric vehicle charging 1.247 The government will also remove the entitlement to use red diesel from April 2022, except in agriculture, fish farming, rail and for non-commercial heating (including domestic heating). By removing this tax relief on pollution, the government will encourage businesses and industry to improve the energy efficiency of their vehicles and machinery or look for greener alternatives. The development of these alternatives will be supported by the government more than doubling its investment in the Energy Innovation Programme. (39) 1.248 Cleaner vehicles will improve air quality. The government is committed to bringing roadside concentrations of polluting nitrogen dioxide gas within legal limits in the shortest possible time. The Budget therefore allocates an additional £304 million to enable local authorities to take immediate steps to reduce nitrogen dioxide emissions. This brings the total amount that government has provided to affected local authorities to £880 million, meeting the government’s obligations to all affected local authorities. (36) 70 ‘Transport Statistics Great Britain 2019’, Department for Transport, December 2019. 1.249 This government aims to be the first to leave the natural environment in a better condition than we inherited it. The ‘25 Year Environment Plan’ sets out the government’s ambitions for clean air and water, thriving plants and wildlife, and mitigating and adapting to 1.250 The Budget announces the Nature for Climate Fund which will invest £640 million in tree planting and peatland restoration in England, increasing the rate of tree planting by over 600%72 and covering an area greater than Birmingham over the next five years. In addition, the Budget announces the Nature Recovery Network Fund, which will partner with businesses and local communities to protect, restore and support existing habitats and wildlife. The government will also introduce the Natural Environment Impact Fund to help prepare green projects that could be suitable for commercial investment in order to encourage private sector support for environmental restoration. 1.251 The UK’s commitment to protecting the natural environment extends beyond Great Britain and Northern Ireland and into the UK Overseas Territories. The government is tripling funding for the Darwin Plus programme to help protect and conserve the globally significant biodiversity found in UK Overseas Territories.73 This builds on the £220 million for biodiversity conservation in developing nations, and the doubling of UK international climate finance, announced by the Prime Minister at the UN General Assembly last year. 1.252 The government is committed to improving waste management, boosting recycling and reducing plastic pollution.
Following consultation in spring 2019, the government will introduce a new Plastic Packaging Tax from April 2022 to incentivise the use of recycled plastic in packaging and help tackle the scourge of plastic in the natural environment. An additional £700,000 will establish the Extended Producer Responsibility scheme, designed to encourage producers to make their packaging more recyclable and reduce the amount of unnecessary packaging in their products. (38) 1.253 The government will also take action to fight waste crime. The Budget will provide funding for a digital waste tracking system to provide better data on waste transport, as well as £2 million to improve evidence on where fly-tipping happens and the best ways to 1.254 Further details on carbon reduction measures in the Budget can be found in Chapter 2. 71 ’25 Year Environment Plan’, Department for Environment, Food & Rural Affairs, January 2018. 72 ‘Provisional Woodland Statistics’, Forestry Research, June 2019. 73 ‘Darwin Plus Projects Register’, Darwin Initiative, March 2020. 2.1 Chapter 1 explains how the measures announced in the Budget support the Government’s long-term strategy. This chapter sets out all Budget 2020 policy decisions. Unless stated otherwise, the decisions set out are ones which are announced at the Budget. in the years up to 2025-26. This includes tax measures, changes to Departmental Expenditure Limits (DEL) and measures affecting annually managed expenditure (AME). 2.3 The government is also publishing the methodology underpinning the calculation of the fiscal impact of each policy decision. This is included in the supplementary document ‘’Budget 2020: policy costings’ published alongside the Budget. 2.4 The supplementary document ‘Overview of Tax Legislation and Rates’, published alongside the Budget, provides a more detailed explanation of tax measures. Head2 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Investing in excellent public services Spend -2,530 -12,600 -27,225 -32,095 -36,085 -42,320 commitments including on health, schools, criminal justice system Spend 0 -1,430 -2,685 -2,795 -2,825 - 3 EU benefit from contributions no longer paid and Spend 0 +4,340 +4,990 +7,130 +11,250 +14,605 6 Immigration Health increase to £624 with £470 rate for Tax 0 +150 +355 +355 +360 +355 7 increase annual allowance Tax 0 -180 -315 -450 -560 -670 8 maintenance4,5 Spend 0 -175 - - - - 9 counter terrorism4 Spend 0 -80 - - - - 10 Safer Streets CCTV and

