Budget 2024 live: Jeremy Hunt cuts national insurance, abolishes non-dom status and raises child benefit threshold – as it happened

Our budget calculator, created with accountancy firm Blick Rothenburg, is now live:

It cost taxpayers £15,000 to cover damages to an academic science secretary Michelle Donelan had falsely accused of supporting Hamas, her department has said.

The sum was paid “without admitting any liability”, according to the Department for Science, Innovation and Technology (DSIT).

Daisy Cooper, the Liberal Democrats’ deputy leader, said it was a “scandal” that Donelan was not paying the damages herself. Cooper said:

This is nothing short of a scandal and we still don’t know the full legal costs.

If Michelle Donelan had a shred of integrity left, she would pay for this bill out of her own pocket instead of asking taxpayers to pick up the tab.

If she refuses to do so, Rishi Sunak should dock her pay.

Jonathan Reynolds, the shadow business secretary, has just told Radio 4 that Labour will find “an alternative way” of funding the policies it had planned to fund with revenue from the abolition of non-dom status. He said the money was going towards the NHS, and dentistry in particular. Evan Davis asked him in particular about the non-dom policies, but Reynolds answer implied that Labour would also apply this approach to the policies funded by the extension of the windfall tax on energy companies.

But Reynolds also said it might take the party a few days to find a precise way of funding these policies.

The Tories published a list of the Labour policies they now think are in jeopardy earlier. (See 3.40pm.)

Jeremy Hunt announced significant changes to the rules affecting higher earners who want to claim child benefit. Child benefit is worth £24 per week for the oldest child, and £15.90 per week for other children, and overall the new system is going to be significantly more expensive than the current one, costing the Treasury more than £500m per year. This is how Hunt explained it in his speech.

The way we treat child benefit in the tax system is confusing and unfair.

It’s a lifeline for many parents because it helps with the additional costs associated with having children.

And when it works, it’s good for children, it’s good for parents, and it’s good for the economy because it helps people into work.

But we currently withdraw child benefit when one parent earns over £50,000 a year.

That means two parents earning £49,000 a year receive the benefit in full but a household earning a lot less than that does not if just one parent earns over £50,000.

Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system including allowing HMRC to collect household level information.

We will therefore consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.

But because that is not a quick fix, I make two changes today to make the current system fairer …

I confirm that from this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000.

And we will raise the top of the taper at which it is withdrawn to £80,000.

That means no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether.

And because of the higher taper and threshold, nearly half a million families with children will save an average of around £1300 next year.

But some families are set to lose out badly. For example, a couple with one parent earning £45,000 a year, and the other earning £40,000 a year currently qualify for child benefit at the full rate. Under the new system, where a household threshold, not an individual threshold applies, they would get nothing.

And this change (the bit that saves the Treasury money) is not due to come into force until April next year, while the other changes (which cost the Treasury money) come into force this spring.

In his Political Currency podcast, which he co-hosts with Ed Balls, the former Tory chancellor George Osborne says this is a booby trap for the next government. He says:

This whole thing [of] ‘we’re going to have a brand new system for high earners in our country where we’re going to assess their entire household income in order to calculate this child benefit charge. We can’t do it now. But we’ll be bringing it in 2026’. That, I promise you, is a mine placed in the minefields for the future.

Here are some of the comments from opposition parties about the budget.

From Labour’s Rachel Reeves, the shadow chancellor

The chancellor’s budget has lifted the lid on 14 years of Tory economic failure.

Taxes are still rising, prices are still going up in the shops, and mortgages are higher.

Nothing Jeremy Hunt has said today changes that. It’s time for change. It’s time for an election.

From Ed Davey, the Lib Dem leader

This is a bottom-of-the-barrel budget from a Conservative government that has given up on governing.

Rishi’s recession is being followed by Hunt’s hangover, with years of unfair tax hikes while local health services are stretched to breaking point.

This udget had nothing to offer for people seeing their mortgage soar due to Conservative chaos or being left waiting for months in pain for NHS treatment.

The public will see this for what is: a desperate last throw of the dice by a Conservative government that has neglected the NHS, trashed the economy and overseen a record fall in living standards. It couldn’t be clearer that we need a general election now so voters can finally kick this tired and out-of-touch government out of office.

From Drew Hendry, the SNP’s economy spokesperson

The Tories trashed the economy, and now they’re taking the axe to public services - showing why it’s essential to vote SNP at the general election to make Scotland Tory-free and have the choice of a better future with independence.

Scotland’s budget has already been slashed by the UK government - and now they are cutting public services to the bone.

Worse still, there is no alternative on offer from Sir Keir Starmer’s Labour Party, who support Brexit and want to impose the same damaging Tory fiscal plans, which will slash services and starve the economy of the investment needed to secure growth.

