Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind hon. Members that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.

I report today on an economy that has continued to confound the commentators with robust growth, a labour market delivering record employment and a deficit down by over two thirds. As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future. It provides a strong and stable platform for those negotiations; it extends opportunity to all our young people; it delivers further investment in our public services; and it continues the task of getting Britain back to living within its means. We are building the foundations of a stronger, fairer, more global Britain.

As the House knows, this will be the last spring Budget. The Treasury has helpfully reminded me that I am not the first Chancellor to announce the “last spring Budget”. Twenty-four years ago Norman Lamont also presented what was billed then as “the last spring Budget”. He reported on an economy that was growing faster than any other in the G7, and he committed to continued restraint in public spending. The then Prime Minister described it as the

“right Budget, at the right time, from the right Chancellor”.

What the Treasury failed to remind me was that 10 weeks later the Chancellor was sacked. So, wish me luck today!

Last year, the British economy grew faster than the United States, faster than Japan and faster than France. Indeed, among the major advanced economies Britain’s economic growth in 2016 was second only to Germany. Employment is at a record high; unemployment is at an 11-year low, with over 2.7 million more people enjoying the security and dignity of work than in 2010—a very far cry from the 3 million unemployed predicted by the Labour party. I am pleased to report, on International Women’s Day, that there is now a higher proportion of women in the workforce than ever before. I am even more pleased to report that, as my right hon. Friend the Prime Minister has remarked, since 23 February there is a higher proportion of women in work in the parliamentary Conservative party.

But, Mr Deputy Speaker, there is no room for complacency, and you will not find any on these Benches. As we prepare for our future outside the EU, we cannot rest on our past achievements. We must focus relentlessly on keeping Britain at the cutting edge of the global economy. The deficit is down, but debt is still too high. Employment is up, but productivity remains stubbornly low. Too many of our young people are leaving formal education without the skills they need for today’s labour market, and too many families are still feeling the squeeze, almost a decade after the crash. So our job is not done, and our task today is to take the next steps in preparing Britain for a global future—to equip our young people with the skills they need, to support our public services and to help ordinary working families as we build an economy that works for everyone.

I thank the Office for Budget Responsibility under Robert Chote for its report received today. Let me also take this opportunity to thank my right hon. Friend the Chief Secretary and my ministerial team, who really are the unsung heroes of the Budget, doing much of the heavy lifting over the last few weeks, and of course my excellent Parliamentary Private Secretary, my hon. Friend the Member for Salisbury (John Glen).

I turn now, Mr Deputy Speaker, to the OBR forecasts. This is the spreadsheet bit, but bear with me because I have a reputation to defend. The OBR forecasts the level of gross domestic product in 2021 to be broadly the same as at autumn statement. However, the path by which we get there has changed. Reflecting the recent strength in the economy, the OBR has upgraded its forecast for growth next year from 1.4% to 2%, and I do not see too many people on the Opposition Front Bench indicating flatlining. In 2018-19, growth is forecast to slow to 1.6%, before picking up to 1.7%, then 1.9% and returning to 2% in 2021.

Resilience in the economy is reflected in a strong labour market. Since 2010, the employment rate has risen from 70.2% to 74.6%, with positive news for all parts of the United Kingdom. Unemployment has fallen fastest in Yorkshire and the Humber, and Wales; wages have grown fastest in Northern Ireland; and productivity has grown fastest in Scotland and in the north-east. This positive trend is set to continue over the forecast period. The number of people in employment is set to grow in every year, with a further two thirds of a million people in work by 2021. The OBR forecasts inflation at 2.4% this year, then 2.3% next year and 2% in 2019. Most importantly, despite higher than target inflation, real wages continue to rise in every year of the forecast.

While the economic forecasts are broadly unchanged since the autumn, the OBR has substantially revised down its short-term forecast of public sector net borrowing. The OBR attributes this change to a number of one-off factors that it does not expect to lead to a structural improvement over the forecast period. Combining these factors with the higher short-term forecast for growth and taking into account the measures that I shall announce today, the OBR now forecasts borrowing in 2016-17 to be £16.4 billion lower than forecast in the autumn at £51.7 billion, then £58.3 billion in 2017-18, £40.8 billion in 2018-19, £21.4 billion, £20.6 billion and, finally, £16.8 billion in 2021-22—all lower than forecast at autumn statement.

Overall, public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year. For those who care about such things, it means we are forecast to meet our 3% EU stability and growth pact target this year for the first time in almost a decade, but I will not hold my breath for my congratulatory letter from Jean-Claude Juncker. Borrowing is then forecast to be 2.9% in 2017-18, and then to fall over the remainder of the Parliament to 1.9% in 2018-19, then 1% and 0.9%, before reaching 0.7% of GDP in 2021-22, its lowest level in two decades.

The OBR expects cyclically adjusted public sector net borrowing to be 0.9% in 2020-21, giving us £26 billion of headroom against the headline 2% target in our new fiscal rules, maintaining our fiscal resilience over the period. The OBR’s forecast of lower near-term borrowing, coupled with recent strength in the economy, means lower debt across the period. The OBR now forecasts that debt will rise to 86.6% this year, before peaking at 88.8% next year, 1.4 percentage points lower than forecast in the autumn. It then falls in 2018-19—for the first time since 2001-02—to 88.5%, and continues to decline to 86.9% in 2019-20, 83% in 2020-21 and then reaches 79.8% in 2021-22.

At the autumn statement, I set out our plan to return the public finances to balance in the next Parliament—a plan that is now underpinned by our new fiscal rules. That plan strikes the right balance between reducing our deficit, preserving fiscal flexibility and investing in Britain’s future. Some have argued that lower borrowing this year makes a case for more unfunded spending in the future. I disagree. Britain has a debt of nearly £1.7 trillion—almost £62,000 for every household in the country. Each year, we are spending £50 billion on debt interest—more than we spend on defence and policing combined. Borrowing over the forecast period is still set to be £100 billion higher than predicted at Budget 2016.

So the only responsible course of action is to continue with our plan, undeterred by any short-term fluctuations and undistracted—[Interruption.]—by the reckless policies advanced by the Opposition. We on this side of the House will not saddle our children with ever-increasing debts. [Interruption.] Mr Deputy Speaker, I think Opposition Members may need to have a word with their own Front Benchers, who propose borrowing another half a trillion pounds with which to saddle our children and burden their futures. So the Budget that I set out today will again fund all additional spending decisions over the forecast period.

A strong economy needs a fair, stable and competitive tax system, creating the growth that will underpin our future prosperity. My ambition is for the UK to be the best place in the world to start and grow a business. Under the last Labour Government, corporation tax was 28%. By the way, they don’t call it the “last” Labour Government for nothing. From April this year, corporation tax will fall to 19%, the lowest rate in the G20. In 2020, it will fall again to 17%, sending the clearest possible signal that Britain is open for business.

I am listening to the voice of business.

Resign!

The one place where I will not hear the voice of business is on the Opposition Benches.

I committed at the autumn statement to review, with business, our R and D tax credit regime. We have done so and concluded that it is globally competitive. But to make the UK even more attractive for R and D, we have accepted industry calls for a reduction in administrative burdens around the scheme and will shortly bring forward measures to deliver that.

In a digital age, it is right that we develop a digital tax system, but in response to concerns about the timetable expressed by business organisations and by several of my right hon. Friends, including the Chairman of the Treasury Committee, I have decided that for businesses with turnover below the VAT registration threshold I will delay by one year the introduction of quarterly reporting, at a cost to the Exchequer of £280 million.

I have heard, too, the calls by North sea oil and gas producers and the Scottish Government to provide further support for the transfer of late-life assets. As UK oil and gas production declines, it is essential that we maximise the exploitation of remaining reserves, so we will publish a formal discussion paper on the options in due course.

There is one further area in which I can announce action to back British businesses. My right hon. Friend the Communities and Local Government Secretary and I have listened to the concerns raised by colleagues in this House and by businesses about the effects of the 2017 business rates revaluation. Business rates raise £25 billion per year, all of which, by 2020, will be going to fund local government, so we cannot abolish them, as some have suggested; but it is certainly true in the medium term that we have to find a better way of taxing the digital part of the economy—the part that does not use bricks and mortar. In the meantime, there is scope to reform the revaluation process, making it smoother and more frequent to avoid the dramatic increases that the present system can deliver. We will set out our preferred approach in due course and will consult on it before the next revaluation is due.

The revaluation itself is by law fiscally neutral. Ahead of this revaluation, the Government committed to a package of cuts to business rates now worth nearly £9 billion, permanently doubling the rate of small business rate relief to 100%, and raising the thresholds so that 600,000 small businesses are taken out of paying rates altogether. The revaluation has undoubtedly raised some hard cases, especially for those businesses coming out of small business rates relief, so today, as I promised many of my right hon. Friends, I address those concerns with three measures which apply to the national business rates system for England. First, any business coming out of small business rate relief will benefit from an additional cap. No business losing small business rate relief will see their bill increase next year by more than £50 a month, and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher.