Head2 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 11 Public Works Loan increase main rate, with reduced rates for social housing and infrastructure Spend +105 +60 +175 +205 +270 +325 Supporting people and families 12 National increase Primary Threshold and Lower Profit Limit to Tax * -2,110 -2,185 -2,360 -2,370 -2,370 13 Fuel freeze for 2020-21 Tax 0 -525 -530 -540 -555 -560 14 Alcohol freeze all rates for Tax -40 -285 -295 -305 -310 -320 15 zero rate e-publications Tax 0 -60 -175 -185 -190 -200 16 National NICs holiday for employers of veterans in first year of 17 abolish VAT for female sanitary 18 Vehicle Excise change classification of new motorhomes 19 Personal Independence reduce frequency of assessments 20 Neonatal new entitlement to 21 Housing further shared 22 Rough sleeping4,5 Spend 0 -60 - - - - 23 Capital increase structures and buildings allowance Tax -15 -90 -165 -210 -260 -295 Expenditure increase rate 25 Employment increase Tax 0 -445 -455 -465 -470 -475 26 Business increase retail discount to 50%, and extend to 27 Business £1,000 discount for pubs with rateable value of less than 28 Corporation relief for pre-2002 29 business productivity and locally delivered business support Levelling up and getting Britain building 30 Spending Round 2019 and set Spend 0 -2,450 -13,690 -14,465 -13,610 -22,500

Head2 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 31 Delivering investment commitments including on transport, health, Spend 0 -3,290 -4,315 -6,160 -8,150 - 32 building safety fund4,5 Spend 0 -1,215 - - - - 33 brownfield housing fund5 Spend 0 -95 - - - - 34 cultural investment fund, 35 Ultra low emission vehicle grants4,5 Spend 0 -140 - - - - 36 Air Quality5 Spend 0 -175 - - - - 37 Renewable Heat extend Spend 0 0 -10 -30 -35 -35 38 Plastic Packaging 30% recycled 39 Red remove relief for sectors other than rail, home heating and Tax 0 0 +15 +1,575 +1,640 +1,645 40 Climate Change two year 41 Climate Change increase gas freeze liquid petroleum gas and 42 Capital Allowances for Business extend first year allowance on 43 Carbon Price freeze for 44 Vehicle Excise exempt zero emission vehicles from the expensive A fair and sustainable tax system 45 Corporation maintain at 19% Tax +930 +4,635 +6,120 +6,680 +7,075 +7,500 46 Capital Gains reduce the lifetime limit in entrepreneurs' relief Tax +5 +215 +1,120 +1,470 +1,670 +1,820 47 Stamp Duty Land 2% non-UK 48 Tobacco extend RPI plus 2ppt escalator and additional 4ppt for hand rolling tobacco in 2020-21 49 Income top slicing relief 51 Corporate Capital Loss 52 Aggregates freeze for 2020-21 Tax 0 -10 -10 -10 -10 -10 53 Heavy Goods Vehicle VED and

Head2 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 54 Car Fuel increase by CPI in 55 maintain £20,000 limit for Avoidance, evasion, and unfair outcomes 57 Tackling abuse in the construction 58 hidden economy Tax 0 0 +5 +35 +50 +65 59 Investment in HMRC to improve Tax +55 +280 +855 +1,065 +1,075 +595 60 Research and Development PAYE 61 Housing investment in fraud detection by Local Authorities Spend 0 +115 +140 +125 +105 +60 62 Public sector net borrowing impact of financial transaction changes8 Spend +2,160 +2,530 +2,900 +3,155 +990 +985 Previously announced policy decisions 63 Independent Loan Charge 64 tax exemption for 65 Protecting Your Taxes in delay start date to December and reduction for new cars registered 67 Stamp Tax on connected 68 change start date for reverse 69 Business Rates Retention 2020-21 pilots in Devolution Deal 70 Negative Revenue Support 72 restrict EEA migrants' access to non-contributory benefits for first five years in UK from 73 Child Benefit and Child Tax end exporting for children outside 74 Universal delay surplus earnings threshold reduction by