The UK economy is broken - and the damaging cuts in today’s budget will make it even worse by failing to properly invest in the green energy gold rush, choking off economic growth, and putting up to 100,000 jobs at risk in Scotland’s energy sector.

With the UK cost of living soaring, it’s a scandal that Tory tax breaks will benefit the richest most - with any benefit for working families completely wiped out by the cost of rising rents, mortgages, bills and food prices.

From Carla Denyer, the Green party’s co-leader

People are crying out for investment in social care, in our NHS and in dentistry. We needed a ‘care full’ budget but have ended up with a careless, reckless Budget.

Chancellor Jeremy Hunt is attempting to bribe the electorate through tax cuts, which can only mean more pain for public services that are already on their knees.

People won’t be richer, healthier or happier because of this Budget. People know a con when they see one.

From Richard Tice, the Reform UK leader

They had one last chance to try and fix the economy they’ve broken…

Instead, all they offered was lies, spin and taxes via the back door.

There is an alternative. The alternative is @reformparty_uk.

From Plaid Cymru’s Ben Lake

The Chancellor’s Budget confirmed suspicions that the Government has little intention to address the many pressing issues facing society.

People are fed up of seeing public services crumbling around them due to a lack of public investment.

The Chancellor rightly pointed out that a strong economy depends on strong public services, and yet public investment in the UK’s social and economic infrastructure has remained at around half the average for OECD advanced economies for decades.

Today’s Budget does nothing to close that gap. Rather than tackling this long term weakness in the UK’s economy, the Chancellor prioritised the short term electoral fortune of the Government.

The Resolution Foundation says Hunt’s budget will leave “a sour taste” for whoever wins the next election, with £19bn of post-election tax rises and another £19bn of public service cuts inked in.

That takes away from the “pre-election sweetener” of further National Insurance rate cuts, taking total net personal tax cuts this election year to £8bn, Resolution say.

They also point out that the winners from today’s decisions are middle earners, while the cash losers are Britain’s eight million taxpaying pensioners...

Torsten Bell, chief executive of the Resolution Foundation, said:

“The Chancellor has delivered a second dollop of pre-election tax cuts, borrowing more and taxing the likes of non doms, vapes and energy companies to do so.

“When combined with big previously announced tax rises, this leaves a complex pattern of winners and losers. Middle earners make up the bulk of the former, while low or high earners will still see their taxes rise.

“The biggest choice Jeremy Hunt made was to cut taxes for younger workers, while allowing taxes to rise for eight million pensioners. This is a staggering reversal of the approach taken by Conservative governments since 2010. It is undoubtedly good economics, even if the politics are a harder sell.

“The tax cuts announced today to sweeten the Government’s election pitch rely on the prospect of a sour £19 billion of post-election tax rises, and the fiscal fiction that another £19 billion of cuts to public services can be delivered in a spending review that the Treasury today confirmed will not take place until after polling day.

“For all that, the big picture has not changed at all with this Budget. Britain remains a country where taxes are heading up not down – rising by the equivalent of £3,900 per household – and where incomes are set to remain below their level at the last general election when voters return to the polls.”

The OBR says that by 2028-29 tax as a percentage of GDP will be about 4 percentage points higher than it was in 2019-20. It was 36.9% and it is going up to 40.3%. As this chart in the OBR report shows, the cuts to national insurance will only cut the tax-to-GDP ratio by about half as much as tax rises have put it up.

The report says:

The direct impact of major tax increases raises the tax take by 2.0 per cent of GDP. This includes the threshold freezes for income tax and NICs, which increases the tax take by 1.3 per cent of GDP, and the increase in the corporation tax rate from 19 to 25 per cent, which increases the tax take by 0.6 per cent of GDP.

The direct impact of major tax cuts reduces the tax take by 0.9 per cent of GDP. Personal tax cuts in the form of the reductions in (NICs) employee and self-employed main rates announced in November 2023 and in this budget reduce the tax take by 0.7 per cent of GDP. Corporate tax cuts in the form of the super-deduction announced in March 2021, the temporary full-expensing announced in March 2023, and the permanent full-expensing announced in the November 2023 reduce the tax take by a further 0.2 per cent of GDP.

The government is on track to break its fiscal rule, if it pushes on with its plan to raise defence spending, the OBR says.

The watchdog was asked about the UK’s fiscal headroom at their press conference in London today, given various tax and spending challenges.

The OBR estimates that increasing military spending to 2.5% of GDP, from 2%, will cost £15bn-£16bn. That’s roughly double the remaining (rather small) fiscal headroom of £8.9bn that remains, before debt is not falling as a share of GDP in 2028-29.

Continuing to freeze fuel duty (as happens every year since 2011), would cost around £4.5bn, or over half the remaining threshold (which is also subject to uncertainty, as small outcomes compared to the underlying forecasts would affect it).