Secondly, recognising the valuable role that local pubs play in our communities, I will provide a £1,000 discount on business rates bills in 2017 for all pubs with a rateable value of less than £100,000—that is 90% of all pubs in England. Thirdly, on top of these two measures, I will provide local authorities with a £300 million fund to deliver discretionary relief to target individual hard cases in their local areas. This fund will be allocated to local authorities by formula, and my right hon. Friend the Communities and Local Government Secretary will set out details in due course. Taken together, this is a further £435 million cut in business rates, targeted at those small businesses facing the biggest increases, protecting our pubs, and giving local authorities the resource to respond flexibly to local circumstances.

Just as a strong economy requires a tax system that is competitive, a strong society requires one that is fair; and because I have committed to funding my spending decisions in this Budget rather than borrowing more, I make no apology for raising additional revenues and for doing so in ways which enhance the fairness of the system. First and foremost, that means collecting the taxes that are due. Since 2010, we have secured £140 billion in additional tax revenue by taking robust action to tackle avoidance, evasion, and non-compliance.

These actions have helped the UK achieve one of the lowest tax gaps in the world, but there is more that we can do. In this Budget, we set out further actions to stop businesses converting capital losses into trading losses; to tackle abuse of foreign pension schemes; and to introduce UK VAT on roaming telecoms outside the EU, in line with international standard practice. From July, we will introduce a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by Her Majesty’s Revenue and Customs. Taken together, these measures will raise £820 million over the forecast period.

As well as collecting taxes that are due, a fair system ensures that those with the broadest shoulders bear the heaviest burden. As a result of the changes we have made since 2010, the top 1% of income tax payers now pay 27% of all income tax, a higher proportion than in any year under the last Labour Government. But a fair system will also ensure fairness between individuals, so that people doing similar work for similar wages and enjoying similar state benefits pay similar levels of tax. As our economy responds to the challenges of globalisation, shifts in demographics, and the emergence of new technologies, we have seen a dramatic increase in the number of people working as self-employed or through their own companies. Indeed, many of our most highly paid professionals work through limited liability partnerships and are treated as self-employed. There are many good reasons for choosing to be self-employed or for working through a company—indeed, I have done both in my time—and I will always encourage and support the entrepreneurs and the innovators who are the lifeblood of our economy.

People should have choices about how they work, but those choices should not be driven primarily by differences in tax treatment. My right hon. Friend the Prime Minister has asked Matthew Taylor, chief executive of the RSA—the Royal Society for the encouragement of Arts, Manufactures and Commerce—to consider the wider implications of different employment practices. I look forward to his final report in the summer, and am grateful to him for sharing his preliminary thoughts. He is clear that differences in tax treatment are a key driver behind the trends we are observing—a conclusion shared by the Institute for Fiscal Studies and the Resolution Foundation.

An employee earning £32,000 will incur, between him and his employer, £6,170 of national insurance contributions. A self-employed person earning the equivalent amount will pay just £2,300—significantly less than half as much. Historically, the differences in NICs between those in employment and the self-employed reflected differences in state pension entitlement and contributory welfare benefits, but with the introduction of the new state pension last year, these differences have been very substantially reduced. Self-employed workers now build up the same entitlement to the state pension as employees—a big pension boost to the self-employed.

The most significant remaining area of difference is in relation to parental benefits, and I can announce today that we will consult in the summer on options to address the disparities in this area, as the Federation of Small Businesses and others have proposed. The difference in national insurance contributions is no longer justified by the difference in benefit entitlements. Such dramatically different treatment of two people earning essentially the same undermines the fairness of the tax system. Employed and self-employed alike use our public services in the same way, but they are not paying for them in the same way. The lower national insurance paid by the self-employed is forecast to cost our public finances over £5 billion this year alone. This is not fair to the 85% of workers who are employees.

The abolition of class 2 NICs for self-employed people announced by my right hon. Friend the Member for Tatton (Mr Osborne) in 2016 and due to take effect in 2018 would further increase the gap between employment and self-employment. To be able to support our public services in this Budget, and to improve the fairness of the tax system, I will act to reduce the gap to better reflect the current differences in state benefits. I have considered the possibility of simply reversing the decision to abolish class 2 contributions, but the class 2 NIC is regressive and outdated—it is absolutely right that it should go—so, instead, from April 2018, when the class 2 NIC is abolished, the main rate of class 4 NICs for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019.

The combination of the abolition of class 2 and the class 4 increases I have announced today raises a net £145 million a year for our public services by 2021-22. That is an average of around 60p a week per self-employed person in this country. Since class 2 contributions are payable at a flat rate while class 4 is chargeable as a proportion of profits, all self-employed people earning less than £16,250 will still see a reduction in their total NICs bill. This change reduces the unfairness in the NICs system and reflects more accurately the current differences in benefits available from the state.

Alongside the gap between employees and the self-employed, there is a parallel unfairness in the treatment of those working through their own companies. Britain has the most competitive corporate tax regime in the G7, and we are determined to make Britain the most attractive place to start and grow a business, but to do that, we must ensure that our corporate tax regime does not encourage people across the economy to form companies simply to reduce tax liabilities, pushing the burden of financing our public services on to others.

HMRC estimates that existing incorporations cost the public finances over £6 billion a year, and the OBR forecasts that at the current rate of increase, an additional annual cost to the Exchequer will occur from those choosing to incorporate of £3.5 billion a year by 2021-22. The gap in total tax and NICs between an employed worker and one who has set up his own company will normally be greater even than the gap with the self-employed, and there are several perfectly legal ways in which that gap can be made bigger still. This is not fair, and it is not affordable. Fairness demands that this discrepancy in treatment be addressed, just as I have addressed the discrepancy with the self-employed.

The dividend allowance has increased the tax advantage of incorporation. It allows each director/shareholder to take £5,000 of dividends out of their company tax-free, over and above the personal allowance. It is also an extremely generous tax break for investors with substantial share portfolios. I have decided to address the unfairness around director/shareholders’ tax advantage, and at the same time raise some much-needed revenue to fund the measures I shall announce today, by reducing the tax-free dividend allowance from £5,000 to £2,000 with effect from April 2018. About half the people affected by this measure are director/shareholders of private companies. The rest are investors in shares with holdings typically worth over £50,000 outside individual savings accounts. Of course, everyone will benefit from the generous £4,760 increase in the annual ISA allowance to £20,000, and the further increase in the personal allowance to £11,500 from April.

I now turn to duties and levies. Unusually for a Chancellor, I am delighted to announce a reduction in the expected yield of a tax—the soft drinks levy. I can confirm today the final rates of 18p and 24p per litre for the main and higher bands respectively, but producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax. This is good news for our children. In further good news for them today, I can confirm that we will none the less fund the Department for Education with the full £1 billion that we originally expected from the levy this Parliament, to invest in school sports and healthy living programmes.

I am freezing for another year both the vehicle excise duty rates for hauliers and the heavy goods vehicle road user levy. I am introducing a new minimum excise duty on cigarettes, based on a pack price of £7.35, and I can also confirm that I will make no changes to previously planned upratings of duties on alcohol and tobacco. The tax measures I have announced enhance the sustainability of our public services into the future and, by improving the fairness of the system, help us to keep tax rates low.

Economic policy does not exist in a vacuum, and economic growth is a means, not an end in itself. The objective of our economic policy is to support ordinary working families and to build an economy that works for them. Government Members know that we can achieve rising living standards and deliver investment in our vital public services only if we have a strong economy and sustainable public finances. It is a simple proposition, yet one that Opposition Front-Benchers seem to find strangely difficult to understand.

We start from a strong base: real wages have grown for 27 straight months; the wages of the lowest-paid grew faster last year than in any of the previous 20 years; and the poorest households have seen their labour incomes rise more since 2010 in the UK than in any other country in the G7. Last year, we delivered a pay rise to over a million of the lowest-paid through the national living wage, and next month we take more steps to support working families with the cost of living. The national living wage will rise again to £7.50 in April, which is over £500 more for a full-time worker than this year and £1,400 more than when the national living wage was introduced. The personal allowance will rise for the seventh year in a row to £11,500, and the higher rate threshold to £45,000; 29 million people will be better off, with a typical basic rate taxpayer paying £1,000 less than in 2010. We will meet our manifesto commitment to increasing the thresholds to £12,500 and £50,000 respectively by the end of this Parliament.

I can also confirm today that the new National Savings and Investments bond that I announced in the autumn statement will be available from April, and will pay 2.2% on deposits up to £3,000—a welcome break for hard-pressed savers. The universal credit taper rate will be reduced in April from 65% to 63%, cutting tax for 3 million families on low incomes.

Next month, we will see the introduction of our flagship tax-free childcare policy, which will allow working families across the UK to receive up to £2,000 a year towards the cost of childcare for each child under 12. The scheme will be rolled out to all eligible parents by the end of the year, and in addition, from September, working parents with three and four-year-olds will get their free childcare entitlement doubled to 30 hours a week. That is worth around £5,000 a year to a young family with a three-year-old and both parents working. By the end of this Parliament, this Government will be spending on childcare £6 billion a year.

These childcare measures represent a further huge step forward in support for ordinary working families, and for women in the workplace. I am delighted to use the occasion of International Women’s Day to announce three additional measures—well, not quite announce them, because my right hon. Friend the Prime Minister has already announced two of them.

It is International Women’s Day!

