Chancellor Rishi Sunak’s 2020 Budget Speech

Madam Deputy Speaker,


Pubs are at the centre of community life…


Madam Deputy Speaker,


Pubs…pubs are at the centre of community life. But too many have closed over the past decade. We’re already promised to introduce a business rates ‘pub discount’, of £1,000, for small pubs. But I’ve heard calls from many Honourable and Right Honourable Members, including My Honourable Friend the Member for Dudley South, that we need to do more, especially given the possible impact of coronavirus on our pubs.


So today, I can announce that, exceptionally, for this year, the business-rate discount for pubs will not be £1,000 – it will be £5,000. And I’m also pleased to announce that the planned rise in beer duty will also be cancelled. And because of decisions I’ve taken elsewhere in this Budget, I am also freezing duties for cider and wine drinkers as well. For only the second time in almost twenty years, that’s every single one of our alcohol duties frozen.


Madam Deputy Speaker,


I have heard representations that after nine years of being frozen, at a cost of £110bn to the taxpayer, we can no longer afford to freeze fuel duty. I’m certainly mindful of the fiscal cost and the environmental impacts. But I’m taking considerable steps in this Budget to incentivise cleaner forms of transport. And many people still rely on their cars. So I’m pleased to announce today that for another year fuel duty will remain frozen. Compared to pre-2010 plans, that’s a saving of £1,200.


Madam Deputy Speaker,


Wages – up.


National insurance – cut.


The tampon tax – abolished.


Spirits duty – frozen.


Beer duty – frozen.


Wine and cider duty – frozen.


Fuel duty – frozen.


We promised to cut taxes and the cost of living – and we got it done.


Madam Deputy Speaker,


As Conservatives, we know that to put more money in people’s pockets, we need a thriving private sector. That is what drives growth, that is what creates jobs, that is what lifts living standards. So the second part of our plan for prosperity is to unleash the power of business.


Businesses need support to start up, grow and export. So today, I provide: £130m of new funding to extend Start-up Loans; £200m for the British Business Bank to invest in scale-ups; another £200m for life sciences; more money for Growth Hubs; 21 cities with British Library business support; £5bn of new export loans for businesses; and dedicated trade envoys representing the North, the Midlands, Wales and the West of England in our embassies around the world.


Madam Deputy Speaker, businesses also need a fair tax system.


We were elected on a manifesto that promised to review and reform Entrepreneurs’ Relief. I’ve now completed that review – and here’s what we’re going to do. Entrepreneurs’ relief is:


Expensive – at a cost of over £2bn per year.


Ineffective – with less than 1 in 10 claimants saying the relief was an incentive to set up their business.


And unfair – with nearly three quarters of the cost going to just 5,000 individuals.


Just because it’s called Entrepreneurs’ Relief doesn’t mean that it’s entrepreneurs who mainly benefit.


For all these reasons, I have heard representations that I should completely abolish it. The Institute for Fiscal Studies have criticised it. The Resolution Foundation called it “the UK’s worst tax break”. And I’m sympathetic to that argument.


But at the same time, we shouldn’t discourage those genuine entrepreneurs who do rely on the relief. We need more risk-taking and creativity in this country, not less.


So I have decided not to fully abolish Entrepreneurs’ Relief today. Instead, I will do what the Federation of Small Businesses called “a sensible reform” and reduce the lifetime limit from £10m to £1m. 80% of small business owners are unaffected by today’s changes. Those reforms save £6bn over the next five years – and I’m giving almost all of that money straight back to business through three additional measures. The Research and Development Expenditure credit will be increased from 12 to 13% – a tax cut worth £2,400 on a typical R&D claim. The Structures and Buildings Allowance will be increased from 2 to 3%, giving an extra £100,000 of relief if you’re investing in a building worth £10m. And, to cut taxes on employment, I will deliver our promise to increase the Employment Allowance by a third to £4,000. That’s a tax cut this April for nearly half a million small businesses. Another step towards the dynamic, low tax economy we want to see.