Head2 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 75 Universal additional support 76 Universal changes to severe disability premium regulations Total policy decisions9 +605 -17,900 -36,430 -38,530 -41,150 -41,920 Total spending policy decisions9 -355 -19,255 -40,185 -45,640 -48,780 -49,440 Of which current -2,545 -13,765 -24,910 -27,860 -27,680 -27,660 Of which capital +2,190 -5,490 -15,275 -17,775 -21,100 -21,780 Total tax policy decisions9 +960 +1,355 +3,755 +7,110 +7,625 +7,520 1 Costings reflect the OBR’s latest economic and fiscal determinants. 2 Many measures have both tax and spend impacts. Measures are identified as tax or spend on the basis of their largest impact. 3 The overall spending level in 2024-25 has been adjusted for the costs of these measures. Settlements for 2024-25 will be set out at the Spending Review after the Comprehensive Spending Review 2020. 4 The overall resource spending envelope has been adjusted to include funding for this measure in future years. Settlements over the period 2020-21 to 2023-24 will be set out in full at the Comprehensive Spending Review 2020. 5 These costs are additional capital spending in 2020-21. Future profiles and total programme costs for some specific programmes are detailed elsewhere in the document. Settlements beyond 2020-21 will be set out in full at the Comprehensive Spending Review 2020. 6 Safer Streets There is a total of £25m in this Fund, of which £10m is funded from the Home Office settlement. 7 Departments have existing 2020-21 capital budgets. Some additions were made to 2020-21 capital budgets at the Spending Review 2019 and further additions are made at this Budget.
Years beyond 2021-22 represent the overall capital envelope, which will be allocated to departments at the Comprehensive Spending Review 2020. Some specific capital allocations are set out throughout this document. 9 Totals may not sum due to rounding. National Living Wage and welfare 2.5 Publishing the Low Pay Commission’s 2020 Remit – Alongside the Budget, the government has published its remit to the Low Pay Commission (LPC) for 2020. Confirming the government’s ambitious target, the remit asks the LPC to make recommendations with the view of reaching a National Living Wage (NLW) of two-thirds of median earnings by 2024, provided economic conditions allow. Following recommendations made by the LPC, the NLW will apply to workers aged 23 and over in April 2021, with a target for it to apply to workers aged 21 and 2.6 Carers’ leave – The government will shortly consult on the design of Carers’ a new in-work entitlement for employees with unpaid caring responsibilities, such as for a family member or dependents. This will support hardworking people to balance their caring responsibilities with work, particularly women who disproportionately undertake unpaid 2.7 Neonatal leave and pay – The Budget announces a new entitlement to neonatal leave and pay for employees whose babies spend an extended period of time in neonatal care. (20) 2.8 Personal Independence Payment reassessments – The government will reduce the frequency of health assessments required for people receiving Personal Independence Payment (PIP). For those whose condition is unlikely to change, the Budget sets a minimum award review 2.9 Increase in the repayment period for Universal Credit advances and reduction in the maximum debt deduction cap on the Universal Credit standard allowance – From October 2021, the period over which Universal Credit advances will be recovered will increase to 24 months, while the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30% to 25% of the standard allowance. 2.10 Enhancing Housing Benefit compliance – The Budget provides further investment of up to £12 million per year in local authority resource to maximise their capacity to tackle Housing Benefit fraud and error. (61) 2.11 Universal Credit to Pension Credit transition – The Budget confirms funding for an operational change to ensure claimants do not experience a gap in their benefit entitlement when moving from Universal Credit to Pension Credit. (75) 2.12 Universal transitional protection for former Severe Disability Premium (SDP) claimants – The government is confirming funding for increasing the rate of transitional payments for claimants in receipt of Severe Disability Premium when they move to Universal 2.13 Universal Credit rollout – The implementation schedule of Universal Credit has been updated to ensure its safe delivery. The government expects rollout to complete by 2.14 Universal surplus earnings – The Budget confirms funding for a delay to the reduction of the Universal Credit surplus earnings threshold, so that only large income spikes above £2,500 will be taken into account. The threshold will be reduced to £300 in

