Healey looks to deliver ‘breathing space’

Chancellor John Healey this afternoon delivered a 'breathing space' budget he declared was for British businesses big and small.

He put energy reform and support for high street businesses high on his agenda, along with backing for entrepreneurs and more major devolution measures.

However, there was no major announcement on defence spending, with decisions on how the nation will look to meet its NATO targets delayed until after the spending review next year.

In his announcements on devolution, the chancellor revealed millions would be given to regions to ‘unleash Britain's innovation power’.

And in a move to support the high street and small firms, he announced an increase in the threshold for Small Business Rate Relief for retail hospitality and leisure businesses from £12,000 to £18,000.

He told the Commons: “For 70,000 more businesses I’m not just cutting their rates, I’m taking them out of paying business rates altogether.

"This means half of our shops, restaurants and gyms will now pay no business rates at all."

The chancellor also pledged long term radical reform of the energy market to produce cheaper power. He said: “We will introduce a new cost control framework to drive down all aspects of energy bills.”

He added: “For business, our new British Industrial Competitiveness Scheme will take 25 per cent off electricity bills for 10,000 firms at the heart of British industry. It will go live in April and I confirm we will make backdated payments for energy costs this year, too.”

He pledged the government would only buy and build new projects when they lower bills and when they can connect to the grid.

In other measures he confirmed the government will increase the minimum wage by 3.9 per cent. This will raise the National Living Wage to £13.21 an hour and the 18-20 National Minimum Wage to £11.27. And the 5p cut in fuel duty will be extended to July 2027.

The government will expand challenge led procurement and develop new definition of a UK supplier 'to identify the companies creating genuine investment, wealth and jobs here in Britain'.

A new 'founder’s relief' in capital gains tax was unveiled. Mr Healey described it as 'a 10 per cent rate on lifetime gains of up to £10m for the founders of our most successful firms'.

A new trading allowance will raise the amount people can earn from a new venture tax free from £1,000 to £3,000. And a young entrepreneurs’ allowance will be introduced to cover a year of living costs for young founders 'while they turn their ideas into businesses'.

The chancellor also announcing a new scale up programme to female founders and revealed the British Business Bank will double its funding commitments to women led businesses to £200m.

Looking at devolution and announcing 'good growth funds' for mayors, and 'incubator capital' for areas without mayors, he told MPs: “Local leaders shouldn’t have to come cap in hand to Whitehall to build a new tram or concert hall.”

The chancellor said his plans for 'fiscal devolution' will see 100 per cent of business rates retained locally by the end of the decade. From next year 20 per cent of business rates revenue will go to elected mayors and from 2028 they will get a share of income tax revenue.

He unveiled a series of smaller multimillion pound investments in regions of England, although nothing was announced for Lancashire in his speech.

Turning to defence spending he told the Commons he would set out details of how the UK would meet its NATO commitment to spend 3.5 per cent of its GDP by 2035 after next year’s Spending Review. And he added: “Today I am getting work under way to get there in a fiscally sustainable way.”

On housing, Mr Healey said: “To get more council homes built, I am extending cheaper borrowing for councils and making all land sold to social housing providers VAT free.

“And today I am providing an additional £1.5bn for the Social and Affordable Housing Programme, taking our total government backing for council housing to £40bn.”

The chancellor said his budget would give people 'breathing space' 13 times throughout his hour long speech.