There’s a third issue too – the financial markets’ expectations of interest rates in future have risen since the OBR’s forecasts were drawn up. Those movements would eat £3bn to £4bn out of the headroom.

Jeremy Hunt’s decision to use national insurance rates as the vehicle for cutting employment taxes will cut the tax bill for Scottish workers by up to £1,330, but only partly offset higher tax policies being pursued by ministers in Edinburgh.

The chancellor’s measure could have greater political impact in Scotland than in other parts of the UK because it is the only UK-wide tax on jobs that he controls following the devolution of income tax rates to Scotland in 2016.

It allows the Scottish Tories to present their party as the only one lowering taxes at the next general election, but the key question is whether Scottish tax payers will be impressed or indifferent.

The Chartered Institute for Taxation has calculated that every Scot earning between £15,000 and £28,867 will benefit overall – their total tax bill will fall. But the effects over £28,867 will be mixed: their overall tax bill will still fall by more than it would have before Hunt cut NI, but for many, the Scottish wages tax bill will still remain higher.

For instance: someone in Scotland earning £35,000 will be £795 better off due to the NI cut, but will stay pay £61 more overall than someone in the rest of the UK because of the higher Scottish income tax rates. Someone earning £50,000 will be £1,320 better off due to the NI cut, but still pay £1,542 more overall.

Only the wealthiest affected by Scotland’s new highest income tax rate of 48p levied on those earning £125,140 or more, will still pay more from 6 April, ranging from a modest £550 a year to £9,300 a year more for those on £1m a year.

Ratings agency Moody’s is not too impressed by today’s budget announcement.

Evan Wohlmann, Moody’s lead analyst for the UK sovereign, says Hunt’s plans will ‘perpetuate’ the UK’s fiscal challenges.

Wohlmann also says the implied spending cuts after the election are “unlikely to materialise”, saying:

“The UK chancellor’s announcement of pre-election tax cuts while maintaining restrained spending plans will perpetuate the UK’s fiscal challenges.

The government’s plans imply real spending cuts for unprotected departments which in Moody’s view are unlikely to materialise given long-term spending commitments on health and defence. Together with high interest costs, these pressures limit the UK’s flexibility to leverage fiscal policy to foster credit positive policymaking and create fiscal space to absorb shocks.

That rather echoes what the IMF warned in January:

Last October, Moody’s lifted its outlook on the UK credit rating to ‘stable’, thanks to the restoration of policy predictability.

And it seems unlikely to change that view soon.

Wohlmann says UK debt levels are on a par with the likes of France and Belgium:

That said, the government’s demonstrated commitment to set policy within its fiscal rules framework underpins the stable outlook on the UK’s Aa3 rating, with government debt projected to remain at around 100% of GDP in line with similarly rated peers such as France (Aa2 stable) and Belgium (Aa3 stable).”

The OBR says that 3.7 million people will be brought into paying tax as a result of the freeze in the value of the personal allowance by 2028-29. And 3.2 million people will end up paying the higher rate (2.7 million) or the top rate (600,000) for the same reason, it says.

This effect is known as fiscal drag, and it has been particularly pronounced this decade because Rishi Sunak, when he was chancellor, said he was freezing allowances and threshold for four years from April 2022. Later Jeremy Hunt said the freeze would extend for another two years.

Here is the chart in the OBR report showing the impact of these decisions.

The IFS also fear that the government’s plan to raise department spending by just 1% will require painful cuts to public services.

Paul Johnson says:

The Chancellor left his provisional post-election spending plans effectively unchanged, despite reports that he would cut them back to ‘fund’ tax cuts.

Those plans still look devilishly difficult to deliver. Sticking to them would require cuts to unprotected services (those not lucky enough to be covered by existing commitments and promises) of around 3.3% per year, under a plausible set of assumptions.

This compares to cuts of 6.1% per year to those areas between 2009–20 and 2014–15, and increases of 5.2% per year over this parliament.

Jeremy Hunt’s decision to cut national insurance rates by two percentage points for a second time has been “strongly supported” by Douglas Ross, the Scottish Tory leader, because it is a Conservative party cut which offsets higher income tax rates levied by Scottish National party ministers in Edinburgh.

The chancellor’s measure highlights a growing gulf in taxation policies between the two administrations.

The SNP and Green administration has used their devolved powers over income tax to slightly cut rates for those earning under £28,867 but increased them again for everyone earning above it, bringing in a new 45p “advanced” rate for salaries above £75,000 and raising the highest rate to 48p in the pound.

The Scottish Tories hope the national insurance cut will boost their chances of defending their seven Westminster seats at the general election.

Ross said:

A second national insurance cut in the space of four months is a huge boost to families and because national insurance is a reserved tax it can’t be stymied by the SNP.