2.15 Changes to the duration of high level sanctions – The government is removing the three-year sanction from Universal Credit and Jobseeker’s Allowance. This will bring high- level sanctions to 13 weeks for the first failure to comply with conditionality or work search requirements and 26 weeks for each subsequent failure, making 26 weeks the duration of the longest single sanction in Universal Credit and Job Seekers Allowance. 2.16 Supporting families with school-aged children through Tax-Free Childcare (TFC) – The government is announcing a service improvement that will make TFC compatible with school payment agents. This will allow parents of up to 500,000 school-aged children across the UK to access TFC and use it towards the cost of their wraparound childcare. 2.17 Migrants’ access to benefits – The government is aligning EEA migrants’ access to non-contributory benefits with non-EEA nationals. This will apply to EEA migrants arriving in the UK under the new immigration system, from January 2021. (72) 2.18 Stop export of Child Benefit – The government is stopping the export of Child Benefit payments made in respect of children living overseas. This will apply to EEA migrants arriving in the UK under the new immigration system, from January 2021. (73) 2.19 Porting of Support for Mortgage Interest (SMI) loans – As announced in June 2019, the government will amend the SMI loan regulations to allow recipients moving home to transfer their existing loan to their new property. 2.20 Extending Shared Accommodation Rate (SAR) exemptions – The government is introducing exemptions from the SAR for claimants of Universal Credit and Housing Benefit covering rough sleepers aged 16-24, care leavers up to the age of 25, and victims of domestic abuse and human trafficking. (21) 2.21 Extension to Civil State Pension – The Civil Partnerships (Opposite-sex Couples) Regulations 2019 give opposite-sex couples the choice of entering into marriage or civil partnership. The Budget provides funding which ensures individuals can derive or inherit a State Pension from an opposite-sex civil partner. 2.22 Devolution of welfare benefits to the Scottish Government – As set out in the Scotland Act 2016, the government is devolving a number of disability benefits to the Scottish government, including Personal Independence Payment, Disability Living Allowance, Attendance Allowance, Industrial Injuries Disablement Allowance and Severe Disablement Allowance. 2.23 Nurses – From September 2020, all new and existing students on nursing, midwifery and allied health courses in England will benefit from additional non-repayable maintenance grants to help with living costs. Students will receive at least £5,000 a year, with up to £3,000 further financial support available for eligible students with childcare responsibilities, as well as those studying in regions and specialisms where Trusts find it difficult to recruit nurses. 2.24 50 million GP surgery appointments – The government is committed to creating 50 million more GP surgery appointments a year in England.
The government will achieve this by funding the Department for Health and Social Care and the NHS to train, recruit and retain up to 6,000 more doctors in general practice and 6,000 more primary care professionals, such as physiotherapists and pharmacists. 2.25 Health Infrastructure Plan (HIP) – As announced in September 2019, the government has committed £2.7 billion to deliver 6 major building and redevelopment schemes in hospitals in England, and a further £100 million of seed funding for other schemes to develop their plans. In total, this programme involves at least 40 hospital building projects. (5) 2.26 Learning Disability and Autism Fund – The government will provide funding over the next three years to speed up the discharge of individuals with learning disabilities or autism into the community from mental health inpatient care in England. 2.27 NHS operational capital – The government will protect the level of NHS operational capital investment in England by increasing the DHSC’s capital budget by £683 million in the new financial year 2020-21. This will allow Trusts to continue to invest in important capital projects such as estate refurbishments and building maintenance. (5) 2.28 National Institute for Health Research (NIHR) – In order to improve our understanding of how to reduce the burden of illness in the future, the government is committing £12 million of new funding for the National Institute for Health Research to invest in prevention research, supporting local authorities to grow their research capabilities for the 2.29 Diagnostic