Hammond will bow to pressure from May to turn on the spending taps

Phillip Hammond will tomorrow bow to pressure from Theresa May to ‘turn on the spending taps’ – by announcing Budget boosts for drivers, the elderly and low-income families trapped by payday loans.

After months of tension between Downing Street and the Treasury over the extent to which the Tories should respond to Jeremy Corbyn’s policies, the Chancellor has been forced to abandon his pro-austerity stance. 

In a newspaper article today, the Chancellor Phillip Hammond, above, says he is happy to confirm to motorists ‘we will also be freezing fuel duty for the ninth year in a row’. Phillip Hammond will tomorrow bow to pressure from Theresa May to ‘turn on the spending taps’

What will the Chancellor announce?

He is expected to use his third – and possibly final – Budget to announce:

  • A £30 billion investment package for roads paid for by road tax;
  • Plans to move people trapped on ‘payday loans’ to zero-interest Government loans;
  • Nearly £1 billion extra for social care;
  • £500 million extra for the Armed Forces;
  • A £1.5 billion bailout for the high street by slashing business rates.

Mr Hammond’s room for manoeuvre has already been restricted by Mrs May’s flagship announcement of a £20 billion-a-year boost for the NHS, which sources say the Chancellor tried in vain to block.

He also has to find the money for a boom in council house building and a freeze in fuel duty – announced by Mrs May at the Tory Party conference when she declared the ‘end of austerity’ – and to plug a £2 billion gap in the Government’s jinxed Universal Credit benefits system.

Downing Street strategists, led by Chief of Staff Gavin Barwell, are keen to neutralise the electoral threat of Mr Corbyn, who has made uncosted public spending splurges central to his popularity. 

But Mr Hammond, a fiscal hawk, fears that over-reacting to Labour’s promises risks damaging the party’s reputation for financial responsibility.

Mr Hammond is also expected to announce plans to explore a new no-interest loans scheme to help families who are trapped in arrangements with loan sharks and payday lenders, above. The Chancellor has been forced to abandon his pro-austerity stance [File photo]

Mr Hammond is also expected to announce plans to explore a new no-interest loans scheme to help families who are trapped in arrangements with loan sharks and payday lenders, above. The Chancellor has been forced to abandon his pro-austerity stance [File photo]

He is understood to have confided to friends that he expects the Budget to be his last: by next autumn he will either have been sacked by Mrs May, who will have lost patience with their disagreements; or Mrs May will have been replaced by a Brexiteer Prime Minister such as Boris Johnson who would force the pro-Remain Mr Hammond out of the Cabinet. 

In a newspaper article today, the Chancellor says he is happy to confirm to motorists ‘we will also be freezing fuel duty for the ninth year in a row’. He also hails his ‘bumper’ investment in roads, saying ‘these are the arteries that keep our country alive and they need taking care of’.

The new £28.8 billion boost over the 2020-25 period for ‘strategically important roads’ will increase Highways England’s budget by 40 per cent – funded directly by revenue from Vehicle Excise Duty – to tackle congestion, repair damaged roads and trial next-generation transport methods such as self-driving shuttle services and electric bikes.

Downing Street strategists, led by Chief of Staff Gavin Barwell, above, are keen to neutralise the electoral threat of Mr Corbyn

Downing Street strategists, led by Chief of Staff Gavin Barwell, above, are keen to neutralise the electoral threat of Mr Corbyn

The Chancellor is expected to say the investment can be justified by the fact congestion costs households over £30 billion each year.

Mr Hammond is also expected to announce plans to explore a new no-interest loans scheme to help families who are trapped in arrangements with loan sharks. 

Communities Secretary James Brokenshire is also understood to have won almost an extra £1 billion to ease the adult social care crisis in England, in addition to the current £3.6 billion which his department contributes to the total £16.1 billion net cost of adult social care.

Defence Secretary Gavin Williamson will receive an expected boost of £500 million for the Armed Forces. Well-placed sources said he had secured the ‘victory’ after convincing Mrs May to force Mr Hammond to ‘loosen his purse strings’.

The Chancellor's room for manoeuvre has already been restricted by Mrs May’s flagship announcement of a £20 billion-a-year boost for the NHS, which sources say the Chancellor tried in vain to block

The Chancellor’s room for manoeuvre has already been restricted by Mrs May’s flagship announcement of a £20 billion-a-year boost for the NHS, which sources say the Chancellor tried in vain to block

However, many Tory MPs are likely to argue the cash-strapped department will need more substantial investment to plug a £20 billion black hole over the next decade.

The Chancellor is expected to help half a million small retailers by slashing their business rates by a third. The £1.5 billion lifeline is a response to the growing difficulties experienced by chain stores and independent retailers, which has led to the loss of more than 50,000 jobs.

There were also reports he will pump hundreds of millions of pounds into installing superfast broadband in remote areas.

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