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Budget 2016: George Osborne warns of impact of leaving EU Budget 2016: George Osborne unveils sugar tax on soft drinks
(35 minutes later)
Chancellor George Osborne has revised down the UK's growth forecast - and warned leaving the EU will put the economy at greater risk. Chancellor George Osborne has unveiled a tax on the makers of sugary soft drinks to tackle childhood obesity.
Unveiling his eighth Budget, he said the country was "well placed" to handle a "dangerous cocktail" of global economic risks if "we act now so we don't have to pay later". He revised down the UK's growth forecast in his eighth Budget and sparked controversy by warning of the risks to the UK economy of EU exit.
Growth for 2016 will be 2% - 0.4% lower than predicted last year, he said. He said the UK was "well placed" to handle a "dangerous cocktail" of global economic risks if "we act now so we don't have to pay later".
Mr Osborne will seek to save £3.5bn by 2020 through extra spending cuts. Labour said it was a budget with "unfairness at its very core".
But in a move that will have angered colleagues who think the UK would be better off out of the European Union, he cited the Office for Budget Responsibility's view that the UK will be "safer, stronger and more secure" if voters chose to remain in the EU in June's referendum. In his biggest Parliamentary test to date, Labour leader Jeremy Corbyn is delivering the Opposition's response.
Mr Osborne said the Office for Budget Responsibility had made clear its forecasts were based on the assumption the UK would remain in the UK and had warned that "there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty". Mr Osborne announced £3.5bn in extra spending cuts by 2020 to help meet his financial targets, which he was forced to admit had slipped in the four months since his Autumn statement, due to sluggish growth.
Mr Osborne confirmed that he has failed to meet the rule of debt falling as a proportion of GDP this year. He said the £530m raised by a tax on the makers of sugary drinks would be spent on doubling the funding of primary school sports.
But he said the UK was still on course to cleared by 2019/20 thanks to the extra spending cuts, with a budget surplus of £10.4bn in 2019/20 and £11bn the following year. The levy will be introduced in two years' time, to give companies time to adapt products to reduce their sugar content.
He will tell MPs: "Our economy is strong, but the storm clouds are gathering again. He froze fuel duty but announced a 2% increase in tax on cigarettes, with 3% on rolling tobacco, from 6pm. Beer and cider duty will be frozen as will the levy on whisky and other spirits.
"Our response to this new challenge is clear. A Budget where we act now so we don't pay later. Other key Budget announcements include:
"In this Budget we choose the long term. We choose to put the next generation first." In a move that has angered Conservative colleagues who think the UK would be better off out of the European Union, he cited the Office for Budget Responsibility's view that the UK would be "safer, stronger and more secure" if voters chose to remain in the EU in June's referendum.
Mr Osborne said the Office for Budget Responsibility had made clear its forecasts were based on the assumption the UK would remain in the EU and had warned that "there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty".
In a statement, Conservative MP and Leave campaigner David Davis said: "The real risks for Britain lie in remaining within the EU.
"Many of the 'cloudy skies' and 'cocktail of risks' the chancellor speaks of originate from a failing, shrinking and unstable European economy."
Mr Osborne said the UK was still on course to clear its deficit by 2019/20 thanks to the extra spending cuts, with a budget surplus of £10.4bn in 2019/20 and £11bn the following year.
Mr Osborne's package includes a £1.5bn plan to turn all state schools into academies and allow some to have longer days as the government seeks to show it can still deliver the changes it promised despite tougher economic times.Mr Osborne's package includes a £1.5bn plan to turn all state schools into academies and allow some to have longer days as the government seeks to show it can still deliver the changes it promised despite tougher economic times.
In his biggest Parliamentary test to date, Labour leader Jeremy Corbyn will deliver the Opposition's response immediately after Mr Osborne's speech. On the investment side, Mr Osborne committed £300m for transport projects, with the government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England.
The chancellor watered down planned tax credit and police budget cuts in his November Autumn Statement but sluggish growth since then has forced him to revise his calculations.
Speculation ahead of the Budget has centred on possible tax rises, including a claim by the insurance industry that another increase in Insurance Premium Tax is planned.
He could also capitalise on low oil prices to raise fuel duty, although this would be opposed by many Conservative MPs, and slap extra tax on tobacco.
There have also been calls for some tax cuts, with suggestions of an increase in the level at which the higher rate of income tax kicks in.
On the investment side, Mr Osborne is set to commit £300m for transport projects, with the government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England.
Almost half of the transport money committed was announced in the Autumn Statement.Almost half of the transport money committed was announced in the Autumn Statement.
The government has also announced a 'Help to Save' scheme under which would give low-paid workers a top-up if they put savings aside.The government has also announced a 'Help to Save' scheme under which would give low-paid workers a top-up if they put savings aside.
Shadow Chancellor John McDonnell, for Labour, called for "straight talking" from the chancellor, with more focus on long-term investment and "no more press releases about infrastructure projects or housing projects that aren't delivered and aren't properly funded".Shadow Chancellor John McDonnell, for Labour, called for "straight talking" from the chancellor, with more focus on long-term investment and "no more press releases about infrastructure projects or housing projects that aren't delivered and aren't properly funded".
Under the education package of reforms, every state school in England will have to become an academy - meaning they are independent of local authority control - by 2020 or to have a plan in place by that date to do so by 2022.Under the education package of reforms, every state school in England will have to become an academy - meaning they are independent of local authority control - by 2020 or to have a plan in place by that date to do so by 2022.
The move would end the century-old role of local authorities as providers of education.The move would end the century-old role of local authorities as providers of education.
Schools will also be able to bid to be allowed to change their hours to suit their pupils' needs.Schools will also be able to bid to be allowed to change their hours to suit their pupils' needs.
How do you think the Budget will affect you? Send your comments and questions to haveyoursay@bbc.co.uk.How do you think the Budget will affect you? Send your comments and questions to haveyoursay@bbc.co.uk.
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