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Budget 2017: £120m for Stormont but Hammond insists Northern Ireland budget is priority

Hammond urges all parties to reach deal on devolution

By Andrew Woodcock and Adrian Rutherford

Philip Hammond has urged Northern Ireland's political leaders to reach a deal on restoring devolution, saying a new Executive and an agreed budget must be a priority.

The Chancellor announced an additional £120m for the incoming Executive as he delivered his first Budget yesterday.

There will be an extra £90m for day-to-day spending through to 2019/20, while the capital budget will get an additional £30m through to 2020/21. Afterwards Mr Hammond said: "The government's focus at this time is working with the parties in discussions aimed at forming a new Northern Ireland Executive. 

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"We want to see a new Executive setting a budget for 2017-18 as one of its early priorities - and it will have the opportunity to incorporate the new funding being made available today into its planning, when it does so.

"My Budget offers a further boost in ensuring that people across Northern Ireland can share the benefits of economic growth across the country."

Secretary of State James Brokenshire said it underlines the government's determination to build a country that works for everyone.

"The Budget reinforces this government's commitment to strengthening the economy right across the UK," he said.

"Northern Ireland will continue to benefit from the stability of being part of a strong UK economy. We are committed to strengthening the economy through investing in skills and increasing prosperity right across the UK."

Mr Brokenshire said the extra £120m in funding would give a new Executive the freedom to invest in its priorities.

"This underlines the need for a functioning Executive in Northern Ireland, which can make the right decisions for Northern Ireland's economy," he added.

"I am determined to continue working intensively with the parties to ensure the resumption of a strong, stable and inclusive Executive in Northern Ireland."

After delivering his first Budget as Chancellor, Mr Hammond was accused of breaking a Conservative election promise after hitting almost 2.5 million self-employed people with a £240 National Insurance hike.

Labour vowed to oppose what it termed an "unfair £2bn sole-traders' tax on the self-employed low and middle income earners", while Liberal Democrats branded the move a "jobs tax".

And the Chancellor also hit savers by cutting tax-free dividend allowances from £5,000 to £2,000, in a move designed to reduce tax incentives for workers to register themselves as companies.

The measures helped raise cash for a bid to resolve two of Theresa May's worst political headaches, as Mr Hammond announced £2bn for social care in England and a £345m package to ease the impact of the business rate revaluation.

But the Chancellor said that the Budget package was neutral overall, as he stored up a war-chest for expected choppy waters ahead as the UK goes through the process of Brexit.

He was buoyed by a short-term boost to official growth forecasts, upgraded from 1.4% to 2% for this year.

But the Office for Budget Responsibility (OBR) took a gloomier outlook for the following period, slashing predicted growth from 1.7% to 1.6% in 2018 and from 2.1% to 1.7% as Brexit takes place in 2019.

Borrowing was revised downwards by £16.16bn for 2016/17 to £51.7bn. And the OBR tweaked deficit forecasts down in each of the next five years, reaching £16.8bn in 2021/22.

Mr Hammond said the Budget sets out a plan for a "brighter future" as the UK leaves the European Union.

With the Prime Minister expected to start the formal Brexit process within days, the Chancellor told the Commons: "As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future; it provides a strong and stable platform for those negotiations."

But shadow chancellor John McDonnell said he was "building our economy on sand", leaving the UK "less prepared for the challenges we face outside of the EU".

Despite measures for women, including £20m to tackle domestic violence, £5m to help mothers return to work and £5m for celebrations of the centenary of votes for women, Mr McDonnell said the Budget - which fell on International Women's Day - had "failed the fairness test for women" who are hardest hit by public service cuts.

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