Madam Deputy Speaker – we promised to cut taxes on business – we’re getting it done.


Madam Deputy Speaker, to help our businesses lead the next generation of high-productivity industries, we also need to invest now in the technologies of the future.


We are a country of Newton, Hodgkin and Turing – ours is a history filled with ideas, invention and discovery. And it’s truly a national history. The first steam railway ran between Stockton and Darlington. The first television was invented by a Scot. A Welshman invented the first hydrogen fuel cell. And Jocelyn Bell Burnell, born in Northern Ireland, discovered the first radio pulsars.


To compete and succeed over the next decade and beyond, we need to recapture that spirit. So the third part of our Plan for Prosperity is to invest in ideas.


Madam Deputy Speaker,


In our manifesto, we made a promise to double investment in research and development to £18bn. I will not be doing this today. Instead, I will increase investment in R&D to £22bn a year. That is the fastest and the largest increase in R&D spend ever. As a percentage of GDP, it will be the highest in nearly forty years – higher than the US, China, France and Japan. And a major step towards our target of increasing public and private investment in R&D to 2.4% of GDP.


And we won’t wait to get started – next year, funding will grow by 15%, the fastest year-on-year growth on record. Detailed allocations of our new investment in ideas will be set out at the Spending Review. But I can make some announcements today.


I’m investing £1.4bn in our world-leading science institute at Weybridge, where, as we speak, they’re working to analyse samples of Coronavirus. To secure our leadership in the technologies of the future, I’m investing over £900m in nuclear fusion, space and electric vehicles. And as we invest in ideas, we’re also changing the way we fund science in this country. I can confirm that we will invest at least £800m in a new blues-skies funding agency here in the UK modelled on the extraordinary ‘ARPA’ in the US.


And as we invest in ideas, we’re also changing where we fund science in this country. Today, half of R&D funding goes to London, the East and the South East of England. So we’re investing £400m new funding into high-quality research, with much of that incremental funding going to our brilliant universities around the country. We promised to make this country one of the scientific and research centres of the world – we’re getting it done.


Madam Deputy Speaker,


There can be no lasting prosperity for our people, if we do not protect our planet. So the fourth part of our Plan for Prosperity, is:


To create the high skill, high wage, low-carbon jobs of the future.


To level up, with completely new industries in our regions and nations.


To raise our productivity and lift our quality of life even as we cut our emissions.


The Treasury’s Net Zero Review will set out the Government’s strategic choices ahead of COP26 later this year. Today’s Budget takes the first steps.


First, we will increase taxes on pollution. Electricity is now a cleaner energy form than gas – but our Climate Change Levy, paid by companies, taxes electricity at a higher rate. So as another step towards equalising the rates and encouraging energy efficiency, from April 2022, I’m freezing the levy on electricity and raising it on gas. I will support the most energy-intensive industries to transition to Net Zero, by extending the Climate Change Agreements scheme for a further two years.


To tackle the scourge of plastic waste, we will deliver our manifesto promise to introduce a new Plastics Packaging Tax. From April 2022, we will charge manufacturers and importers £200 per tonne on packaging made of less than 30% recycled plastic. That will increase the use of recycled plastic in packaging by 40% – equal to carbon savings of nearly 200,000 tonnes.


Let me now turn to Red Diesel. The Red Diesel scheme allows selected users to pay duty of just over 11p per litre for diesel, compared to almost 58p per litre for everyone else. But the sectors using red diesel are some of the biggest contributors to our air quality problem – emitting nearly 10% of the most noxious gases polluting the air of cities like London. This is a tax relief on nearly 14 million tonnes of carbon dioxide every year, the same as the entire population of London and Greater Manchester taking a return flight to New York.


It’s been a £2.4bn tax break for pollution that’s also hindered the development of cleaner alternatives. So I will abolish the tax relief for most sectors. That’s the right thing to do – but I recognise it will be a big change for some industries. So firstly, this change will not take effect for two years – giving businesses time to prepare. Secondly, I have heard the concerns about agriculture, particularly from the NFU, rural colleagues, including My Honourable Friend the Member for Sherwood, so…so…so I have decided that agriculture will retain the relief.