It says here that I will commit a further £20 million of Government funding to support the campaign against violence against women and girls, which, as my right hon. Friend the Prime Minister said earlier, takes the Government’s commitment to this campaign to over £100 million in this Parliament. That is on top of the tampon tax, which today delivers another £12 million in support of women’s charities across the UK. The Prime Minister also mentioned earlier that the Government will commit a further £5 million to promoting returnships to the public and private sector, helping people back into employment after a career break.

Next year is the centenary of the Representation of the People Act 1918, which was the decisive step in the political emancipation of women in this country. I will commit a further £5 million to projects to celebrate this centenary, and to educate young people about its significance.

As well as knowing that the Government are on their side, people want to know that they are getting a good deal from private markets. A well-functioning market economy is the best way to deliver prosperity and security to working families, and the litany of failed attempts at state control of industry by Labour leaves no one in any doubt about that—except, apparently, the right hon. Member for Islington North (Jeremy Corbyn), who is now so far down a black hole that even Stephen Hawking has disowned him.

The Government recognise that sometimes markets, particularly in fast-developing areas of the economy, can fail people. Sometimes the market does not deliver the outcome that the textbooks suggest that it should. When that happens, the Government will not hesitate to intervene. We will shortly present a Green Paper on protecting the interests of consumers, but ahead of the Green Paper we will take the first steps to protect consumers from unexpected fees or unfair clauses, to simplify terms and conditions, and to give consumer bodies greater enforcement powers. Together, those measures will boost incomes, help family budgets to stretch a little further, support parents back into work, and tackle some of the frustrations that sometimes make it seem that the dice are loaded against ordinary people going about their everyday lives.

The House knows that the only sustainable way to raise living standards is to improve our productivity growth. Put simply, higher productivity means higher pay. The stats are well known: we are 35% behind Germany and 18% behind the G7 average, and the gap is not closing. Investment in training and in infrastructure will start to close that gap. The Government place addressing the UK’s productivity challenge at the very heart of their economic plan, because the cornerstone of an economy that works for everyone must be rising living standards for ordinary working people.

A key element of our plan is the £23 billion of additional infrastructure and innovation investment that I announced in the autumn statement. Today, to enhance the UK’s position as a world leader in science and innovation, I am allocating £300 million of that fund to support the brightest and the best research talent. That includes support for 1,000 new PhD places and fellowships, focused on STEM subjects: science, technology, engineering and maths. I am allocating £270 million to keep the UK at the forefront of disruptive technologies such as biotech, robotic systems and driverless vehicles—a technology that I believe the Labour party knows something about. There will be £16 million for a new 5G mobile technology hub, and £200 million for local projects to leverage private sector investment in full-fibre broadband networks.

On transport, I am today announcing £90 million for the north and £23 million for the midlands from a £220 million fund that addresses pinch points on the national road network, and I am launching a £690 million competition for local authorities across England to tackle urban congestion and get local transport networks moving again. My right hon. Friend the Transport Secretary will announce details shortly.

Because we believe that local areas understand local productivity barriers better than central Government, we will make further progress with our plans to bolster the regions. In May, powerful Mayors will be elected in six of our great cities. Across Britain, local areas will take control of their own economic destiny, and we will support them. I can inform the House that I have reached a deal with the Mayor of London on further devolution. Tomorrow, I will follow the launch of the northern powerhouse strategy in the autumn statement by publishing our midlands engine strategy, which will address productivity barriers across the midlands.

For the devolved Administrations, our announcements today deliver additional funding of £350 million for the Scottish Government—[Interruption.]

Let us just move on. We are doing very well; let us not spoil a good day. Come on, Chancellor of the Exchequer.

Wait for it: there will be £200 million for the Welsh Government and almost £120 million for an incoming Northern Ireland Executive, demonstrating once again that we are stronger together in this great, United Kingdom.

Perhaps the single most important thing that a Government can do to support ordinary working families is invest in the future, so that their children and grandchildren can make the most of the opportunities ahead. That means addressing the skills gap, and ensuring that every child, regardless of background, has the opportunity to go to a good or outstanding school. In the autumn statement, I focused on investment in infrastructure and research and development. The next step today in our plan to raise productivity and living standards is to focus on the quality of our children’s education and the teaching of technical skills.

While investing in education and skills of course helps to tackle our productivity gap, delivering greater prosperity, it does something else as well. It delivers greater fairness, because investing in skills and education is the key to inclusive growth—to an economy that works for everyone. If you talk to people from any background and any part of the country about their hopes and their aspirations for the future, you will hear a recurring concern for the next generation. Will they have the qualifications to find a job?

Will they have the skills to retrain as that job changes, and changes again, over a working lifetime? Will they be able to get on to the housing ladder, or save for a pension? In short, the question that concerns so many people is, “Will our children enjoy the same opportunities as we did?” Our job is to make sure that they do, and that is why we are investing in education and skills to ensure that every young person, whatever their background and wherever they live, has the opportunity to succeed and prosper.

The proportion of young people not in work or education is now the lowest since records began. That is a good base on which to build, but it is only by equipping them for the jobs of tomorrow that we ensure that they will have real economic security. We have put education reform at the heart of our agenda since 2010, and that commitment is already paying off: 89% of schools in England are now rated “good” or “outstanding”, which is the highest proportion ever recorded. That means that 1.8 million more children are being taught in good or outstanding schools than when the Labour party left office in 2010.

Our forthcoming schools White Paper will ask universities and private schools to sponsor new free schools. It will remove the barriers that prevent more good faith-based free schools from opening, and it will enable the creation of new selective free schools so that the most academically gifted children—from every background—have the specialist support that they need to fulfil their potential. Today I can announce funding for a further 110 new free schools, on top of the current commitment to 500. That will include new specialist maths schools to build on the clear success of Exeter Mathematics School and King’s College London Mathematics School, which my right hon. Friend the Prime Minister visited earlier this week.

We are committed to that programme because we understand that choice is the key to excellence in education, but we recognise that for many parents, the cost of travel can be a barrier to exercising that choice. Pupils typically travel three times as far to attend selective schools, so we will extend free school transport to include all children on free school meals who attend a selective school, because we are resolved that talent alone should determine the opportunities that a child enjoys. [Interruption.] Before Labour Members get too excited, let me add that we will invest in our existing schools too. [An Hon. Member: “No, you won’t.”] Oh yes, we will—by providing an additional £216 million over the next three years, which will take total investment in school condition to well over £10 billion in this Parliament.

Good schools are the bedrock of our education system, but we need to do more to support our young adults into quality jobs and help them to gain world-class skills, and while we have an academic route in this country that is undeniably one of the best in the world, the truth is that we languish near the bottom of the international league tables for technical education. Our rigorous, well-recognised system of A-levels provides students with the qualifications to move into our world-class higher education system, and we support this route further today by offering maintenance loans to part-time undergraduates and doctoral loans in all subjects for the first time. But long ago our competitors in Germany, the US and elsewhere realised that in order to compete in the fast-moving global economy, they had to link technical skills to jobs, and I am pleased to report, in national apprenticeship week, that our apprenticeship route is now, finally, delivering that ambition here, with 2.4 million apprenticeship starts in the last Parliament and the launch of our apprenticeship levy in April supporting a further 3 million apprenticeships by 2020.

But there is still a lingering doubt about the parity of esteem attaching to technical education pursued through the further education route. Today, we end that doubt for good with the introduction of T-levels. Thanks to the work of Lord Sainsbury, Baroness Wolf and other experts in this field, we have a blueprint to follow. Their review concluded that students need a much clearer system of qualifications: one that is designed and recognised by employers, with clear routes into work, more time in the classroom, and good quality work placements; and one that replaces the 13,000 or so different qualifications with just 15 clear, career-focused routes. Delivering on those recommendations is the third part of our plan, so today we will invest to deliver, in full, these game-changing reforms. We will increase by over 50% the number of hours of training for 16 to 19-year-old technical students, including a high-quality three-month work placement for every student, so that when they qualify, they are genuinely “work-ready.”

Once this programme is fully rolled out, we will be investing an additional £500 million a year in our 16 to 19-year-olds. To encourage and support the best of them to go on to advanced technical study, we will offer maintenance loans for those undertaking higher level technical qualifications at the new institutes of technology and national colleges, just as we do for those attending university—putting the next generation first, to safeguard their future and to secure our economy.

Because changing labour markets will mean that retraining is vital—with many of our young people today needing to retrain at least once, and perhaps more often, during a working life that may span more than 50 years—we will consider how best to deliver high-quality learning and training throughout working lives. The Department for Education will invest up to £40 million in pilots to test the effectiveness of different approaches to lifelong learning, so that we can identify what works best and help the next generation learn and train throughout their lives.

Just as the principle that every child should have the opportunity to fulfil his or her potential is central to this Government’s values, so is the principle that everyone has access to our national health service when they need it, and that everyone should enjoy security and dignity in old age. Today, our social care system cares for over 1 million people, and I want to pay tribute to the hundreds of thousands of carers who work in it. But the system is clearly under pressure, and this in turn puts pressure on our NHS. Today, there are half a million more people aged over 75 than there were in 2010, and there will be 2 million more in 10 years’ time. That is why the Government have already delivered more than £7 billion of extra spending power to the system over the next three years, and it is why we are ensuring that local authorities and the NHS work more closely together to enable elderly patients to be discharged when they are ready, freeing up precious NHS beds and ensuring that elderly people are receiving the appropriate care for their needs. So today I am committing additional grant funding of £2 billion to social care in England over the next three years; that is £2 billion over the next three years, with £1 billion available in ’17-18. This will allow local authorities to act now to commission new care packages and forms a bridge to the better care funding that becomes available towards the end of the Parliament.

