This is what Richard Hughes, chair of the Office for Budget Responsibility, told the PM programme a few minutes ago when he was asked to give a big picture explanation as to what the budget is doing on spending. He was asked if Rishi Sunak was spending all the extra allocated to him from better-than-expected growth figures. Not entirely, Hughes said. He went on:

Our forecasts gave the chancellor £35bn extra in receipts before he took any policy decisions in this budget, and that was a windfall from both strong growth in the medium term but also higher inflation in the near term, which gave him a bit more what we call ‘fiscal drag’ in forecasting terms.

He added to this £35bn at an extra £15bn pounds in tax rises, the ones announced back in September, which took his overall spending spending review war chest around £50bn pounds.

He spent about £30bn of that. Half of that went straight from the new health and social care levy into the health service and social care sector. And then he used the other half to essentially reverse the cuts that he had pencilled in to other departmental budgets since the start of the pandemic.

But that did leave him about £20-25bn left over after he did his spending review and he used that to reduce borrowing in every year, and in particular to meet his target to get debt falling over the medium term, which he needs to get falling by 2024-25, according to his new fiscal rules.

The Women’s Budget Group (WBG) which campaigns for a gender equal economy, accused the chancellor of “papering over the cracks” exposed by the pandemic, rather than a transformative rebuilding of the economy.

WGB director Dr Mary-Ann Stephenson welcomed some positive announcements, including the £500m promised for family hubs, but pointed out that “75 new hubs won’t fill the void left by the closure of more than 1000 children’s centres between 2009 and 2018/19”.

In too many areas, she said the spending did not come close to making up for the cuts of the last 10 years, let alone the impact of the pandemic, particularly on women. She said:

The budget speech devoted more time and detail to alcohol duty than to policies on care, housing, climate and violence against women, all of which are more important to women than saving a few pence on a bottle of prosecco.

She said it was a hugely disappointing budget for the childcare sector which has been starved of cash for year. “In 2019-20 the free hours [of childcare] were underfunded by £662m, the additional £170m funding [promised by the chancellor] doesn’t even make up for that, let alone cover the increased costs of the national living wage.”

Stephenson also criticised the fact that the chancellor made only passing mention of the epidemic of violence against women and girls. “The £185m for support services for victims/survivors falls far short of the £409m that Women’s Aid estimates is needed for domestic violence and abuse alone,” she said.

Rishi Sunak’s budget made almost no mention of universities – to the relief of many of the sector’s leaders after months of speculation about radical changes to their funding in England.

Higher education was notable mainly by its absence in the budget, other than a recast commitment to the government’s 2.4% of GDP target for research and development spending, and delaying the time taken for reaching the £22bn target until 2026-27.

But the government had for months signalled that it was preparing a response to the Augar review on post-school tertiary education funding, and Sunak’s spending review had been expected to tackle forecasts for rising student loan write-offs. Tuition fee cuts, faster loan repayments or student number limits were all being mooted within Whitehall.

Nick Hillman, director of the Higher Education Policy Institute,observed:

We still don’t know what, if anything, will happen to student loans or student numbers or tuition fees. This is surprising because, given major changes can take a couple of years to introduce, we will soon approach the point where it is not feasible to roll out really big new changes smoothly before the next election.

On further education there was an £1.6bn increase in spending, including for the new T-level vocational courses for post-16 education. But the increase only means that overall funding will keep pace with the rising numbers of 16- to 19-year-olds in England’s population.

Sunak also announced £560m to fund a new adult numeracy programme, Multiply, which aims to improve basic maths skills. The fund will open next year, offering classes and online courses for adults without a pass grade in GCSE maths.

The UK’s cost of borrowing has fallen today, in a post budget statement boost to the chancellor.

The yield, or interest rate, on Britain’s benchmark 10-year gilts has dropped from 1.11% on Tuesday to below 0.98% today.