I’ll also…I’ll also keep the relief for rail, for domestic heating, and there will be no impact on fishing. We’ll consult over the summer with other sectors.


And thirdly, to help develop cleaner alternatives to red diesel and other fossil fuels, we will more than double R&D investment in the energy innovation programme to £1bn.


Now, as well as taxing pollution – we will invest and cut taxes on clean transport. We’re introducing a comprehensive package of tax and spend reforms to make it cheaper to buy zero- or low-emission cars, vans, motorbikes and taxis; we’re investing £300m in tackling nitrogen dioxide emissions in towns and cities across England; and we’re investing £500m to support the rollout of new rapid charging hubs, so that drivers are never more than 30 miles away from being able to charge up their car. Taken together, this Budget invests £1bn in green transport solutions.


Madam Deputy Speaker,


Many Members around this House will have seen the devastating impact of the recent floods on homes and businesses in their own constituencies, and particularly the Honourable Member for Barnsley East, my Honourable Friends the Members for Calder Valley, and Telford, and My Right Honourable Friend the Member for Ludlow.


So I can announce today that I’m making £120m available immediately to repair all defences damaged in the winter floods. To support those areas that have been repeatedly flooded, I’m also providing £200m of funding directly to local communities to build their flood resilience. And to protect people and over 300,000 properties, I’m doubling our investment in flood defences over the next six years to £5.2bn.


Madam Deputy Speaker,


We’re also supporting natural habitats like woodlands and peat bogs. I can confirm today that to protect, restore and expand these wonderful habitats – and capture carbon – we will provide £640m for a new Nature for Climate Fund.


Over the next five years, we will plant around 30,000 hectares of trees – that’s a forest larger than Birmingham – and restore 35,000 hectares of peatland. This Government intends to be the first in history to leave our natural environment in a better state than we found it.


Madam Deputy Speaker,


I can make one further announcement on green growth. Carbon Capture and Storage is precisely the kind of exciting technology where Britain can lead the world over the next decade. I can announce today that we will invest at least £800m to establish two or more new Carbon Capture and Storage clusters by 2030. Once up and running, these clusters will store millions of tons of carbon dioxide that would otherwise be released into the atmosphere. The new clusters will create up to 6,000 high-skill, high-wage, low-carbon jobs in areas like Teesside, Humberside, Merseyside or St Fergus in Scotland. It’s levelling up in action.


Madam Deputy Speaker – green jobs; better flood defences; cheaper electric vehicles; innovative new technologies. We promised to protect our environment – we’re getting it done.


Madam Deputy Speaker,


We as a party know that talent is evenly spread in our country, but opportunity is not. We have to put that right. We need to build the infrastructure that will lay the foundations for a new century of prosperity. We need to grab the opportunity to upgrade, to improve, to enhance, to level up. That starts today with the next part of our plan – as we get Britain building.


Madam Deputy Speaker,


Over the next five years, we will invest more than £600bn pounds in our future prosperity. Public net investment will, in real terms, be the highest it has been since 1955. Take the average amount we’ve invested over the last forty years in real terms – we’re tripling it. Capital budgets in 2024-25 alone will reach over £110bn.


I will set out the detailed capital allocations at the Spending Review – but I’m taking three major steps today.


First, we’re going to change the whole mindset of Government. To make sure economic decision-making reflects the economic geography of the country, we’re reviewing the Treasury’s Green Book, we’ll have Treasury offices in Scotland, Wales and Northern Ireland, and I can announce today that we’re also opening a new economic campus in the North, with over 750 staff from the Treasury, and the departments for business, local government and trade. And we won’t stop there – our ultimate ambition is to move 22,000 civil servants outside central London.


Second, because of this changed mindset, we’ll invest more in our nations, cities and towns.