Freezing duty on fuel and whisky is another boost for hard-pressed Scots – particularly in rural areas, where people rely on their cars and many of our distilleries are based. The VAT cut for small businesses is equally good news.

Paul Johnson, director of the Institute for Fiscal Studies, is in witty mood as he analyses the budget:

“We’ve learned to expect some degree of smoke and mirrors in the Budget. Today was no different, only on this occasion Mr Hunt decided to tax the smoke and to mirror the Labour party’s tax pledges on non-doms and North Sea oil.

Alongside a new tax on vaping and an increase in tobacco duty, this was enough to allow Mr Hunt to announce another, well-trailed cut to National Insurance.

Johnson welcomed the 2p cut in national insurance, which – when combined with the 2p cut from November’s Autumn Statement – means those on just above average earnings will gain around £1,000 a year.

Changing the non-dom system, and reforming the child benefit tax credit, are also welcome, he says.

But overall, Johnson says “this remains a parliament of record tax rises.”

He explains:

Some bright spots, then, though the big picture on tax remains much the same. Come the election, tax revenues will be 3.9% of national income, or around £100 billion, higher than at the time of the last election. This remains a parliament of record tax rises.

Governments don’t like performing U-turns, but for Jeremy Hunt there were two bonuses from lifting two of Labour’s tax plans; it funded his tax cuts, and might force Labour to drop some of its more attractive spending plans.

To emphasis this point, CCHQ has just sent a briefing note to journalists saying Labour must now explain whether it is going to abandon these policies, or find another way of funding them.

The Tories say these are the policies Labour was planning to fund with £1.6bn from the abolition of non-dom status.

• More NHS appointments (£1.1bn per year)

• Breakfast clubs in schools (£186m per year)

• More NHS equipment (£171m per year)

• More NHS dental appointments (£111m per year)

And the Tories says these are the policies that Labour plans to fund with £4.9bn from the extension of the windfall tax.

• Home insulation programme (£1.32bn a year)

• Green-related jobs (£500m per year)

• Setting up GB Energy (£1.66bn a year)

• Creating a sovereign wealth fund (£1.46bn a year

Labour is holding a briefing this afternoon, so we should get some sort of response then.

The Tories expect to raise more from the abolition of non-dom status than Labour said it expected to raise. But Labour’s version of the extension of the windfall tax is forecast to raise more than the Jeremy Hunt version, which he says will raise £1.5bn by 2029, and so not all the Labour revenue has been spent.

Labour claims that, despite the cut in national insurance in the budget, households are still £870 worse off on average as a result of the tax measures taken by the Tories. Labour has calculated this figure on the basis that the cuts worth £21.4bn (by 2028-29) need to seen alongside the the impact of the extra £41.1bn raised by the freeze in thresholds and allowances for tax and national insurace.

Those two figures from from this chart in the OBR’s report.

The government’s planned tax on vaping liquids could double the cost of the strongest e-liquids from 2026.

The Office for Budget Responsibility say they expect it will raise £500m per year by the 2028-29 financial year, although there are “several uncertainties in the costing”.

The OBR explains:

The new tax applies a specified fixed amount of duty to a defined quantity of e-liquid and will be charged to UK manufacturers or importers. There are three rates that are differentiated according to the amount of nicotine content in the e-liquid.

It means that a vaping product that falls within the highest nicotine category and currently retailing at £3.00 (for 10 millilitres of e-liquid) will be subject to a £3.00 rate of duty (in 2026-27), raising its post-tax price to £6.60 (since we assume all of the duty will be passed through to consumers).

The budget documents released by the Treasury have more details:

The government will introduce a new duty on vaping products from 1 October 2026, with registrations for the duty opening from 1 April 2026.

The rates will be £1.00 per 10ml for nicotine free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg or more per ml. A 12-week consultation will be published on the policy design and technical details alongside the Spring Budget.

Normally ministers are meant to promote the budget on social media. But Andrew Bowie, an energy minister, has posted a message on X saying the extension of the windfall tax on energy companies (EPL – energy profits levy) is “deeply disappointing”.

I agree with Douglas.
There is much in this budget to welcome. Much that is good for Scotland and our United Kingdom. And only the Conservatives have a plan.
However, the extension of the EPL is deeply disappointing. I will be working with him to resolve this.

Bowie is MP for West Aberdeenshire and Kincardine. The Douglas he mentions in his tweet is Douglas Ross, the Scottish Tory leader. All Scottish Tories feel strongly about this issue (see 2.20pm) and minister may be assuming that, as a Scottish MP, he has some licence to speak out about this not available to English ministers.

With the 2p cut in national insurance being widely trailed, it was not clear this morning whether or not Jeremy Hunt had a surprise “rabbit” to pull out of the hat at the end of his speech. In so far as there was a “rabbit”, it was “the abolition of national insurance”.