That’s the biggest one-day move since March 2020, when nervous investors were seeking the safety of government debt. Earlier this month, it hit 1.2% for the first time since May 2019, amid speculation that the Bank of England was preparing to raise interest rates next month.

Long-term borrowing costs have also fallen sharply, as measured by the yield on 30-year government bonds.

Bond yields fall when prices rise, and bond traders are reacting to the news that Britain won’t be borrowing as much as previously forecast.

The Debt Management Office, which handles bond issuances, said it plans to issue £194.8bn of gilts in the current financial year, a drop of £57.8bn [that’s to cover maturing bonds as well as new borrowing].

Matthew Bennett, investment manager at NFU Mutual, explains:

“The improved economic forecasts combined with relative few spending pledges means less government debt will be issued next year than previously forecast and markets reacted to this change in supply dynamics.

“However, this move could easily reverse over the coming weeks and months depending on policy decisions from the Bank of England, global economic developments and the stickiness or otherwise of inflationary forces.”

Aid agencies are angry and disappointed that the UK won’t restore its overseas aid budget to 0.7% of GDP until the end of the parliament.

Amy Dodd of The One Campaign to end extreme global poverty said the Chancellor should have acted to restore the 0.7% target immediately, having cut it to 0.5% last year.

Dodd also expressed concern that the “lack of clarity” in today’s statement could mean the Treasury was planning to further dilute the UK’s commitment to development aid by using it to fund things such as Covid vaccines, which were not in the original target.

“This lack of clarity given is disappointing and strengthens concerns that the Chancellor is using accounting trickery to make further cuts.

Having already shrunk the UK’s support for development, implementing further cuts by stealth would exacerbate the challenges of climate and Covid already faced by developing countries.

“If Government is serious about tackling global challenges, as it should be on the eve of G20 and Cop26, it should commit to returning to 0.7% now, as the UK economy bounces back to pre-Covid levels and when it is most critically needed.”

Bernard Aryeetey, Global International Affairs Director of WaterAid, said millions of the world’s poorest people will continue to miss out on clean water, decent toilets and good hygiene until the target is restored.

“We estimate that 10 million people will miss out every year until the budget is restored.

The Chancellor’s delay on restoration means three more years of dirty water, further infant mortality and the wider spread of disease for millions in vulnerable communities.

Nick Dearden of the Global Justice Now campaign said locking in aid cuts for a further three years will have “a devastating impact, costing countless lives in the global south - and that should weigh on Rishi Sunak’s conscience.”

Stephanie Draper, of the Bond network for UK organisations working in development, said the Chancellor was again “balancing the books on the backs of the poorest” while undermining trust in the UK.

“This makes the UK’s standing in addressing global inequality even more questionable, whilst severely undermining crucial Cop26 negotiations.”

Boris Johnson and Rishi Sunak have been visiting a brewery to promote their changes to alcohol taxes. Whether or not they were able to organise a piss-up on the premises does not seem to have been resolved, but they can certainly stage a photo oppotunity.

Although the government is promoting the alcohol duty reforms as a big feature of the budget, in fiscal terms they are insignificant. According to the budget red book, in 2022-23 the alcohol measures will cost the Treasury £565m - although £545m of that is the cost of the alcohol duty freeze, and duty reform is only costing £20m (which means it is not really a net giveaway at all). Even by 2026-27, the alcohol duty reform is only due to cost the Treasury £155m.

The arts sector has cautiously welcomed the budget but many key figures stressed further support was needed.

Sharon Heal, the director of the Museums Association, said the package of support for museums recognised the difficulties that the pandemic was still causing.

In particular, we are pleased to see the government recommit to funding for the renovation of regional museums in England. However, it should be noted that the government originally committed to £100m of spending on the Ment programme in 2019, but delivered only £19m of this fund due to the pandemic.

Heal said she was also pleased the government had agreed to extend the museums and galleries exhibitions tax relief and to double its value. “However, we continue to believe that this relief should be made permanent on the same basis as other cultural sector tax reliefs, such as film and theatre.”