Today’s Budget provides an extra £640m for the Scottish Government, £360m for the Welsh Government, and £210m for the Northern Ireland Executive. I’m announcing £242m of funding for new City and Growth Deals, taking our investment in these deals to more than £2.7bn. We’ve agreed today a new devolution deal in West Yorkshire, with a directly-elected Mayor for the region. And to make sure that it isn’t just Londoners who benefit from the kind of long-term transport deal that helped TfL, I’m announcing today that the new West Yorkshire Mayor will, along with seven other Metro Mayors, get new, London-style funding settlements, worth £4.2bn. These settlements are in addition to the Transforming Cities Fund, which will invest over a billion pounds in local transport in 12 further cities, including Stoke, Preston, Derby and Nottingham, and Southampton.


Third, we’re going to build broadband, railway, roads – if the country needs it, we will build it.


Today’s Budget provides £5bn to get gigabit-capable broadband into the hardest-to-reach places, and £510m of new investment into the shared rural mobile phone network, which means that in the next five years, 4G coverage will reach 95% of the country. And let me thank My Right Honourable Friend the Culture Secretary, who will get this done.


We’re…we’re also…we’re also going to build better railways, Madam Deputy Speaker.


With spades going in the ground on HS2, our commitment to fund the Manchester-Leeds leg of the Northern Powerhouse Rail, funding today for a new station at Cambridge South and the Midlands Rail Hub, Darlington station moving to the next stage of development and approval, and funding to make a dozen train stations more accessible.


And there’s more money for our roads, too. Today, I’m announcing the biggest-ever investment in strategic roads and motorway – over £27bn of tarmac. That will pay for work on over 20 connections to ports and airports, over 100 junctions, and over 4,000 miles of road. I’m also announcing new investment in local roads, alongside a new £2.5bn pothole fund – that’s…that’s £500m every single year; enough to fill, by the end of this Parliament, 50 million potholes. The details of all the road schemes I’m funding will be published later today – and I thank my Right Honourable Friend the Transport Secretary for all his efforts.


Our ambition is truly national. The A417 in the South West. The A428 in the East. The A46 in the Midlands. Unclogging Manchester’s arteries. Freeing the traffic north of Newcastle. And, something my North and Mid Wales colleagues will be particularly pleased to hear – we’re protecting beautiful villages in the Welsh Borders, as we finally build the Pant-Llanymynech bypass.


We promised to get Britain moving – and we’re getting it done. There’s one more road I’d like to mention. It’s one of our most important regional arteries. It is one of those totemic projects symbolising delay and obstruction. Governments have been trying to fix it since the 1980s. Every year, millions of cars crawl along it in traffic, ruining the backdrop to one of our most important historic landmarks.


So, to the many Honourable and Right Honourable Members who have campaigned for this moment – I say this: The A303 – this Government’s going to get it done.


Madam Deputy Speaker,


Today, we’ve announced the biggest programme of public investment ever. £27bn for strategic roads this Parliament. Funding to fill 50m potholes. New railways, new stations. £5bn for broadband. A new Mayor for West Yorkshire. Investment in every region and every nation of our United Kingdom. We promised to get Britain building – this Budget is getting it done.


Madam Deputy Speaker,


Only by having a Plan for Prosperity will we grow the economy. Only by having a growing economy can we invest in our public services. And only by investing in our public services, the people’s priority, can we send a clear message to those who rely on them: You are our priority.


Our public services are the one of the most important tools by which we, the Government, can level up and spread opportunity, so that no matter who you are or where you were born, you’ll have every chance to succeed in our modern dynamic economy. And that starts with education.


We’ve already provided schools with a three-year settlement worth over £7 billion by 2022. My Right Honourable Friend the Education Secretary is taking forward our plans to increase per-pupil funding next year by an average of over 4%. Today, I’m providing every region in the country with funding for specialist 16-19 maths schools £25,000 per year, on average, for each secondary school to invest in arts activities, and £30m a year to improve PE teaching, along with £8m for the Football Foundation’s scheme to build new pitches for around 300,000 people to play on.