This is what Hunt said about employee national insurance, and about the fact that it in effect duplicates income tax.

This is the second fiscal event where we have reduced employee and self-employed national insurance.

We have cut it by one third in six months without increasing borrowing and without cutting spending on public services. That means the average earner in the UK now has the lowest effective personal tax rate since 1975 – and one that is lower than in America, France, Germany or any G7 country.”

Because Conservatives believe that making work pay is of the most fundamental importance, because we believe that the double taxation of work is unfair, our long-term ambition is to end this unfairness.

The Telegraph’s website currently has “Hunt signals the end of national insurance” as its lead headline on its budget coverage.

But the end of national insurance seems unlikely. According to the budget red book, the Treasury raises £168bn from national insurance contributions. This figure includes the revenue from employer national insurance contributions, but that is still a huge amount of money that would have be funded by cuts or “productivity savings” in the public sector.

Hunt’s plan for a British ISA is getting a rather lukewarm reaction from the City.

As covered at 1.02pm, it will give savers an extra £5,000 tax free allowance, to be spent on UK assetts. That’s on top of the £20,000 you’re allowed to put into your ISA each year.

Claire Trott, divisional director of retirement and holistic planning at wealth manager St. James’s Place, fears that a British ISA will create more complexity.

Trott says:

“We welcome all opportunities for tax free investment with the ‘British ISA’ increasing the overall ISA allowance. However, it comes with restrictions on where you can invest which may be a turn off for some.

It also adds to the complexity of something that used to be simple, we now have multiple ISAs with various restrictions, which will probably mean more need for financial advice.”

Nimesh Shah, CEO of accountancy firm Blick Rothenberg, also has questions:

Introduction of the British ISA could give someone up to £26k in ISA savings per annum if they are also eligible for the Lifetime ISA.

I question whether we need another form of ISA - wouldn’t it have been easier to increase the £20k ISA allowance which has remained stuck at this level since 2017/18.

Bloomberg’s Merryn Somerset Webb points out that few people manage to put aside £20,000 each year (in this economy?!), so it’s a symbolic gesture really:

And Victoria Scholar, head of investment at interactive investor, points out that the UK stock market has lagged behind rivals

UK stock markets have underperformed their rivals in the US, Europe and elsewhere since Brexit. International investors have shunned the FTSE 100 amid concerns about increased perceived risk and weaker prospects for the UK economy.

The Treasury’s goal with this announcement is to try and drum up support for UK markets which are in the doldrums. Along with Brexit, the so-called Jurassic Park FTSE 100 has suffered from a heavy lack of exciting new tech success stories, in stark contrast to US markets where tech giants from Silicon Valley have largely been responsible for the major outperformance stateside.

The Office for Budget Responsibility have released a video to explain their new forecasts.

Key points include:

• Inflation has fallen faster than expected, and should drop below the UK’s 2% target later this year.

• Markets expect interest rates to fall faster.

• The medium-term outlook for growth is little changed, compared to November, partly due to higher economic inactivity.

• The fiscal forecast is also little changed – lower inflation means that debt servicing costs are lower than expected, but also means lower growth from tax revenues

• This has given the chancellor a net fiscal boost of £10bn per year over the next two years, but borrowing is largely unchanged by the end of the forecast period.

OBR chief Richard Hughes says:

In his spring budget, the chancellor spends all of this windfall on another 2p cut to national insurance, and another freeze in fuel duty, whose cost is partly recouped by new taxes on vapes, carbon imports and non-doms.

There are no significant changes to the planned level of spending on public services, Hughes adds:

Jeremy Hunt faces a rebellion from Scottish Tory MPs over his decision to extend the windfall tax on energy profits until 2029, with one energy minister, Andrew Bowie, reportedly considering resignation.

The chancellor has been under intense pressure to end the levy from vulnerable Scottish Tories, including Douglas Ross, the party’s Scottish leader and the MP for Moray, a north-east seat close to Aberdeen, the UK’s oil and gas industry capital.

Ross confirmed he will not vote for the measure, even though Hunt did listen to his pleas for a second cut to national insurance rates – a move which benefits Scottish employees who pay higher income tax rates levied by ministers Holyrood. (See 12.01pm.)

The Tories are defending three Westminster seats in north east Scotland at the next general election, including Bowie’s seat in West Aberdeenshire and Kincardine, which he holds with a wafer thin 843-vote majority over the Scottish National party.

With Scottish opinion polls putting them as low as 15%, the Scottish Tories believe championing North Sea oil and gas jobs is their strongest suit – a position undermined by Hunt’s decision to extend the levy.

