HM Treasury Detailed Budget Report

7th March 2024

The last few years have been tough for the UK economy, which has faced unprecedented shocks from the legacy of the COVID-19 pandemic, an energy price spike driven by Putin's illegal invasion of Ukraine, and globally high inflation.

At the beginning of 2023 the Prime Minister set out five priorities, three of which were economic: to halve inflation, grow the economy and get debt falling. At Spring Budget the government is delivering on these priorities: inflation has fallen, growth has been more resilient than expected, and debt is forecast to fall.

Inflation has more than halved from its recent peak and the government is continuing to support the Bank of England, with policy decisions at this event directly reducing inflation in 2024-25. The OBR forecasts inflation to fall to its 2% target in Q2 2024, a year earlier than in their November 2023 forecast.

As a result of falling inflation, real wages are rising. The OBR now expects living standards, as measured by real household disposable income (RHDI) per person, to grow by 0.8% in 2023-24 and continue to grow in each year of the forecast. In the latest data, people's real incomes were around £1,100 higher than the OBR
expected in their March 2023 forecast.

In November 2022, the OBR forecast a year-long recession and for the economy to contract by 1.4% in 2023. Similarly, the Bank of England forecast a contraction of 1.5% in December 2022. The UK economy, supported by government policy, has proved much more resilient.

GDP grew by 0.1% in 2023 and the unemployment rate has remained low by historical standards at 3.8% in Q4 2023, below the OBR's November 2022 forecast of 4.6%. Growth is now forecast to pick up from the first half of 2024 and the IMF is forecasting that the UK will have the third fastest cumulative growth in the G7 over
the 2024-2028 period.

The government is on track to meet both its debt and borrowing fiscal rules, with underlying debt falling as a share of GDP to 92.9% in 2028-29. The wider measure of headline debt falls in every year from 2024-25 to reach 94.3% in 2028-29. Borrowing is forecast to fall in every year, reaching £39.4 billion or 1.2% of GDP by 2028-29.
This would be the lowest level of borrowing as a share of GDP since 2001-02. Total borrowing from 2023-24 to 2028-29 is forecast to be £0.3 billion lower than at Autumn Statement 2023.

The economy is now beginning to turn a corner and because the government is sticking to the plan it can now make further tax cuts for working people, boosting growth whilst keeping the public finances on a sustainable path.

The tax system should be fair, simple, and reward hard work. At the moment, if you are of working age and get your income from having a job, you pay both National Insurance contributions (NICs) and income tax. If you get your income from other sources you only pay income tax. Reducing employee and self-employed National
Insurance is the best way to target working people, supporting growth and making the tax system fairer.

That is why the government cut NICs for 29 million workers at Autumn Statement 2023. The government is building on this by making a further cut worth over £10 billion a year for workers across the UK.

The government is cutting the main rate of employee National Insurance by 2p from 10% to 8% from 6 April 2024. Combined with the 2p cut announced at Autumn Statement 2023, this will save the average worker on £35,400 over £900 a year.

The government is also cutting a further 2p from the main rate of self-employed National Insurance on top of the 1p cut announced at Autumn Statement 2023.

This means that from 6 April 2024 the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2, this will save an average self-employed person on £28,000 around £650 a year.

The combined effects of these reductions to National Insurance also means that a person on the average wage now has the lowest effective personal tax rate since 1975.

The OBR forecast that, as a result of the reductions to NICs at Spring Budget, total hours worked will increase by the equivalent of almost 100,000 full-time workers by 2028-29. Combined with the impact of the NICs cuts announced at Autumn Statement 2023 the OBR expects that total hours worked will increase by the
equivalent of around 200,000 full-time workers by 2028-29.

Accounting for policies announced at Spring Budget and the previous two fiscal events, the OBR forecasts that tax and labour market measures will increase total hours worked by the equivalent of more than 300,000 full-time workers by 2028-29.

The High Income Child Benefit Charge is another part of the tax system the government wants to make fairer. Child Benefit is crucial to help parents pay for the costs associated with having children, helping them to balance work with looking after their children. It is not fair that a household with two parents each earning £49,000 a year will receive Child Benefit in full, while a household earning less overall but with one parent earning over £50,000 will see some or all of the benefit withdrawn.

The government is committed to removing this unfairness and moving to a system based on household rather than individual incomes by April 2026, and will consult in due course.

In the meantime, to further support those in work, from April 2024 the government will raise the threshold for the High Income Child Benefit Charge to £60,000 taking 170,000 families out of paying this tax. The rate of the charge will also be halved so that Child Benefit is not repaid in full until you earn £80,000. The government estimates that nearly half a million families will gain an average of £1,260 in 2024-25 as a result.

To support people with the cost of living, the government is maintaining the rates of fuel duty at the current levels for a further 12 months, through extending the temporary 5p cut and cancelling the planned increase in line with inflation for 2024-25, saving the average car driver £50 in 2024-25. The government is also extending the alcohol duty freeze from 1 August 2024 until 1 February 2025, resulting in 2p less duty on an average pint of beer than if the planned increase had gone ahead. Together these measures come at a cost of over £8 billion across the forecast period.