equipment replacement – As announced in September 2019, the government is providing £200 million for the NHS in England to replace its oldest diagnostic equipment, including MRI machines, CT scanners, and breast screening equipment. The new equipment will improve the quality of screening and speed of diagnosis for illnesses such 2.30 Hospital car parking – The government will scrap hospital car parking fees in England for those in greatest need, including patients with a disability and/or terminal illness and their families, patients with regular appointments, parents of sick children staying overnight and NHS 2.31 Immigration Health Surcharge (IHS) – The government will increase the IHS from £400 to £624. There will be a new discounted rate for children under the age of 18 of £470. For students and those entering on the youth mobility scheme, the surcharge will rise from £300 2.32 Counter terrorism – Overall counter-terrorism spending will increase by £114 million in 2020-21 to maintain capability and officer numbers in the face of a changing terrorist threat, and to help keep the UK safe. This includes an additional £31 million for the UK Intelligence Community and £83 million for counter-terrorism policing. As a result, funding for counter- terrorism policing will increase by £103 million in 2020-21. (9) 2.33 UK Intelligence Community infrastructure – The government has provided the UK Intelligence Community with £67 million additional funding to build on their world-leading technological capabilities so that they can continue to help keep the country safe from harm. 2.34 Capital for Companies House – The government will allocate £14 million to Companies House to enable it to continue with vital capital projects to help its work tackling economic crime and anti-money laundering. 2.35 Fire Safety – The government is providing £20 million for Fire and Rescue Services to increase inspection and enforcement capability and build a strategic response to the Grenfell

2.36 Domestic violence prevention – The government is providing £10 million in 2020-21 for innovative new approaches to preventing domestic abuse, working with Police and Crime Commissioners to expand projects like the “Drive” prevention programme. 2.37 Domestic abuse courts – The government will provide an additional £5 million to begin a trial of integrated domestic abuse courts in England and Wales. This funding will allow progress to be made on establishing these courts over the next year. 2.38 Royal Commission on the Criminal Justice process – The government will provide an additional £3 million to launch a Royal Commission on the Criminal Justice process in England and Wales. This funding will allow work on the Commission to begin at pace over the next year. 2.39 Community sentences – The government will provide an additional £68.5 million to strengthen community sentences in England and Wales, including by increasing the number of offenders who are required to wear an electronic tag. 2.40 Victim support – The government will provide an additional £15 million to improve the justice system’s offer to victims. This will boost the support available to victims of rape, and create a new digital hub to make the criminal justice process in England and Wales easier 2.41 Prison maintenance – The government will provide an additional £156 million in 2020-21 to tackle prison maintenance issues, helping to maintain prison operating capacity and improve conditions for those living and working in prisons in England and Wales. (8) 2.42 Youth Violence – The government is providing £5 million in 2020-21 to support the creation of a Centre of Excellence for Tackling Youth Violence. 2.43 Economic crime levy – The government intends to introduce a levy to be paid by firms subject to the Money Laundering Regulations to help fund new government action to tackle money laundering and ensure delivery of the reforms committed to in the Economic Crime Plan.1 These reforms will help safeguard the UK’s global reputation as a safe and transparent place to conduct business. The levy will be additional to ongoing public sector funding. The government will publish a consultation on the levy later this spring. 2.44 Additional funding for veterans mental health – The government will provide a £10 million uplift in 2020-21 to the Armed Forces Covenant Fund Trust, to deliver charitable projects and initiatives that support veterans with mental health needs. This funding demonstrates this government’s ongoing commitment to ensuring that our veterans can access the services and support that they deserve.