Of course, this is not only about money. While there are many excellent examples of best practice around the country, at the other end of the scale just 24 local authorities are responsible for over half of all delayed discharges to social care. Alongside additional funding, the Health and Communities Secretaries will announce measures to identify and support authorities which are struggling and to ensure more joined-up working with the NHS.

These measures, and greater collaborative working under NHS sustainability and transformation plans, will bring short and medium-term benefits, but the long-term challenges of sustainably funding care in older age requires a strategic approach, and the Government will set out their thinking on the options for the future financing of social care in a Green Paper later this year. For the avoidance of doubt, I would like to make it clear that those options do not include, and never have included, exhuming Labour’s hated death tax.

The social care funding package that I have announced today will deliver immediate benefit to the NHS, allowing it to re-focus on delivering the NHS England forward view plan—a plan which this Government have supported with the £10 billion increase in annual funding by 2020, £4 billion of it in this year alone. We recognise the progress that the NHS is making in developing sustainability and transformation plans, and we recognise, too, that in addition to the funding already committed, some of those plans will require further capital investment. The Treasury will work closely with the Department of Health over the summer as the STPs are progressed and prioritised, and at autumn Budget I will announce a multi-year capital programme to support the implementation of approved high-quality STPs across our health service in England. In the meantime, my right hon. Friend the Health Secretary expects that a small number of the strongest STPs might be ready ahead of autumn Budget, so today I am allocating an additional £325 million of capital to allow the first selected plans to proceed.

I have one further announcement related to the NHS. The social care package I have announced today will help to free up beds by easing the discharge of elderly patients. That is one of the two big pressures on our hospitals. The other is inappropriate A&E attendances by people of all ages. Experience has shown that on-site GP triage in A&E departments can have a significant and positive impact on A&E waiting times. I am therefore making a further £100 million of capital available immediately for new triage projects at English hospitals in time for next winter.

This Government back the NHS’s plan. We are funding it with a £10 billion above-inflation increase by 2020. We have addressed the pressures on the NHS from the social care system with a total of £9.25 billion in additional resources. We will protect the NHS from the effects of the changed personal injury discount rate, and have set aside £5.9 billion across the forecast period to do so, and today we have made a clear new commitment to fund the capital programme for the implementation of high-quality STPs, with a first down-payment for the early pioneers. As the voters of Copeland so clearly understood, we are the party of the NHS—we are the party of the NHS because we have not just the commitment and the will, but also the economic plan that will secure the future of our most important public service.

Last November I set out our plan to build an economy that works for everyone, to enhance our productivity and protect our living standards, to restore our public finances to balance and to invest for our future. Today’s OBR report confirms the continued resilience of the British economy. At this Budget we continue with our plan, building on the foundation of our economic strength, reaching out to seize the opportunities that lie ahead, backing our public services, supporting Britain’s families, investing in the skills of our young people and making Britain the best place in the world to do business.

Our United Kingdom has a proud history. We have done remarkable things together, but we look forwards, not backwards, confident that our greatest achievements lie ahead of us. Today, we reaffirm our commitment to invest in Britain’s future. We embark on this next chapter of our history, confident in our strengths and clear in our determination to build a stronger, fairer, better Britain. I commend this Budget to the House.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Pensions (offshore transfers) (motion no. 12);

(b) Alcoholic liquor duties (rates) (motion no. 40);

(c) Tobacco products duty (rates) (motion no. 42).—(Mr Philip Hammond.)

Question agreed to.

I now call on the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion, and on the remaining motions, will be put at the end of the Budget debate on Tuesday 14 March.

This is a Budget of utter complacency about the state of our economy, utter complacency about the crisis facing our public services, and complacency about the reality of daily life for millions of people in this country. It is entirely out of touch with the reality of life for millions.

This morning, over 1 million workers will have woken up not knowing whether they will work today, tomorrow or next week. Millions more workers know that their next pay packet will not be enough to make ends meet. Millions are struggling to pay rent or a mortgage, with private renters on average paying nearly half their income in rent. Yesterday, more than 3,000 people in this country will have queued up at food banks to feed themselves and their families. Last night, over 4,000 people will have slept rough on the streets of this country. And the Chancellor makes his boast about a strong economy.

But who is reaping the rewards of this economy? For millions, it is simply not working. It is not working for the NHS, which is in its worst crisis ever, with funding being cut next year. It is not working for our children’s schools, where pupil funding continues to be cut. It is not working for our neighbourhoods, which have lost 20,000 police officers, leaving the force in a perilous state in many parts of the country. It is not working for our public services and the dedicated people who work in them—nurses, firefighters and teachers; no pay rise in seven years for them—or for people with disabilities, who are twice as likely to be living in poverty, and whom this Government are denying the support that the courts say they need.

There are 4 million children living in poverty, and that figure will rise by another 1 million in the coming years. The economy is not working for the thousands of young people who cannot get anywhere to live, cannot get on the housing ladder and, in many cases, cannot leave the parental home. Parents of grown-up children whom they would expect to be debt-free by now are having to bail out student debt, or are trying to help them with a deposit to get housing, if they can manage it. A million elderly people—I will come on to this again—are being denied the social care that they need due to the £4.6 billion of cuts made by the Chancellor’s Government, with the support of the Lib Dems, over the past five years. The economy is not working for pensioners, for whom the security of the triple lock remains in doubt.

This is the reality facing Britain today: a Government cutting services and the living standards of the many, to continue to fund the tax cuts of the few. Some people are doing very well under the Conservative Government. The chief executives of big companies are now paid 180 times more than the average worker and being taxed less. Big corporations are making higher profits and being taxed less. Speculators are making more and being taxed less. The wealthiest families are taxed less due to cuts in inheritance tax. All that adds up to £70 billion of tax giveaways over the next five years to those who need it the least. This Government have the wrong priorities.

Let me give three examples. The pain of losing a child is unimaginable for most of us, but for those who do lose a child, their pain is worsened by the stress of having to pay for their own child’s funeral. I pay tribute to my hon. Friend the Member for Swansea East (Carolyn Harris) for her campaign to establish a children’s funeral fund, but far from establishing such a fund, which would cost just £10 million a year, the Government are instead cutting support for bereaved families—three in four bereaved families will receive less. That is utterly heartless.

Despite generous tax giveaways at the top end, there was no money either for the 160,000 people with disabilities whom a court has ruled deserve a higher rate of personal independence payments. These are people with debilitating mental health conditions such as dementia, schizophrenia and post-traumatic stress disorder. The Prime Minister came to office talking about fighting “burning injustices”. Less than nine months later, she seems to have forgotten all about them, because none of them is being fought today.

Low pay holds people back and is holding our country back. We are the only major developed country in which economic growth has returned yet workers are worse off. Wages are still below 2008 levels. Inflation is rising and there is an urgent need to address the pressure on people’s incomes. Personal debts are rising massively and there are rising energy bills, and the costs of the weekly shop, transport and housing are all rising.

The Chancellor faced a series of tests as to whether he would stand on the same side as the people or not. He could have raised the minimum wage to the level of the living wage—the real living wage of £10 an hour—as we, the Labour party, have pledged to do. That would give a pay rise to 6 million people in this country, 62% of whom are women. He failed to do that.

Since 2010, millions of public sector workers have endured a pay freeze and then a pay cap. The dedicated public servants who keep our services going have lost over 9% of their real wages, or will have done by 2020. The Chancellor could have ended the public sector pay cap, as we have pledged to do, and given a pay rise to the 5 million dedicated public servants whom we all rely on—day in, day out—in our hospitals, our health service in general and our local government. He failed to do that. It is an insult to say that they deserve falling living standards when we all know that those in the public sector are working harder than ever, covering the jobs of those who have gone.

There is a crisis, too, in job security. Millions of workers do not know whether they will be working from one day to the next. Millions of workers do not know how many hours they will be working this week or next week. Just imagine what it is like to try to plan your life if you do not know what your income is going to be from one week to the next. That is the reality—[Interruption.]

Order. Can I just say to Members on the Government Benches that I want to hear the Leader of the Opposition? I do not want him to be shouted down. You might not be interested, but our constituents out there want to hear what the alternative is, so please—[Interruption.] If the Whip wants to be funny, he can go and get a cup of tea now. Let us show the same respect that was given to the Chancellor of the Exchequer.

Thank you, Mr Deputy Speaker.

There is nothing funny about being one of the 900,000 workers on zero-hours contracts, 55% of whom are women. The Chancellor could have announced a ban on zero-hours contracts, as we have pledged to do, but again he failed. Zero-hours contracts are only the tip of the iceberg, with 4.5 million workers in Britain in insecure work, 2.3 million working variable shift patterns and 1.1 million on temporary contracts. We have long argued for a clampdown on bogus self-employment, but today the Chancellor seems to have put the burden on self-employed workers instead. There has to be a something-for-something deal, so I hope the Chancellor will bring forward extra social security in return. One policy that Labour backs is extending statutory maternity pay to self- employed women, which is likely to cost just £10 million a year.