The government is providing an additional £500 million (including Barnett impact) to enable the extension of the Household Support Fund in England from April to September 2024, to continue providing targeted support to vulnerable households with the cost of essentials such as food and utilities, as inflation continues to fall.

The government is reforming how it delivers key public services and boosting public sector productivity to ensure that every pound of taxpayers' money is well spent. Departmental spending has increased significantly over this parliament to support public services in the face of unprecedented economic and geopolitical
shocks. Total departmental spending has grown by 3.2% a year in real terms with a 2.3% increase in day-to-day spending and a 7.0% increase in capital. Total departmental spending will be £86 billion higher in real terms by 2028-29 than it was at the start of this Parliament (2019-20).

Despite this increase in funding, the average productivity of public services is estimated to be 5.9% below pre-pandemic levels.

Returning productivity to prepandemic levels would deliver up to £20 billion of benefits a year.


To address this the government is announcing the next steps in the Public Sector Productivity Programme, including a comprehensive NHS productivity plan backed by £3.4 billion of funding. This will double investment in NHS technological and digital transformation, including to upgrade vital MRI scanners, roll out universal electronic patient records and reduce the time frontline workers spend
on administrative tasks. This will help unlock £35 billion in cumulative productivity savings from 2025-26 to 2029-30.

As part of the Programme, the government is also investing £800 million in wider public services which will deliver up to £1.8 billion worth of benefits over the forecast period. In the run up to the next Spending Review, relevant departments will develop detailed productivity plans, building on their work to date and the funding announced at Spring Budget.

The government is also announcing an additional £2.5 billion of day-to-day funding for the NHS in England in 2024-25, protecting funding levels in real terms and supporting the NHS to continue to improve performance and reduce waiting times.

The government is bringing forward a series of reforms to ensure the tax system remains fair, keeps pace with developments in the economy, and supports sustainable public finances.

To help reduce taxes on working people the government will ensure that those with the broadest shoulders pay a bit more, by abolishing the tax rules for non-UK domiciled individuals, or non-doms, and replacing them with a residence-based regime. This will ensure that all UK residents who stay in the UK for over four years will pay the same tax on their foreign income and gains, regardless of their
domicile status, creating a modernised regime that is simpler, fairer and more competitive.

The government is making the property tax system fairer and more efficient by abolishing the Furnished Holiday Lettings tax regime to level the playing field between short-term and long-term lets and support people to live in their local area; reducing Capital Gains Tax on residential properties to raise revenue and boost the availability of housing by encouraging residential disposals; and abolishing Multiple Dwellings Relief which has seen incorrect and abusive claims.

These measures raise over £600 million a year in total in 2028-29.
The government is extending the Energy Profits Levy (EPL) by an additional year until March 2029, raising £1.5 billion. To put beyond doubt that the EPL is temporary, the government will include legislation in the Spring Finance Bill to disapply the levy when prices return to normal.

The government is committed to creating a smoke-free generation and tackling youth vaping. To support this the government is introducing a new duty on vaping and increasing tobacco duty from October 2026, raising revenue to support public services like the NHS.

The government is continuing to tackle tax non-compliance by making further investments, including in HMRC's capacity to collect tax debts. These measures are forecast to raise over £4.5 billion of tax revenue by 2028-29.

Spring Budget sets out the government's progress in delivering the growth package from Autumn Statement 2023, including outlining next steps on the £4.5 billion funding package for strategic manufacturing sectors and announcing new measures including introducing a new UK ISA to channel more investment into UK equities.

The government is committed to supporting small businesses and at Autumn Statement 2023 announced an extension to the 75% business rate relief for eligible retail, hospitality and leisure properties for 2024-25, a tax cut worth £2.4 billion.

Spring Budget goes further to support SMEs by increasing the VAT registration threshold from £85,000 to £90,000 to cut their taxes and help them grow.

The government is also announcing over £1 billion of new tax reliefs for the UK's world-leading creative industries. This includes introducing a 40% relief from business rates for eligible film studios in England for the next 10 years; introducing a new UK Independent Film Tax Credit; and increasing the rate of tax credit by 5%
and removing the 80% cap for visual effects costs in the Audio-Visual Expenditure Credit. A permanent extension will be made to tax relief for theatres, orchestras, museums and galleries, and £26 million of funding will be provided to upgrade the National Theatre's stages and infrastructure.

The OBR expects that policies announced at Spring Budget and the previous two fiscal events will increase the size of the economy by 0.7% by 2028-29. This is through increasing total hours worked by the equivalent of over 300,000 fulltime workers and boosting business investment by £14 billion. Together, this Spring Budget and Autumn Statement 2023 deliver a total tax cut of £20 billion
for workers, the largest ever cut to employee and self-employed NICs, as well as making full expensing permanent - with the combined impact of government policy from Autumn Statement 2022 reducing the tax burden by 0.6 percentage points.

The economy is beginning to turn a corner and the government is sticking to its plan: inflation is down, growth is forecast to improve and debt is on track to fall. The government is taking long-term decisions to cut taxes further for working people, reform how it delivers public services, and build a stronger economy and a brighter future for the UK.

Read the full HM Treasury Report HERE
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