To their embarrassment, the Scottish Tories also have an opposition day debate at Holyrood later on Wednesday on the sector. It was intended to highlight Rishi Sunak’s boast at the Scottish Tories’ conference in Aberdeen last Friday “we have consistently been the only major party that has backed the North Sea oil and gas industry.”

The UK tax burden is heading towards its highest level since Clement Attlee was prime minister, when Britain was starting to pay down its war debts.

The Office for Budget Responsibility reports that tax as a share of GDP will fall slightly this year (due to the cut in national insurance in January).

But it then rises gradually in every year of its forecast, rising to 37.1% of GDP in 2028-29.

That, the OBR says, which would be the highest level since 1948, and four percentage points above the pre-pandemic level of 33.1% of GDP in 2019-20.

This rather clashes with the Treasury’s claim that the chancellor is “delivering lower taxes”.

But it’s a lower figure than last November, when the OBR forecast the tax take would hit a post-war high of 37.7% of GDP by 2028-29.

Starmer confirms that Labour supports the cut to national insurance.

But he points out that Rishi Sunak, as chancellor, promised the basic rate of income tax would be cut in 2024.

And, on the NHS, he says Jeremy Hunt as health secretary promised a paperless NHS by 2018.

The division is over. The government won by 288 votes to 38.

Keir Starmer is now speaking.

He starts by referring to the budget as “the last, desperate act of a party that has failed”.

As Hunt sat down, the Office for Budget Responsibility released its latest assessment of the UK economy – its Economic and Fiscal Outlook.

The OBR starts by saying that the UK’s near-term growth prospects have improved, thanks to inflation falling faster than it expected in November. That has led markets to expect a sharper decline in interest rates.

The OBR says:

This strengthens near-term growth prospects and should enable a faster recovery in living standards from last financial year’s record decline.

But the medium-term economic outlook “remains challenging”, the fiscal watchdog warns.

The OBR has lifted its estimate for the current UK population, following the 2021 Census and net migration since then. But, it also sees rising economic inactivity (more people are unable to work due too ill health).

And that means the economy, as a share of the population, is expected to be slightly smaller than expected in November. That means even worse living standards:

The OBR says:

One of the biggest changes to our economy forecast is an increase in the size and growth of the UK population. But higher and rising levels of inactivity offset its impact on the overall size of the workforce, leaving our forecast for the level of GDP in five years virtually unchanged from the autumn, and the level of GDP per person slightly lower.

Eleanor Laing, the deputy speaker, is now calling a vote on certain budget measures (taxes that come into force tonight) that have to go through as soon as the budget speech is over. Normally this is down by acclamation (government MPs shouting aye), so that the Commons can get on with listening to the opposition’s response. But some MPs have forced a division (by shouting no), and there is a vote.

It seems to have been the SNP who were forcing a division.

After the speaker ignored Commons rules in a way that led to MPs not getting a vote on their Gaza motion last month, they have been talking about using more disruptive tactics at Westminster.

The division will take about 15 minutes, and then Keir Starmer will get a chance to respond to the budget.

Hunt is now talking about national insurance.

From April employee national insurance will be cut from 10% to 8%, and self-employed NICS from 8% to 6%.

He says, combined with the changes announced in the autumn statement, 27 million people will gain £900. And 2 million self-employed people will gain £650.

He says the OBR says this will put 200,000 more people in work. And it will increase GDP by 0.4%, he says.

He says this will bring personal taxes to their lowest level since 1975.

And he says the Conservatives will continue to keep cutting national insurance.

(There is a big difference between personal taxes and the overall tax burden. In 1975 VAT had only just been introduced, and it was levied at 10%. It is double that rate now.)

Hunt says he will change the way child benefit is paid.

At the moment the high income threshold applies to individuals, not households. That will change, he says.

And he says he is also increasing the higher income threshold. It will go up from £50,000 to £60,000.

He claims that almost half a million families will gain by almost £1,300.

Hunt is now talking about abolishing non-dom status.

He claims Labour was only interested in this because it was a plan Nigel Lawson originally favoured.

He confirms that he will abolish non-dom status. This provokes lots of jeering. Hunt says he aims to please all sides of the house. Eleanor Laing, the deputy speaker, urges MPs to “shout more quietly”.

Hunt says there will be a non-dom-style tax status open to people coming to the UK for four years. But after that they will have to pay UK taxes.

Hunt says this will raise £2.7bn by end of forecast period. Unlike Labour, the Tories will use this to cut taxes, he says.

Hunt says energy companies. Their profits are extending because of the Ukraine war, so Hunt says he will extend the sunset clause in the windfall tax for an additional year, to 2029, raising £1.5bn.

Hunt says he has been lobbied by MPs representing coastal towns. The tax system for holiday lettings is not working, he says. So he will abolish the furnished holiday lettings relief, he says.

Hunt confirms a new tax on vapes.