2.45 Southampton Spitfire Memorial – The government will provide up to £3 million match-funding to support the construction of a memorial to the Spitfire on the Southampton waterfront, in recognition of the individuals who built and flew the aircraft in the Second 2.46 Further education capital funding – The government will provide £1.5 billion over five years (£1.8 billion inclusive of indicative Barnett consequentials), supported by funding from further education colleges themselves, to bring the facilities of colleges everywhere in England up to a good level, and to support improvements to colleges to raise the quality and efficiency of vocational education provision. 1 ‘Economic crime plan 2019 to 2022’, HM Treasury and Home Office, July 2019. 2.47 Institutes of Technology – The government will provide £120 million to bring further education and higher education providers in England together with employers to open up to eight new Institutes of Technology. These institutions will be used to deliver high-quality higher level technical education and to help close skills gaps in their local areas. 2.48 Facilities and equipment to support T levels – The government will provide £95 million for providers in England to invest in high quality facilities and industry-standard equipment to support the rollout of T levels. Funding will support T level routes being delivered from autumn 2021, including construction, digital, and health and science. 2.49 National Skills Fund – The government will consult widely in the spring on how to use 2.50 Apprenticeship Levy – The government will look at how to improve the working of the Apprenticeship Levy, to support large and small employers in meeting the long-term skills needs 2.51 Apprenticeships – The government will ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- 2.52 Maths schools – The government will provide an additional £7 million to support a total of 11 maths schools in England, covering every region. 2.53 PE and sports – The Budget provides £29 million a year by 2023-24 in England to support primary school PE teaching and help schools make the best use of their sports facilities. 2.54 Arts Premium – The Budget provides £90 million a year to introduce an Arts Premium from September 2021, to help schools in England to provide high-quality arts programmes and extracurricular activities for pupils. 2.55 Freezing the maximum fee cap – As announced in July 2019, the government has frozen the maximum fee cap in England for the 2020-21 academic year at £9,250 for regular full-time undergraduate courses and at £11,100 for accelerated degree courses. 2.56 Removing the student finance three-year residence requirement for victims of domestic abuse – From academic year 2020-21, the government is removing the three-year ordinary residence requirement for student finance for those granted Indefinite Leave to Remain 2.57 Entitlement to part-time Maintenance Loans – The Budget takes into account the fiscal impacts of part-time Maintenance Loans not being extended to sub-degree (level 4/5 courses) and distance learners, as announced in June 2019 and March 2019 respectively. Local government and communities 2.58 Local Infrastructure Rate lending – The government will provide an additional £1.15 billion discounted lending at 60 basis points above gilts via the Public Works Loan Board (PWLB) to support specific local authority infrastructure projects for England, Scotland 2.59 Housing Revenue Account lending rate – The rate for discounted PWLB lending to support social housing will be reduced to 80 basis points above gilts for local authorities in England, Scotland and Wales. (11)

2.60 Future of Public Works Loan Board lending terms – The government will consult on revising the terms of PWLB lending to ensure that local authorities can continue to invest in housing, infrastructure and frontline services. 2.61 Public Works Loan Board powers – The government will reset its power to increase the 2.62 Adults with multiple complex needs – The government will commit £46 million from the Shared Outcomes Fund to provide improved support to individuals experiencing multiple complex needs, such as homelessness, reoffending and substance misuse. 2.63 Rough sleeping – The Budget confirms the £237 million announced by the Prime Minister for accommodation for up to 6,000 rough sleepers and provides a further £144 million for associated support services and £262 million for substance misuse treatment services which, when fully deployed, is expected to help more than 11,000 people a year. This will enable people to move off the streets and support them to maintain a tenancy for the long term. (22) 2.64 Research to support vulnerable children – This Budget will go further on supporting families by providing £2.5 million for research and developing best practice around the integration of services for families, including family hubs, and how best to support 2.65 Increased Business Rates Retention in Devolution Deal areas and the Greater London Authority – In 2017-18, the government set-up 100% Business Rates Retention pilots in devolution deal Cornwall, Greater Manchester, Liverpool City Region, West of England and West Midlands. London has also benefitted from increased retention arrangements from 2017-18. These areas will continue to benefit from increased retention, and London will receive 67% retention in 2020-21, in line with the Greater London Authority funding agreement made 2.66 Eliminating negative Revenue Support Grant (RSG) in 2020-21 – The government confirmed at the 2020-21 Local Government Finance Settlement that it will eliminate negative RSG through the use of foregone business rates, at a cost of £153 million. This is to maintain the commitment not to adjust business rates tariffs and top-ups until the business rates retention system is reset. (70) 2.67 Data sharing – The government has already improved its use of data through the Artificial Intelligence and Data Grand Challenge and the ONS Data Science Campus. The Budget goes further by investing £16.4 million over the next three years, including £6.8 million for the ONS to make it easier to share more, higher-quality data across government.