Low pay and insecure work have consequences for us all. In reality, we all pay for low pay. A million working households have to claim housing benefit. Let me repeat that figure: 1 million working households have to claim housing benefit because their wages are not enough to pay the rent. There are 3 million working families who rely on tax credits simply to make ends meet. This is modern Britain.

The most effective way of boosting wages and increasing job security is, as all studies show, to improve collective bargaining through a trade union. Those are words that the Chancellor did not use in his speech; instead, the Trade Union Act 2016 will further shackle unions and perpetuate the chronic low pay that costs us all a lot of money through in-work benefits. We will promote collective bargaining and repeal the Trade Union Act. This is a Chancellor and a Government who are not on the side of the workers, and not on the side of the taxpayers who pick up the bill for low pay and insecure work.

On International Women’s Day, did the Chancellor deliver a Budget that works for women? According to House of Commons Library analysis that was commissioned by my hon. Friend the Member for Rotherham (Sarah Champion), who is doing a brilliant job speaking up for women from our Front Bench, 86% of the savings to the Treasury from tax and benefit changes have fallen on women. Women’s lives have been made more difficult through successive policies of this Government. Women are struggling with more caring responsibilities due to the continuing state of emergency in social care. The WASPI women born in the 1950s are, with little notice, having to face a crisis in their retirement that they could not possibly have predicted. Some 54,000 women a year are forced out of their jobs through maternity discrimination, but they cannot afford this Government’s extortionate fees to take their employer to a tribunal in search of justice.

Women up and down the country will have to wait another 60 years before the gender pay gap is closed. Hundreds of women are being turned away from domestic violence shelters every year due to a lack of space or appropriate services, or simply because the shelters have closed. Mothers who are already struggling are being put under more pressure through cuts to universal credit and tax credits. As if it was not bad enough to cut benefits to children whose only crime is to be born third or fourth in a family, as of next month, most shamefully, women will have to prove that their third child is a product of rape if they wish to qualify for child tax credits for that child. I pay tribute to my hon. Friend the Member for Rotherham and to the hon. Member for Glasgow Central (Alison Thewliss) for their campaigning on this issue, and I hope that the Chancellor will reverse that cut.

This country has a housing crisis—a crisis of supply and of affordability. Since 2010, house building has fallen to its lowest rate in peacetime since the 1920s. The building of social homes for rent is at its lowest level for a quarter of a century. Did the Chancellor empower councils to tackle the housing crisis by allowing them to borrow to build council housing, as we have pledged to do? No. Have the Government replaced council houses sold under the right to buy, as they promised? No; just one in six have been replaced. And was there any commitment to return to councils the £800 million of right to buy proceeds that the Treasury has taken back, which would be enough to build 12,000 homes? No. Did the Chancellor scrap the unfair bedroom tax, as we have pledged to do? No. Did he reverse housing benefit cuts that would take away support from 10,000 young people? No, despite opposition from Shelter, Crisis, Centrepoint and even the hon. Member for Enfield, Southgate (Mr Burrowes), who has correctly described the policy as “catastrophic”.

Last week, the Institute for Government said that there were “clear warning signs” of the damaging impact of the Government’s cuts on schools, prisons, and health and social care. This Government have taken a sledgehammer to public services in recent years, yet the Chancellor now expects praise for patching up a small part of that damage. This Budget did not provide the funding necessary now to deal with the crisis in our NHS, which the British Medical Association reckons needs an extra £10 billion. The Budget did not provide the funding necessary to end now the state of emergency in social care, which needs £2 billion a year just to plug the gaps, according to the King’s Fund. Those needs will not be met by £2 billion over three years—the money is needed now. More than a million people, mainly elderly people, are desperate for social care and still cannot get it. The money ought to be made available now.

This Government duck the really tough choices, such as asking corporations to pay a little more in tax. Not every local authority can just text Nick and get the deal it wants. Other council services are suffering as well. Our communities are stronger when we have good libraries. They are valuable for children, obviously, but also for the entire community. However, 67 libraries closed last year because of local government underfunding, and 700 Sure Start centres closed because of a lack of local authority funding, denying the life chances that a Labour Government delivered with the opening of Sure Start centres in the 1990s. Six hundred youth centres have closed as well. These painful decisions are being taken by councils not because they want to do it, but because they just do not have enough money even to keep essential services running, following the slashing of their budgets year on year. And it goes on—this affects our communities and lives in so many ways. Last year, councils proposed the sell-off of school playing fields with the equivalent size of 500 football pitches— 500 pitches unavailable for young people to indulge in sport. Surely it is our duty as a community to ensure that all our young people, wherever they live, have a decent chance to grow up with a library, a playing field and a Sure Start centre. It is not a lot to ask.

The Chancellor boasts of a strong economy, but he abandoned the previous Chancellor’s targets, so let me give a more realistic context for today’s figures. The deficit was going to be eradicated in 2015—do we all remember the long-term economic plan?—and debt was going to peak at 80% of GDP and then start falling. Our economy is not prepared for Brexit. It still suffers from underinvestment, an over-reliance on consumer spending, and wholly unsustainable levels of personal and household debt. Investment must be evenly spread around our country. Despite today’s announcements, London continues to receive six times as much investment as the north-east. Labour is backing a fair funding formula for investment so that every area gets its fair share of capital spending. What has been announced today does not achieve that. The Government cannot build a northern powerhouse or a midlands engine if investment does not follow the soundbite.

Our country spends 1.7% of GDP on research and development, which is well below the OECD average. The strongest economies spend over 3%. In the immediate term, the Chancellor must focus his attention—he did not have much to say about this—on the precarious future of skilled workers’ jobs at Vauxhall in Ellesmere Port and Luton, and at Ford in Bridgend. Exporting businesses would have more confidence if the Government clearly committed to negotiating for tariff and impediment-free access to the single market and dropped the reckless threat of turning Britain into a tax haven on the shores of Europe.

One of the biggest challenges facing our country is environmental—climate change. The Government are failing to lead and failing to drive a mission-led industrial strategy, which our Business, Energy and Industrial Strategy Committee has recommended. The Chancellor failed to make energy efficiency a national infrastructure priority. There was no commitment to establish zero-carbon standards on new buildings, and he was unclear about investment in public transport that will definitely reduce pollution. The poor air quality is appalling. It is killing thousands of people in this country and taking away the life chances of many children who grow up alongside polluted roads. The good work being done by Labour’s London Mayor, Sadiq Khan, and by the Welsh Labour Government has rightly recognised air quality as a public health crisis, particularly for children. We have to deal with this crisis urgently.

There cannot be an industrial strategy or productivity gains without serious investment in skills. Adult skills training has been cut by 54% and further education by 14%. The small amounts committed today are long overdue, but woefully insufficient. The schools budget is being cut by 8% over the coming years. Does the Chancellor want fewer teachers and teaching assistants, larger classes or shorter school days? Which is it? I agree with the Prime Minister that every child deserves a decent education and every community deserves a decent school, but we should achieve that by working with communities to provide those schools, not by plonking in selective schools that communities are not demanding. The money announced by the Prime Minister yesterday for new grammar schools is, frankly, a vanity project. The Government should cancel this gimmick and reject selection and segregation. Why do they not honour their own 2015 manifesto pledge to protect per pupil funding, which has clearly not happened?

This Budget lacks ambition for this country and fairness. It demonstrates again this Government’s appalling priorities: another year of tax breaks for the few and public service cuts for the many. When the Prime Minister took office, she said:

“If you’re one of those families, if you’re just managing, I want to address you directly.”

This Budget did not address them; it failed them. This Budget does nothing to tackle low pay, nothing to solve the state of emergency that persists for the many people who demand and need health and social care now, and nothing to make a fair economy that truly works for everyone. It is built on unfairness and on a failure to tackle unfairness in our society.

I do not think that there is a great deal of concord in the House about that speech, but I think that there is some agreement across the House about a number of things that the Chancellor said. In fact, I think that there has been a quiet consensus in this place for steady deficit reduction ever since Alistair Darling’s Budget of 2010, and I am delighted that the Chancellor is persisting with that reduction.

Before picking up on a few of the measures, particularly those that affect small businesses, I want to make one point about overall fiscal policy. The Chancellor does not have much room for manoeuvre. He is pretty heavily boxed in, and I see him nodding in agreement. On the spending side, three quarters of public spending is covered by manifesto pledges, so every round of savings has to fall on a progressively smaller area, which makes it painful for it to absorb. On the tax side, he is just as constrained. In fact, he is even more constrained, because he has inherited the tax lock—the statutory prohibition on any reduction or increase in a number of taxes—and a commitment to reduce corporation tax to 15%. That puts over 80% of revenue beyond his reach should he need to raise more money later. Of course, there is also the fuel duty freeze—I think it is a freeze—that was announced in the autumn statement. All those tax and spending pledges are the fallout of an electoral bidding war, but dealing with that is a matter for another day.

I want to pick up on a few detailed measures that we just heard about, particularly on those, as I said, that affect small businesses, because I am particularly concerned about them. I was delighted to hear some good news, but first it is worth going through the list of things that small businesses are having to deal with at the moment: the doubling of insurance premium tax that was announced last year; automatic enrolment for pensions; the extra cost of the living wage; the infrastructure levy; the revaluation of rates—I will come on to the proposals that have just been announced in a moment—and the “Making tax digital” plan. In addition, there are the proposals for class 4 national insurance contributions.