And to support families, I’m providing £2.5m to fund research into how best to integrate family services, including family hubs, championed by My Honourable Friend the Member for Congleton.


Next, I’d like to take the opportunity to pay tribute to my predecessor and friend, the Right Honourable Member for Bromsgrove.


One of the issues he is most passionate about is levelling up further education. At the Spending Round, he increased funding for 16-19 education by £400m. Today, I can secure his legacy, with £1.5bn of new capital over five years to dramatically improve the condition of our entire FE college estate. My predecessor wanted to level up further education – Saj, we’re getting it done.


Madam Deputy Speaker, I have one final education announcement.


I’ve talked today about Britain being the country of scientists, inventors and engineers. But we’re also the country of Shakespeare, Austen and Dahl. Our greatest export to the world is our language. Our greatest asset is the free exchange of ideas and debate. And our greatest responsibility is the education of our young people.


A world-class education will help the next generation thrive. And nothing could be more fundamental to that than reading. And yet digital publications are subject to VAT. That can’t be right.


So today, I am abolishing the reading tax. From 1st Dec, just in time for Christmas, books, newspapers, magazines or academic journals, however they are read, will have no VAT charge whatsoever. There will no VAT on historical fiction by Hilary Mantel, manuals or textbooks like Gray’s Anatomy, or, indeed, works of fantasy, like John McDonnell’s “Economics for the Many”. The irony is, it’s sold…it’s sold so few. It’s literally his own little-read book.


Madam…Madam Deputy Speaker,


Our second priority is to make sure people have affordable and safe housing.


Today, I can make good our promise to extend the Affordable Homes Programme with a new, multi-year settlement of £12 billion. This will be the largest cash investment in affordable housing in a decade.


To support Local Authorities to invest in their communities, I’m cutting interest rates on lending for social housing by 1 percentage point, making available more than £1bn of discounted loans for local infrastructure and consulting on the future of the Public Works Loan Board.


I’m confirming nearly £1.1bn of allocations from the Housing Infrastructure Fund, to build nearly 70,000 new homes in high demand areas across our country, a new £400m Fund for ambitious Mayors like Andy Street in the West Midlands, to build on Brownfield sites, and tomorrow, my Right Honourable Friend the Housing Secretary will set out for the House comprehensive reforms to bring the planning system into the 21st century.


But the housing challenge is most acutely felt by those with no home at all. So today, I’m confirming nearly £650m of funding to help rough sleepers into permanent accommodation. That will buy up to 6,000 new places for people to live, enable a step change in support services, and help us meet our promise to end rough sleeping in this Parliament. And to fund those rough sleeping measures, I’m confirming today that our manifesto promise to introduce a new stamp duty surcharge for non-UK residents will be introduced at a rate of 2% from April 2021.


Madam Deputy Speaker,


I have one further measure to announce on housing. Two and a half years on, we’re still grappling with the tragic legacy of Grenfell.


Last year, we allocated £600m to remove unsafe Aluminium Composite Material (or ACM) from high-rise residential buildings. Today, I go further. Expert advice is clear that new public funding must concentrate on removing unsafe materials from high-rise residential buildings. So, today, I am creating a new Building Safety Fund worth £1 billion. That is what the independent experts have called for. That is what the Select Committee has called for. That is even what the Opposition have called for.


That new fund will go beyond dealing with ACM to make sure that all unsafe combustible cladding will be removed from every private and social residential building above 18 metres high. And My Right Honourable Friend the Housing Secretary will spearhead our efforts to make sure developers and building owners do their fair share as well.


Madam Deputy Speaker,


There is no more cherished public service than our NHS. Whatever resources the NHS needs to deal with coronavirus – it will get. We all benefit from a thriving health service – so it is right that we ask everyone to contribute. Business benefits from our NHS.