This will improve policy making and evaluation, and combine datasets in new ways to detect fraud. This investment is a first step in the government’s National Data Strategy to unlock the power of data across government and the wider economy, while building trust in its use. 2.68 General grants transformation program – General grants are awarded to an organisation for an agreed purpose and are considered the category of grants with the highest risk of being spent ineffectively. The government is launching a new £5 million programme to create digital tools to increase efficiencies and improve administration of general grants. 2.69 Public Sector Value Framework – The government is developing the medium- to long-term priority outcomes that it is seeking to deliver for priorities such as levelling up, as well as the metrics that will be used to inform and improve performance against these outcomes. These will be published as part of the CSR and will include cross-cutting outcomes in areas where closer working between departments could help achieve better results. 2.70 Building commercial capability – Central government spends £50 billion per year on third-party goods and services. The contracts governing these arrangements are often complex and require considerable expertise to manage effectively. The government will therefore provide £3 million of funding for face-to-face training and assessment of staff across government who manage the most important contracts. By further upskilling key staff, government can improve the efficiency and performance of its largest contracts. 2.71 Cultural Investment Fund – The government confirms a £250 million Cultural Investment Fund for culture, heritage, local museums, and neighbourhood libraries. Of this, £90 million will be made available from April for a Cultural Development Fund that will support cultural regeneration proposals outside of London. (34) 2.72 Youth Investment Fund – The Budget confirms £500 million for a Youth Investment Fund to build new youth centres, refurbish existing youth facilities and provide high-quality services for young people across the country. The government expects that at least 800,000 young people will benefit from new or upgraded youth facilities. 2.73 National Museums maintenance – The government is providing £27 million for critical maintenance work on the National Museums’ estates. The government understands the maintenance challenges faced by the National Museums and will take further action to address 2.74 Football Foundation scheme – The Budget commits £8 million investment in local football facilities alongside matched funding from the Premier League and Football Association, providing quality football facilities in areas with the greatest need. (34) 2.75 The government will publish a landmark National Infrastructure Strategy later in the spring which will set out plans for a once in a generation transformation of the UK’s economic infrastructure. This will respond to the recommendations of the National Infrastructure Commission’s (NIC) National Infrastructure Assessment.2 2.76 Economic regulation – The government is committed to maintaining the UK’s system of strong, independent regulation. The government therefore welcomes the NIC’s report ‘Strategic investment and public confidence’ and agrees with its primary finding that the UK’s system of economic regulation is working well, but may need updating in some areas to address 21st century challenges.3 The government will respond in full to the study later this year. 2.77 Reviewing PFI contracts – The government has retired the PFI and PF2 models, but there are nearly 600 existing PFI contracts in England.4 The government will now focus on making sure they are well managed and represent value for money and will allocate £2 million in 2020-21 to carry out targeted contract reviews. 2.78 Gigabit broadband – The Budget commits £5 billion to support the rollout of gigabit- capable broadband in the most difficult to reach 20% of the country. 2 ‘National Infrastructure Assessment’, National Infrastructure Commission, July 2018. 3 ‘Strategic investment and public confidence’, National Infrastructure Commission, October 2019. 4 ‘Private Finance Initiative and Private Finance 2 2018 summary data’, HM Treasury and Infrastructure and Projects Authority, May 2019. 2.79 New build homes’ connectivity – The Budget announces that DCMS will shortly publish a consultation response which will confirm the government’s intention to legislate to ensure that new build homes are built with gigabit-capable broadband. 2.80 Existing broadband programmes – As part of over £1 billion that the government has already committed to next-generation digital infrastructure, the Budget • the next seven areas that have successfully bid for funding from the third wave of the Local Full Fibre Networks Challenge North of Tyne (£12 million), South Wales (£12 million), Tay Cities (£6.7 million), Pembrokeshire (£4 million), Plymouth (£3 million), Essex and Hertfordshire (£2.1 million) and East Riding of Yorkshire (£1 million) • that the government’s existing superfast broadband programme has shifted its focus to delivering gigabit-capable broadband and has already delivered full fibre to over • that more than 100 schools in rural areas are due to receive full fibre broadband in the next twelve months under the Rural Gigabit Connectivity programme 2.81 Shared Rural Network to improve 4G coverage – The Budget announces that the Shared Rural Network agreement has been finalised between the government and industry. The government will commit up to £510 million of funding, which will be more than matched by industry to support this scheme to improve mobile coverage. This means 95% of the UK’s landmass will have high quality mobile coverage by 2025. 2.82 Second Road Investment Strategy (RIS2) – The government is boosting regional connectivity and transforming connections through the largest ever investment in England’s strategic roads.5 Through RIS2 the government will spend over £27 billion between 2020 and 2025.