The Chancellor Philip Hammond has confirmed government plans to abandon George Osborne’s plans to have a budget surplus by 2020 and instead focus on investing in housing and transport.
Mr Hammond said that the change in policy was a response to the uncertainty caused by Britain’s decision to leave the European Union.
He said the economy was in very good shape but efforts needed to taken to make sure it was prepared for Britain’s eventual Brexit.
In his conference speech, the Chancellor hinted that the government was prepared to borrow to invest heavily in infrastructure projects.
He said there was “a distinction in my mind between investing in things that will make Britain’s economy more efficient in the future, transport systems, communications systems and simply spending more on the day-to-day business of government”.
A repackaged £3bn investment package in housing was announced, which includes an additional £1.1Bn of new funding.
The package will seek to speed up housebuilding by making use of surplus public land and brownfield sites in order to hit the government’s target of building a million new homes by 2020.
Smaller building firms and innovators will be offered short-term loans to use new methods and technology such as prefabricated modular housing.
The Chancellor described Mr Osborne’s policies as “the right ones for that time” but the task of reacting to Brexit meant that the budget surplus target at the end of parliament was no longer pragmatic.
However, the aim of reducing the budget surplus remained and the shift in policy shouldn’t be seen as a signal to the end of austerity.
Mr Hammond said: “Make no mistake: the task of fiscal consolidation must continue. It must happen within the context of a clear, credible fiscal framework that will anchor expectations, control day-to-day public spending, deliver value for money and get us back to living within our means.”
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