Philip Hammond announces 'austerity coming to an end' as he unveils multi-billion pound spending budget

The decade-long squeeze on public spending is "finally coming to an end", Philip Hammond declared, as he turned on the spending taps in his final budget before Brexit.

The Chancellor jumped on better-than-expected growth and borrowing figures to unveil a raft of new cash commitments, including a £1bn boost for the Ministry of Defence and a multi-billion pound injection of funds into the troubled Universal Credit scheme.

In a 69-minute Budget aimed at what Hammond called the "strivers, the grafters and the carers", he said: "I can report to the British people that their hard work is paying off and the era of austerity finally coming to an end."

He added: "Austerity is coming to an end – but discipline will remain.

“That is the clear dividing line in British politics today: We are at a turning point in our history and we must resolve to go forwards, not backwards and work together to build a Britain we can all be proud of."

Hammond was buoyed by new figures from the Office for Budget Responsibility which saw this year's GDP growth projections revised upwards from the 1.3 per cent predicted in the spring to 1.6 per cent today.

He was also handed an £11.6bn windfall in the current year after the OBR revised down its borrowing projections.

Declaring the British economy "back on its feet", the Chancellor pledged £1bn in new cash to relieve "immediate pressures" on the Ministry of Defence "this year and next", in a move that followed intense lobbying from Tory MPs.

In a further bid to quell Conservative backbench discontent, he pledged £1bn of "additional protections" for people moving to the beleaguered Universal Credit welfare scheme over the next five years.

He also upped the scheme's work allowance element by £1,000, in a move he said would cost the Treasury £1.7bn "once roll-out is complete" and allow claimants to keep more of their money when they move into work.

To loud cheers from the Tory benches, the Chancellor also brought forward a Conservative manifesto pledge to raise the income tax threshold, meaning that people will not starting paying tax until they earn more than £12,500 from April next year.

"The hard work of the British people paying off in hard cash in their pockets," he told MPs.

"Now we must pull together to build the bright, prosperous future that is within Britain’s grasp if we choose to seize it: embracing change, not hiding from it, building on the inherent strength of the British economy and the indomitable spirit of the British people."

He also increased the gap between the higher income tax rate payers in Scotland and the rest of the UK, by raising the threshold for the higher rate to £50,000 from April 2019, while at present it is £43,430 in Scotland.

However, the Scottish Government may choose to make changes to the thresholds for the different rates as well when it presents its budget in December.

In other headline-grabbing spending pledges, the Chancellor declared an end to private finance initiative contracts used by governments for decades.

Hammond said axing the deals, which have often left the public sector saddled with eye-watering interest payments, would put "another legacy of Labour behind us”.

"I have never signed off a PFI contract as chancellor and I can confirm today that I never will," he declared.

"I can announce that the Government will abolish the use of PFI and PF2 for future projects."

And Hammond confirmed plans to press ahead with a British tax on tech giants, promising that the new "carefully targeted" levy would fall on "tech giants" generating at least £500m a year in global revenues from April 2020.