So, as promised in our manifesto, the Corporation Tax rate will not be cut this year but will remain at 19% – still the lowest rate in the G20. Migrants benefit from our NHS. And we all want them to do so – but it’s right that what people get out, they also put in. There is a surcharge already, but it doesn’t properly reflect the benefits people receive. So, as we promised in our manifesto, we are increasing the Immigration Health Surcharge to £624, with a discounted rate for children.


To raise further funds for the NHS, I’m announcing a package of measures today to clamp down on aggressive tax avoidance, evasion and non-compliance, including extra funding for HMRC to secure £4.4bn of additional revenue.


And those extra contributions allow me to take three further steps to support our health services.


First, mental health support can be critical for many people – and particularly for our veterans. Thanks to the campaigning from My Honourable Friend the Member for Wolverhampton South West, and My Right Honourable Friend the Member for Harwich and North Essex, I will be supporting veterans with mental-health needs with a £10m donation to the Armed Forces Covenant Fund Trust, and I’m also confirming today that, to encourage employers to provide veterans with job opportunities, we’ll introduce a new National Insurance relief.


Second, I’ve listened to concerns, from all sides of this House, that the pensions tax system is preventing Doctors from taking on more hours. To significantly reduce the number of people that the tapered annual allowance affects, I’m increasing both taper thresholds by £90,000, removing anyone with income below £200,000. Based on their vital work for the NHS, that will take around 98% of consultants and 96% of GPs out of the taper altogether. At the same time, I’m reducing the minimum annual allowance to £4,000 – which will only impact those with incomes above £300,000. This is a £2bn commitment that supports our hardworking Doctors.


Let me turn now to the overall funding settlement for the NHS. We’ve already provided the NHS with a record funding increase. £34bn over five years – the biggest cash increase in public services since the Second World War. Today, I can go further. I can announce over £6bn of new funding in this Parliament to support the NHS. That new money will deliver: 50,000 more nurses, 50 million more GP surgery appointments, and work starting on 40 new hospitals. You heard that right, 40 new hospitals. We promised to back the NHS – and this Budget gets it done.


I have one last point to make about public services. We have now left the EU. We promised to get Brexit done, and we got it done. We promised to regain control of the money we send to Brussels. And for the first time ever, today’s OBR forecast shows that the billions of pounds we would have sent to the EU can now be spent on our priorities.


Today, I’m launching the next Spending Review, to conclude in July, setting out detailed spending plans for the Parliament. Let me set out for the House our new totals for public…spending on public services. The OBR have said that today’s Budget will be the largest sustained fiscal boost for thirty years. Next year, day-to-day departmental spending will grow at the fastest rate in fifteen years. Over the spending review period, its set to grow at the fastest rate since 2004 – an average growth rate in real terms of 2.8% – twice as fast as the economy. That means that by the end of this Parliament, day-to-day spending on public services will be £100 billion higher in cash terms than it is today.


More police – safer streets.


More nurses – better healthcare.


More teachers – better education.


Madam Deputy Speaker, the House now knows what the electorate already knows: The Conservatives are the party of public services.


Madam Deputy Speaker,


We’re at the beginning of a new era in this country. We have the freedom and the resources to decide our own future, a future where we unleash the energy, inventiveness and creativity of all the British people, and a future where we look outwards and are confident on the world stage. That starts right now with our world-leading response to the coronavirus.


This is a Budget delivered in challenging times. We will rise to this moment. We will get through this together. This Budget delivers security today. But it also lays the foundations for prosperity tomorrow. This is just the start.


Over the next few months, we’ll tackle the big issues head-on – from our National Infrastructure Strategy to social care and further devolution.


This is the Budget of a Government that gets things done:


Creating jobs.


Cutting taxes.


Keeping the cost of living low.


Investing in our NHS.


Investing in our public services.


Investing in ideas.


Backing business.


Protecting our environment.


Building roads.


Building railways.


Building colleges.


Building houses.


Building our Union.


A Budget that delivers on our promises.


A People’s Budget from a People’s Government.


And I commend it to the House.