The right hon. Gentleman is providing a good analysis so far. On the increase in national insurance contributions for the self-employed, does he think that the Chancellor needs to explain why he is breaking a 2015 general election manifesto pledge?

The Chancellor set out his reasons quite carefully. He thinks that there is a strong argument for matching what people get out of NICs on the receipt side to the contribution side. I will look carefully at the hon. Gentleman’s point about the specific manifesto pledge, about which the Chancellor and I will no doubt have a further discussion when he comes before the Treasury Committee.

The Chancellor announced some quite important changes to “Making tax digital”, and we need to be clear about the problem that he seeks to address. Until today’s statement, several million people, mostly small traders, would have been required by law from 2018 to fill in their tax returns electronically for the first time. Some of those traders will not even have a smartphone, let alone a computer. The plan’s effect would have been to impose a massive, unfair burden on small businesses and some of the smallest traders, so it is good news that the Chancellor made a concession today, one which appears to be aligned with at least one of the suggestions made in a Treasury Committee report on this subject. The most important thing that the Chancellor is doing is keeping the starting threshold for another year at the VAT threshold of £83,000. That is the good news, but the not so good news is that the relief is only for a year.

May I ask the Chancellor to consider phasing in the lower threshold over a run of three or four years? He has suggested a lower threshold of £10,000, which seems extremely low—he looks puzzled, but he will find that that is what HMRC has been talking about. Dropping the VAT threshold dramatically from £83,000, or whatever it becomes, in one year strikes me as unreasonable. Of course I understand why the Chancellor is doing that—he needs the money—and I am sure that HMRC has told him that there is a huge amount of money waiting to be collected. He is nodding in agreement with that, too.

I think that I am right to say that HMRC previously suggested that £2 billion of uncollected tax is available, but I doubt that figure, and so does the Treasury Committee. If the Chancellor is brutal about introducing the measure, he might not got very much money. Some businesses will go into the grey economy, and some will cease trading altogether, so the pot of gold might not be there at all.

Will the right hon. Gentleman give way?

I give way to the hon. Gentleman, who is a member of the Treasury Committee.

I agree with the right hon. Gentleman that merely delaying by a year is insufficient. Does he agree that the Chancellor should enact the Treasury Committee’s other recommendations and that, unless he does, today’s Budget will be good news for accountants and bad news for small businesses?

The hon. Gentleman makes a powerful point, and of course I support his support for the proposals that we worked up together on “Making tax digital”. I will continue to make those points as vigorously as I can on behalf of the Committee, and I am sure that the Chancellor is listening. We should welcome his acknowledgment that the pre-existing proposals were not workable, and we have already had a bit of adjustment. Now that the door is ajar, perhaps we could have another conversation through the gap.

Like my right hon. Friend, I welcome the easing for businesses below the VAT threshold, but does he recognise that for those businesses over the VAT threshold, and they are not necessarily enormous businesses, that are struggling with some of the additional burdens that he mentioned, not least auto-enrolment, business rates and the changes to dividend taxation, particularly for owner-managers—I declare an interest as an owner-manager—accommodating the new system within the next 12 months will be a challenge and have a significant compliance cost?

My hon. Friend, who is also a member of the Treasury Committee, makes the point that modest or slightly larger businesses will also find the bureaucratic burden introduced by the “Making tax digital” proposals pretty tough. The Committee has taken a lot of evidence on that. In the very long run, digital returns will be the future, but the question is how we get there. This is a generational change, and it is important not to sour relations between small businesses and the Revenue, which can easily happen if we hit small businesses over the head in the hope of getting a bit of extra money in years 1 and 2, or years 2 and 3. With a little more caution, small businesses can be brought into the system and yield a higher long-term revenue because we have their co-operation.

The second change—I will not linger too long on this because I lingered on “Making tax digital”—is to business rates. The Chancellor has announced a welcome relief for those businesses hit by revaluation. He has announced three concessions, which will cost quite a bit of money taken collectively. The concessions are not only important but essential. The small businesses that are being hit by the business rate changes are the lifeblood of the local economy in all our constituencies, and the measures will give them some relief from the pressure.

The Red Book suggests that the Chancellor might consider proposals for more frequent revaluation of business rates. I am pleased about that, because the big problem is the cliff edge created by revaluations every five or seven years. In a nutshell, we require both more frequent revaluation and quicker appeals. We need both. It cannot be beyond the wit of man to devise a reform that can deliver them.

While I am thanking the Chancellor, I thank him for agreeing, as he did when he came before the Treasury Committee recently, to publish the distributional analysis of the Budget measures on a basis comparable to that published in the last Parliament. The Committee will look carefully at the distributional analysis and other tax measures, and it will do so in a slightly more considered and less rushed way than we have in the past.

In the spirit of thanking the Chancellor, will my right hon. Friend join me in thanking him for saying on page 35 of the Red Book that he wants to consult on introducing a new duty band for still cider just below the 7.5% band that targets white ciders? Many Members on both sides of the House will know that white cider is particularly damaging to young people and homeless people, and the consultation is a great signal of intent that we will get to grips with the issue, so that we do not have this harmful, damaging and too-cheap white cider on our high streets and particularly in our off-licences.

My hon. Friend has made his point, and he may well be right. I never talk about cider for long in the House of Commons because, whatever I say, I have always found that it results in a great deal of correspondence. I will avoid cider altogether.

I end on a couple of larger points about the backdrop to the Budget. The Chancellor is having to deal with two big risks. First among those, and by far the biggest, is the risk to the economic prosperity of our constituents and the stability of the west from the resurgence of economic nationalism. There is a bit of that in Britain and a great deal more elsewhere in the world. Protectionism has been on the rise for some time, and it is already affecting global growth. It is worth bearing in mind that global growth has been anaemic over the past five years compared with the average of the past 30 years, and that includes the effects of the financial crash. There is a big difference between those two numbers.

Global trade growth has been even weaker. Global trade is now declining as a share of world economic activity, and we should all be concerned about that. The link between prosperity and trade does not seem to have registered with President Trump, at least not yet. He has withdrawn from the Trans-Pacific Partnership, and the Transatlantic Trade and Investment Partnership looks to be in trouble. He has called the World Trade Organisation “a disaster,” and he is threatening to withdraw from that, too. But not the Prime Minister. She has made it clear that Britain should be the firmest advocate for free trade anywhere in the world, and she is right. If it were all to go wrong and we were to return to full-blooded protectionism, we would not have to look into a crystal ball; we could read the book of the 1930s.

rose—

rose—

I will give way one last time.

Is the right hon. Gentleman disappointed, as I am, that the Chancellor did not mention that real wages and asset values were reduced at a stroke by 15% through devaluation? Although devaluation secures more exports in the short term, it will be offset by tariffs in the future. What are the prospects for trade when the single market hits us over the head with tariffs?

I will end with a word or two about Brexit, but I will not comment on the exchange rate except to say that devaluation makes the country poorer, but devaluations can come and go. We need to look at it as a shock absorber that the market has put in place as a consequence of the Brexit decision and in a much more long-term framework rather than judging it, as we are now, so soon after the event. Brexit does pose the risk of a trade shock.

Will the right hon. Gentleman give way?

If the hon. Lady will forgive me, I would rather wind up. I am sure she will want to make her own speech in a moment.

There certainly will be a trade shock if we revert to WTO rules, so I am pleased that the Prime Minister has made it clear that she is working for what she calls a “bold and ambitious” deal with the EU. Deep engagement, political and economic, from outside the EU almost certainly commands a majority in the House and in the country; cutting off Britain almost certainly does not. Hopefully all parties to the negotiations grasp the importance of securing a deal, but wanting a comprehensive deal and getting one in what will amount to 18 months of negotiations are not the same thing. Getting one will be a massive undertaking. Businesses know that, which is why many of them will not wait around to find out whether there will be a deal; they will protect themselves. They will start to move economic activity out before 2019 and the supply chains will start to adjust, too—to the UK’s detriment.

I shall make one further point. There is a straightforward way to safeguard the UK from the risk I have just described, and the UK must ask for it in the negotiations. It almost certainly requires only qualified majority voting, and it is available under article 50 of the treaty. The UK should make it clear, now, that after leaving the EU—that is, having repealed the European Communities Act 1972 —the UK’s first requirement is that a standstill on the implementation of the detailed terms of any deal should be put in place. That is a crucial ingredient to bring stability and certainty during the negotiations.

When the Conservatives first came into power in 2010, there was a 10% budget deficit, ballooning public debt and the second-lowest growth in the G7. That all amounted to a massive challenge. Now, the public finances are stronger—only after six years of hard work—but the two risks to which I have alluded could amount to a cocktail scarcely less difficult to handle, particularly if mistakes are made. The Chancellor has told us that he has taken a cautious approach by steadily reducing borrowing; I strongly support him in that, and he has my strong support to persist, even if he hits heavy weather.

Order. After this next speech, the time limit on speeches will be 10 minutes.

