Philip Hammond has signalled the Government is ready to invest billions in Britain’s infrastructure as he prepares to unveil his Budget in the Commons on Monday.
The chancellor is expected to announce £28.8 billion to upgrade England’s motorways and other major arterial roads in a drive to improve economic performance and address the “productivity gap”.
In an interview with The Sunday Telegraph he also hinted there would be more money for defence and superfast broadband when he sets out his plans in the Commons.
Mr Hammond also signalled his determination to pursue a digital tax to ensure internet giants like Facebook pay a greater share of their profits into the Exchequer.
Despite the continuing the uncertainty over Brexit, the Chancellor insisted the economy was in good shape as the country prepares to leave the EU.
“The fundamental health of the economy is plain to see. We are operating under a cloud of uncertainty. But notwithstanding that the behaviour of the economy is buoyant,” he said.
The Chancellor was handed an unexpected pre-Budget boost by the Office for Budget Responsibility which suggested stronger than expected tax receipts and slower Government borrowing could hand him an additional £13 billion.
He made clear he was determined to maintain long-term investment in the country’s infrastructure.
“Sometimes the easiest thing for a government to cut in the short term if it’s under pressure is capital investment,” he said.
“It is the spending on the skills of the next generation, the infrastructure, including the digital infrastructure, the broadband infrastructure.
“For the 21st century broadband is to roads in the 20th, railways in the 19th, and canals in the 18th. It’s the network infrastructure that will make this country work.”
As well investing in the road network – with a further £420 million for councils to repair potholes – the Telegraph reported he was preparing to spent at least a quarter of a billion pounds to help connect rural areas to the high speed internet.
Mr Hammond said it was only through such measures the UK could hope to close the productivity gap with other major industrialised nations.
“The bottom line is that if we’re going to deliver rising real wages and rising living standards for the British people we have to raise Britain’s productivity performance,” he said.
“It is just not acceptable, and neither is it necessary that a German worker or an American worker produces 30% more output per hour worked than a British worker.
“We compensate for that by a culture of long hours and lower pay. That’s not my vision for the future of this country.”
After having previously having clashed with Defence Secretary Gavin Williamson over defence funding, Mr Hammond indicated there would be extra cash in the Budget for the armed forces.
The Telegraph said there could be a cash injection for the military of up to £1 billion ahead of a long-term spending settlement next year.
“You are looking at someone who was defence secretary for three years. I absolutely get the problems and the challenges in defence,” he said.
“It’s about how we support the men and women of our armed forces going forward to ensure we’ve got the configuration that we need to keep Britain safe, to project our power and influence in the future, and there is nobody more committed to that mission than me.”
Mr Hammond, who raised the prospect of a digital tax on the internet giants in his Conservative Party Conference speech in Birmingham said the Government still hoped to get international agreement on the issue.
However if that proved impossible, he indicated the UK was ready to act alone.
“It will be much more effective and much more durable and much less easily avoidable if it’s done on an international basis,” he said.
“But British people have a really very strong sense of fairness, and there is a real sense that it is just simply unfair that these very large internet companies are not paying their fair share of tax in the UK.
“And when you get a really strong, across the board, sense of unfairness among the population something has to be done.”
While he said acting unilaterally would be “sub-optimal”, it would still be preferable to “doing nothing and looking as though we’re being walked all over by companies that are too big for us to control”.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here