And there will be a one-off increase in tobacco duties.

There will be an increase in the tax on non-economy flights, he says.

Hunt says the NHS needs modernisation. Modernising its IT system will cost £3.4bn, he says. But he says this will unlock productivity savings worth 10 times as much. So he will fund it in full, he says.

This will double the NHS investment in digital transformation, he says.

And it means NHS funding has gone up by 13% in real terms since the start of this parliament, he says.

He quotes Amanda Pritchard, chief executive of NHS England, saying this will enable the NHS to deliver productivity growth of 1.9% over the next parliament.

Hunt is now turning to public services.

There a particularly loud bout of heckling. Eleanor Laing, the deputy speaker, complains that was out of order.

Hunt says violent crime is down and he says the armed forces are the best in Europe. Defence spending will go up to 2.5% of GDP as soon as economic circumstances allow.

He says the number of doctors and nurses in the NHS has risen.

But, although spending has risen, public sector productivity remains below pre-pandemic level. That show money is not the solution, he says. He says we need a more productive state, not a bigger state.

He says the government will maintain the plan to increase public spending by 1% in real terms set out in the autumn statement – but the government will “spend it better”, he says.

There had been reports he would cut this to 0.75%.

Hunt claims the UK is on track to become the world’s next Silicon Valley.

He says he is wants to change rules for pension funds. They should have to disclose their level of UK equity investment, he says.

And he wants to encourage the development of a new generation of retail investors, he says.

The government will consider ways of making it easier for people to take their pension pots with them when they change jobs.

And the government will introduce a new “British Isa”, allowing investments of £5,000 in British firms. This Isa allowance will be on top of the existing one

UPDATED: The latest growth figures are slightly more positive than expected by the OBR in the autumn, for this year and the next two.

There’s quite a pick-up in growth next year.

But it’s still a weak growth outlook by long-term standards.

Hunt says the OBR are forecasting:

• 2024: 0.8% growth, up from 0.7% growth expected in November.

• 2025: 1.9% growth, up from 1.4% growth expected in November.

• 2026: 2.2% growth, up from 2% growth expected in November.

• 2026: 2% growth, matching the 2% growth expected in November

• 2027: 1.8% growth, down from 2% growth expected in November.

• 2028: 1.7% growth, matching the 1.7% growth expected in November.

* – We’ve updated this table, because Hunt originally said growth in 2026 would be “two point two percent”, but it appears he meant “two percent”, with no percentage point.

Hunt is now talking about growth.

He says the OBR expects growth to be 0.8% this year, and 1.9% next year – higher than previously expected.

Hunt is now reading out the debt figures.

He says it is on track to fall as a percentage of GDP, meeting the fiscal rules.

And the government is also meeting its rule about having borrowing below 3% of GDP early.

If Labour decarbonise the electricity grid by 2030, they will not meet these rules, he says.

He says Labour claim it will decarbonise in accordance with its fiscal rules. That can only mean tax rises, he says.

Hunt says he will maintain the supposedly “temporary” 5p cut in fuel duty. And he will extend the freeze in fuel duty.

Hunt says he will extend the freeze in alcohol duty until February 2025.

The government is backing the “great British pub”, he says.

Hunt says households have had £3,400 in economic support.

As a result, real household income is on course to rise, he says.

He says he has plans to help those facing debt.

For people taking advance loans, he will increase the repayment programme from 12 months to 24 months, he says.

For some people a debt relief order will help. But they cost £90, he says. He will abolish that charge.

Hunt says Labour’s plans would push up taxes.

He turns to the forecasts.

First, inflation.

It was 11% when he and Rishi Sunak took office.

The latest figures show it at 4%, and the OBR forecasts show it falling below the 2% target in just a few months time – a year earlier than forecast in the autumn statement.

Hunt says he can now offer permanent cuts in taxation. He is doing this to deliver help in challenging times.

But it is also because “lower taxes mean higher growth”.

He says higher growth cannot come from more immigration.

Jeremy Hunt is deliving the budget statement.

He starts by saying MPs mourn the loss of life in Israel and Gaza. He starts recalling the Muslims who died in the two world wars. He will allocated £1m for a memorial for them.

He says this is partly in response to a campaign by Sajid Javid.

Rishi Sunak starts with the normal spiel about his engagements including meetings with colleagues. But he will be listening to the budget, he says.

Kevin Schofield from HuffPost UK has a quote from Douglas Ross saying he will not vote for an extension of the windfall tax. (See 11.54am.) In his story Schofield quotes Ross as saying:

The Scottish Conservatives have a clear position. We will always stand up for the livelihoods of the almost 100,000 Scottish workers who depend on our oil and gas industry.

Unlike Labour and the SNP who would stop any new developments, we will not support any action that would put those jobs at risk.