In many ways, the Chancellor did not disappoint us. We had the self-effacing jokes about spreadsheets and the spun lines about being stronger together, and then it went downhill. There was barely a mention of Brexit—the most momentous challenge facing the UK—and, more importantly, what the Chancellor would do to mitigate the damage that we expect as a consequence. Before I come to that, though, I had very much hoped to welcome a concrete package of measures for the oil and gas sector, and particularly for end-of-life fields; instead, we have been offered an options paper. One of my sharp-eyed assistants told me that that is exactly the same promise as the one made in 2016, so perhaps at some point the Chancellor will actually deliver the paper and set out some concrete measures.

Will the hon. Gentleman give way?

Not at the moment.

Budgets can sometimes be assessed more by what is omitted than by what is included. I thought there would have been more reference made to the city deals and how important they are for the areas that are negotiating them.

Will the hon. Gentleman give way?

I shall give way in a moment.

Although in passing the Chancellor mentioned fairness and, indeed, living standards, he did not dwell for very long—in fact, not at all—on the counter-analysis to his assertions, which is that child poverty will increase by 30% by 2021-22. That is entirely explained by the direct impact of tax and benefit reforms. He spoke about an increase to the minimum wage, which is of course welcome, but ignored the assessment that says that real average earnings are forecast to rise by less than 5% between now and 2020-21. In essence, that will mean more than a decade without real earnings growth.

On the subject of omissions from the Chancellor’s statement, the hon. Gentleman will know that hundreds of women have travelled to Westminster today from Scotland, Greater Manchester and all over the country to campaign against the unfairness of their not being properly informed about changes to their state pension. Does he agree that it is disrespectful to say the very least that on International Women’s Day those women fighting for justice on their pensions got no mention at all from the Chancellor of the Exchequer?

The final omission is any redress for the WASPI women. That is absolutely correct.

Will the hon. Gentleman give way?

Not at the moment.

It is worth reminding ourselves how we got to where we are today. It is not all the fault of this Chancellor, but the Tory targets on debt, deficit and borrowing that were promised in 2010 simply were not met. I shall demonstrate the scale of the failure. We were told that debt would begin to fall as a share of GDP in 2014-15, that the current account would be in balance the following year, and that public sector net borrowing would be barely £20 billion in that same year. Of course, as many of us warned it would not at the time, that did not happen. Debt will not begin to fall as a share of GDP until 2018-19, the current account will not be in the black until the same year, and public sector net borrowing in 2015-16 was not the barely £20 billion promised, but £72 billion. In short, the Scottish National party argues that the first five years of Tory austerity failed, and we have little confidence that the second five years will be any better.

I turn to the present, and then the future. Last autumn, the Chancellor told us that net debt would peak at 90% of GDP, or £1.84 trillion—that is 12 zeros. Today, he gave us the startling news about the huge progress: it will now peak at £1.83 trillion. Borrowing is down a few hundred million for 2017-18, and the current budget, due to be in surplus by £18.5 billion in 2019-20, has barely changed. The forecasts are as bad as they were promised to be in the autumn and have barely changed from last spring.

What growth there is seems to be driven in large measure by an assessment of increased business investment of around 4% over the next few years. The Office for Budget Responsibility says that there will be

“a 0.1% fall in business investment in 2017, before uncertainty begins to dissipate”.

We are about to have article 50 invoked, followed by a tortuous 18-month to two-year negotiation, and the OBR and the Treasury are telling us that the uncertainty will dissipate sometime at the back end of this year. That almost beggars belief.

Can the hon. Gentleman explain why he and his party thought before and immediately after the referendum that there would be a sharp slowdown or recession this winter? Were they not completely wrong then, and are they not wrong now about article 50?

The right hon. Gentleman is completely wrong. I can say with absolute certainty that there was never, ever a threat of an immediate collapse. Indeed, I am on record as saying there would be no problem in week one, month one or year one, or even in year two or year three, which gets us to just beyond the negotiation. The danger was always the long-term risk of decreases in foreign direct investment and trade, and of loss of GDP from reduced migration, to which I shall turn because the Chancellor did not.

Much of the previous failure came about because the last Tory Government strangled the lifeblood from recovery by cutting too much or too quickly, with little or no regard to the consequences. That error was set in stone by the old fiscal charter and its requirement to run a permanent surplus quickly, almost irrespective of the economic conditions. The new fiscal charter, which was not really given a look-in today, is certainly more flexible than the last one, but it still targets a surplus early in the next Parliament. The numbers and the timescale look precarious. The forecasts for a current account surplus are tiny, not even reaching 1.5% of GDP in this Parliament. If there is any external shock or any capital flight, if we suffer more devaluation, which is quite likely, or if the negotiations go badly, the figures could fall apart very quickly indeed.

These numbers are being delivered before the full impact of a hard Tory Brexit are felt. We cannot even assess properly what the consequences of that will be, because the OBR tells us

“there is no meaningful basis for predicting the precise end-point of the negotiations as a basis for our forecast.”

That is a central assumption that pretends Brexit does not exist—a ridiculous thing to do with the invocation of article 50 looming.

The OBR’s central forecast is in rather stark contrast to what we already know. The Treasury had reported previously that the UK could lose up to £66 billion from a hard Brexit, and that GDP could fall by almost 10% if the UK reverted to WTO rules, which echoes what the Chair of the Treasury Committee said. Other assessments mirror that. The London School of Economics says:

“In the long run, reduced trade lowers productivity.”

That is a huge problem for the UK. It went on to say:

“That increases the cost of Brexit to a loss of between 6.5% and 9.5% of GDP.”

It puts a range of figures on that of between £4,500 and £6,500 per household.

Last year’s PricewaterhouseCoopers report suggested that employment could fall by 600,000. The figures for Scotland produced by the Fraser of Allander Institute suggest that a hard Tory Brexit could result in 80,000 lost Scottish jobs and a drop in wages averaging £2,000 in a decade. If we add to that the report by senior executives in the FTSE 500 saying that Brexit is already having a negative impact on business, and the British Chambers of Commerce reporting that half the businesses surveyed have already seen a hit to margins due to devaluation, we can see the scale of the problem. What we should have seen today is mitigation to match that.

To be fair to the Chancellor, he did move a little last autumn with announcements of additional support for capital investment and research and development. Today, he reiterated some of the R and D statements and put some flesh on the bone of other investment, no doubt taking his cue from the IMF, which had said previously that the Treasury had done enough to stabilise finances for the Government to embark on extra investment spending. However, the figures from last year’s autumn statement show public sector net investment falling in 2017-18 to 2018-19 and not recovering again until we are in the next Parliament. The figures today for public sector gross investment show them falling this coming year, 2017-18, to the forecast made only three and a half months ago. The money should be spent now to mitigate that rather than waiting for the OBR to say that the damage has been done.

However, it is not all about broken promises on debt, deficit and borrowing. It is not even about repeating the mistakes of the past on investment. We are now in such uncertain times that, to protect jobs and the current account, trade should be front and centre, but little was said about that today. The Red Book tells us already that the current account is in negative territory for the entire forecast period. The impact of net trade will be zero or a drag on GDP growth for almost every year in the forecast period. That is after an average 15% devaluation in sterling since the EU referendum.

Is my hon. Friend aware that the Red Book also points out that, over the forecast period, the cumulative current account deficit is more than 13% of GDP? We will have to sell an awful lot of UK companies to fund that.

That is precisely the point. The choices are that we grow and we take exports seriously, or we do what Tory Governments have always done, which is to sell off the family silver.

Growth is forecast to be based on heroic levels of business investment after the uncertainty of Brexit ends this year. It will be propped up by household consumption with a commensurate rise in household indebtedness, central Government investment, which I welcome, and fixed investment in private dwellings, but with house prices forecast to rise at two or three times the rise of inflation. The Budget report seems to make merit of that: people will feel wealthy, it says. We know what happens when prices fall, and we know what the impact is on youngsters trying to get on the property ladder. On household debt in particular, the Chancellor should have been much more aware of the concerns that, even after excluding mortgage payments, household debt has now reached record levels. This is not a balanced recovery.

However, it is the issue of trade that is most worrying. The figures are clear. The last full year for which we have figures—2015—saw a current account deficit of £80 billion, and a deficit in the trade in goods of £120 billion. At least the Chancellor did not repeat the claims of his predecessor that we could double exports by the end of this decade to £1 trillion. Perhaps he should enlighten the Secretary of State for International Trade, who still thinks that it is sensible to keep the target even though he does not believe that it can be met. This is not all the fault of this Chancellor. Many of these failings have been embedded in the UK economy for decades. It is not just about exports, but about support for innovation, which I welcome, and manufacturing as well as boosting productivity across the board.

We should have had specific plans today—the Chancellor has had enough time in office—for substantial GDP growth, not the less than 2% in every year for the forecast period, which is lower than the pre-crisis trend. We should have had measures to boost productivity. In Scotland, productivity is 4% higher than the 2007 level, compared with next to nothing in the UK. We should have had targeted support for high-growth export-focused small and medium-sized enterprises. The Chancellor should have taken more businesses out of business rates entirely in England rather than offering just a bit more help for a short period of time.

I welcome what the Chancellor said about education. If we tackle the attainment gap, we can get inclusive growth. We will not get inclusive growth if people are struggling to put food on the table because the welfare cap is squeezing people’s real incomes.