As such, while I support many of the Budget measures, as Scottish Conservative Leader I will not vote for this extension when it is brought before Parliament.

My Scottish Conservative colleagues and I will continue to have robust discussions with the Chancellor on this matter.

Before the budget we’ve got PMQs. Here is the list of MPs down to ask a question.

This is just the list of backbenchers who won the right to ask a question in the ballot, not the full list of MPs who will speak. That’s because the speaker will also choose people not on the list, to ensure questions come in the government/opposition/government/opposition order.

On Monday George Galloway said he would try to get a question in today. Given that Rishi Sunak described Galloway’s win in the Rochdale byelection as “beyond alarming”, he may feel entitled to a right of reply.

Another Labour tax proposal which Jeremy Hunt has lifted for the budget is the plan to abolish non-dom status. The Financial Times has some detail about how Hunt will do this. It says:

The chancellor is looking to scrap the two-century old concept of domicile, and change when individuals receive the tax break, the Financial Times has been told. The Treasury declined to comment.

Non-domiciled people are UK residents deemed to have their permanent home or “domicile” outside the country. They can currently earn money from abroad without paying UK tax on this for up to 15 years, provided they do not bring any income or capital gains into the country.

Hunt will modernise the system, replacing the concept of domicile in tax with a statutory residence test that would define who benefits from a new system of tax privileges.

He will also encourage wealthy people to bring their foreign-held assets and money to the UK. Tax experts have long complained the current regime is complicated and disincentivises non-doms from bringing wealth into the country, as they are taxed when they do so.

Darren Jones, the shadow chief secretary to the Treasury, has described this as a “humiliating U-turn”.

There is a long history of governing parties cutting taxes in budgets just before general elections, and new governments (often from the same party) whacking them up again in the first budget after polling day. Jeremy Hunt is obviously in election bribe mode today, but this chart, from the Institute for Fiscal Studies thinktank, which covers fiscal events up to last year’s autumn statement, suggests that what he is doing is not unprecedented. Denis Healey did something similar before the 1979 election, which Labour lost, and Geoffrey Howe before 1983, which the Tories won.

Retaining the fuel duty cut in the budget is a regressive policy that benefits the wealthiest in society, who will save £60 a year, while those who earn the least will save just £22, according to analysis. Helena Horton has the story here.

Good morning. Looking at some of the newspaper front pages this morning, you might assume that it’s all done, and that today’s budget is a “good news” event for the Conservative party (which is in such a dire plight it may have forgotten what good news is).

From what we know, it seems as if Jeremy Hunt is going to test the “election bribe” approach to politics to destruction with a giveaway budget that he hopes will revive his party’s fortunes by anaesthetising memory of the very large tax increases the government has already imposed since 2019, and setting a campaign trap for Labour.

But there are three big questions yet to be answered.

First, is a 2p cut in national insurance the main story of the budget, or is there something much bigger to come? The 2p cut is now established as fact, but it is not entirely clear whether that is because the Treasury wanted the news out before the budget, or whether it was just forced into confirming what diligent reporting had uncovered. Budgets normally focus on tax changes taking effect in the budget year. But Rishi Sunak is also on record as wanting to cut income tax eventually to 16p in the pound, and sometimes chancellors announce tax cuts they plan to make a year or more in advance. Will we get some of that today?

Second, how will Labour react? Hunt will probably fund his tax cut by lifting two of the four tax increases proposed by Labour (which the Tories used to oppose) and by cutting plans for public spending after the election. Many in the Labour party would love to see Starmer promise to reverse any such cuts when he responds to the budget statement. But Starmer wants to fight the general election on terms set by Labour, not Hunt, and so he is unlikely to leap into such an obvious elephant trap. We might not get the full, considered Labour response today, but we will find out in what direction they are heading.

The final question is, if this is the most nakedly partisan budget of recent times, will it work? We certainly won’t know for sure today, but by 6pm we might be better placed to have a guess.

Here is our overnight story on the budget by Kiran Stacey, Pippa Crerar and Phillip Inman.

And here is Phillip’s guide to what to expect from the budget.

My colleague Graeme Wearden will be joining me later from the business blog, and we will be covering the budget in full, and then focusing on reaction and analysis.

Here is the agenda for the day.

8.30am: Rishi Sunak chairs cabinet, where Jeremy Hunt will brief ministers on what’s in the budget.

12pm: Rishi Sunak faces Keir Starmer at PMQs.

12.30pm: Hunt delivers his budget statement in the Commons. The speech will last about an hour, and when it finishes the budget red book, the Office for Budget Responsibility’s analysis, and all the other budget documentation will be published on the Treasury and OBR websites.

2.30pm: Richard Hughes, chair of the OBR, holds a press conference.

5pm: Hunt addresses a meeting of the backbench Conservative 1922 Committee.

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