Earlier, the hon. Gentleman was talking about significant omissions. Does he share my deep concern about other omissions? There was nothing at all in this statement about the climate crisis; nothing about investing in green energy; nothing about energy efficiency; nothing about reversing the solar tax hike; and nothing about the public health emergency caused by air pollution. Does he agree that that is a reckless and irresponsible squandering of a vital opportunity?

The pattern that we have seen over the past few years confirms that. It is not just about the photovoltaics and the contracts for difference changes, which were not helpful, but all the other issues that the hon. Lady has raised too. She is right to keep on making those points.

One reason why the Government cannot fund their policies is to do with the yield from taxes. I believe in tax competition, but if we look at the corporation tax yield, we can see that it has flatlined and fallen in real terms for the past four years of the forecast period. In order to make amends today, or to make the numbers stack up, we have seen a scandalous attack on aspiration and on the self-employed by taxing more and making more changes to national insurance contributions to the tune of £4.2 billion or so. The party of aspiration is taxing those who are self-employed, pouring in active, real hard disincentives to starting businesses, to employing people, and to stepping out on one’s own. That is a decision that will come back to haunt this Chancellor.

Does the hon. Gentleman not agree that, if people work, they should be taxed equally? There is a non-level playing field when it comes to taxing people who are employed and taxing those who are self-employed. Does he think that that is fair or sustainable?

This is the problem with Tories. They talk about business as if they know it. They assume that every businessman is a multi-billionaire. When most self-employed business people start, they earn less than the minimum wage. If they can take out £1,000 or £2,000 in a dividend to help them make ends meet at the end of the year, that is the right thing for them to be able to do. If they become half a Microsoft in the future, they pay taxes, employ tens of thousands of people, and we all get to benefit. None of these people will now do that automatically. They will take a second look, have a pause, and wonder whether the risk is worth taking because of the disincentive put in place today.

rose—

I will not give way for the moment, because I want to make a little progress.

The Chancellor also announced some £350 million for Scotland. [Interruption.] I thought that he might want me to welcome that. The problem is that it is all smoke and mirrors. Even after today’s announcement, Scotland’s discretionary spending will still be down £1 billion between this year, 2016-17, and the end of this Parliament, and more than £2.5 billion down in the Tory decade since 2010. Every little helps, but we will not be putting out the bunting to celebrate the Chancellor’s largesse.

The key point I want to make is about Brexit. The hard Tory Brexit—the elephant in the room barely mentioned by the Chancellor—is approaching quickly. It means that we will revert to WTO rules, with all the tariffs and other regulatory barriers, if a better deal cannot be struck, and I have no confidence at all in this Government’s ability to deliver that deal.

Will the hon. Gentleman give way?

Not at the moment.

There is no guarantee that a deal will be done. If the Chancellor expects that the plans outlined today can cope with the consequence of a cliff-edge Brexit, which the Prime Minister plans, then the whole Government are in for a very rude awakening.

Let us look at some facts. The economic value of EU citizens working in the UK is enormous. PricewaterhouseCoopers told us last year that the impact of migration restrictions alone due to Brexit could lead to a loss of over 1% of GDP. That 1% fall would more than halve the Government’s GDP growth forecasts for every single year of this forecast period, rendering them meaningless.

Just to put some colour into that, my hon. Friend the Member for Dundee West (Chris Law) today met representatives of the computer games industry, who said that 98.4% of the companies that responded to them had said that the Government should immediately guarantee the status of EU nationals working in the UK. That would have been, if not a fiscal measure, an active and positive economic one for the Chancellor to have announced today. It would have been an active and positive economic measure to guarantee that the UK would fully replace lost EU funding post-2020, specifically the less favoured area support scheme, particularly if the UK leaves the EU before the closure window in 2019. It would have been a positive economic measure today to confirm the UK’s intention to negotiate substantial and long transitional arrangements for the financial sector, to avoid the loss of jobs, income, headquarters and tax.

Was my hon. Friend as concerned as I was at the announcement just six days ago in the Irish press that since the Brexit vote over 100,000 UK companies have registered, or taken steps to register, offices in Ireland?

I am not shocked or surprised by that. What we need to do is ensure, certainly in Scotland, and in the UK if the Government can find the will to do it, that we make this country as attractive as possible as a place to continue to invest in and run businesses in, and for us that means staying in the single market and, frankly, staying in the EU.

Finally, I want to refer to announcements made in relation to the Budget over the past week. There was the decision to have extra departmental spending cuts, and the decision on personal independence payments and other welfare measures. The latter, we believe, demonstrates the real impact of the welfare cap in punishing the most vulnerable and balancing the books on the backs of the poor, confirming many predictions that the UK is set to become more unequal than it has been since the days of Margaret Thatcher, and further confirming that this Government have learnt nothing. They are tweaking the numbers to fit the ideology, driven by an austerity agenda and failing to realise that they cannot cut their way to growth. At its heart, the real tragedy of this Budget, only a week or so before article 50 is invoked, is that Brexit was the word that dared not speak its name, and this country is completely unprepared for the economic tsunami that this Government will unleash.

There is now a 10-minute time limit on speeches.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

The good news is in the forecasts. I am delighted that the Government have gone back to the forecasts they put to us in March 2016, when they rightly said that the UK economy would grow by 2% in 2016, and by little over 2% in 2017. I welcomed those forecasts at the time and held to them throughout the past year. I am delighted that the Treasury has now largely backed those more sensible forecasts.

However, we need to ask why the Treasury, the Office for Budget Responsibility, the Bank of England and many other independent forecasters got the forecasts so comprehensively wrong in the summer of 2016, and why the autumn statement forecasts were still so wrong at the end of last year. I wonder whether we need some efficiency improvements in their economic forecasting departments. Do we really need all those forecasters in the OBR, the Treasury and the Bank of England, if they are going to get it so comprehensively wrong and make the Chancellor’s job so difficult? He is trying to chart a consistent and stable course through a set of forecasts that are rather like a wild ride to some kind of nightmare world, only to discover that there is no nightmare but rather a good outlook.

The right hon. Gentleman says that we ought to get rid of forecasters in the OBR and the Bank of England if they get the forecasts wrong. Plenty of modellers and forecasters in the City of London got their forecasts wrong before the crash in 2008, but I am sure he does not believe that we should end the banking trade in the City of London.

I do not think that the hon. Lady was listening to what I said. I asked whether we have too many of them, because we do not need quite so many to get it wrong; I think that we could be more economical in getting it wrong, if that is what they persist in doing. Certainly, the official forecasters completely missed the banking crash of 2008-09, which some of us did not miss. Then, of course, they got the Brexit impact completely wrong. The Scottish National party is redefining what it believed at the time of the remain campaign. I remember quite clearly it supporting a campaign that said, in terms, that those official forecasts were right—that confidence would be damaged, and therefore consumer expenditure would fall, whereas it has actually gone up very strongly. It said that investment would collapse, but it did not, because the demand was there, and companies need to meet it.

I clearly remember being in the Treasury Committee when we interviewed the Chancellor, and clearly remember holding him to account for his bogus forecasts, which were clearly over the top, clearly bound to turn people off and clearly led to the wrong result on 23 June.

I am delighted that the hon. Gentleman shared my scepticism. I just wish that he had said rather more at the time when we were fighting the referendum campaign, because I do not remember him being on my side or making similarly helpful comments before people went to vote.

One of the difficulties I found when I was Minister with responsibility for construction was that statistics from the Office for National Statistics are often incomplete and based on only partial information. Does my right hon. Friend agree that if forecasts were more infrequent, we might get the numbers right more often?

That might be worth looking at. We need to consider why the forecasts went so comprehensively wrong on this occasion. We also need to probe further why they went so wrong in 2007-08, when they disrupted the world economy in the west. They disrupted the Labour Government very dramatically, because there was absolutely no foresight about the consequences of the actions they were taking over the banking system, first allowing it to expand too fast and then collapsing it far too quickly, with awful consequences, as we know. I am delighted that I can fully support the Government’s latest forecasts, because they are in line with where I have been throughout.

That brings me neatly to the monetary situation. The Government need to recognise that there is a new move afoot. We will probably see an interest rate rise in the United States of America next week, and we might see two or three rises of 25 basis points over the course of this year, because it recognises that its recovery is sufficiently advanced. There is quite a bit more inflation in the American system, and it needs to start to normalise interest rates a little more. We might even hear from the European Central Bank tomorrow that it is no longer thinking of cutting rates further; they are already negative. It might need to think in due course about tapering its rather generous quantitative easing programme.

We are moving into a world where interest rates tend to go upwards, rather than going downwards or staying stable. If we are too slow in responding to that mood, we will find undue pressure on the pound. I do not think that has anything to do with Brexit; I think it is to do with interest rate differentials. The pound started to fall away in the summer of 2015, and most of the devaluation we have seen to date actually took place by April last year, before the vote, but there has been more pressure in recent weeks. When people look at these interest rate differentials, they will say, “Why don’t I hold my money in dollars? Not only will I immediately get a pick-up in interest, but I think there will be further rate rises in America.” We need to factor that in. That is why I welcome the Government’s decision to increase public spending in certain areas. As a constituency MP, I want more money spent on social care. I represent a high-cost area of the country, where the shoe is pinching and there are more people needing that assistance. The Government were right to make a sensible contribution, and I look forward to seeing the details.