The Society of London Theatre & UK Theatre’s chief executive, Julian Bird, said the increase in rates of tax relief from 45% and 50% (for touring productions) “will provide producers and investors with greater confidence in developing our world-leading theatre and drive the cultural recovery from the pandemic”.

But Paul W Fleming, the general secretary of Equity (the trade union for performing arts workers), said the budget “continued the government’s tradition of giving a bung to the bosses and offering little to the workers”. He went on:

Additional money for cultural institutions and a temporary tax relief increase for theatres are necessary. However, creative workers who underpin our renowned industry face a triple whammy of tax increases, rising energy bills and an inadequate social security system for the self-employed, making it even harder for those from working class backgrounds to break into the industry.

Nick Macpherson, a former Treasury permanent secretary, says he thinks that in practice taxes will never rise as much as his old department is predicting.

The Treasury has distributed to journalists showing what difference the changes to alcohol duty will make to particular drinks. Here it is, although you may need to magnify the screen to read it properly.

Drinkers of port (up £1.09) and madeira (up 86p) seem to be the biggest losers, although the decision to tax stronger drinks more also means red wine seems to be going up in price and white wine down. Prosecco should get noticeably cheaper (by 87p a bottle), but fruit ciders will go down in price too (by 13p a pint in the pub).

Opposition MPs and campaigners have said that the £2bn reduction in the universal credit taper rate will provide no extra support for 4 million people who are unemployed or unable to work because of disability or illness, and amounts to just a third of the £6bn a year spent on the universal credit uplift.

Katie Schmuecker, deputy director of policy at the Joseph Rowntree Foundation, said:

The reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990.

There is much amusement/bemusement in the north-east to see that the Teesside market town of Yarm is receiving money from the government’s levelling up fund - a share of £100m earmarked for five projects in the region. It’s already the poshest town in the Tees Valley, complete with an artisan butcher, loads of independent shops, a tapas bar, steak house and so forth. Surely no coincidence that it is also home to every Tory’s favourite mayor, Ben Houchen.

A leading race equality chief has welcomed extra spending on family hubs and parenting programmes, but warned that support for working families is a “drop in the ocean” and criticised the government for showing a lack of ambition.

Responding to today’s spending review, Jabeer Butt, CEO of the Race Equality Foundation, said:

We wanted to see today’s budget investing in people over places and building back fairer for those communities that have been so badly hit by the many effects of the pandemic. Covid has had a disproportionately damaging impact on black, Asian and minority ethnic families and children, so cash for family hubs and parenting programmes in today’s budget is welcome.

But the scale of support is too small. It reveals a lack of ambition on the government’s part when it comes to making a meaningful positive impact on these families’ lives.

There has been an underwhelmed reaction from the organisations representing barristers to the increased funding for the Ministry of Justice. While Rishi Sunak is attracting some ridicule for boasting that the education budget has been restored in real terms to 2010 levels, the legal profession can only dream of that, given that the MoJ had its budget cut by over a quarter over the last decade.

While, like all departments the MoJ, got a real terms increase, it is a far cry from the extra £2.48bn a year the Bar Council said was needed just to return the justice system (excluding police funding) to the levels of 2010.

There is £477m to tackle the backlog in the criminal courts but the budget report admits this will only reduce crown court backlogs from 60,000 today down to 53,000.

Derek Sweeting QC, chair of the Bar Council, said:

The announcement by the chancellor today is a step in the right direction but there will still be a shortfall of funding to tackle the justice crisis, restore public confidence and reduce the backlogs in our courts and tribunals. Moving forward the Bar Council will be engaging with the profession, courts service and Ministry of Justice to rebuild our justice system.

Jo Sidhu QC, chair of the Criminal Bar Association, said the extra money was “window redressing” in the absence of cash to pay properly for criminal advocates who are being driven out of the profession and invest substantial amounts in legal aid and addressing the backlog. He said:

There is little sense putting aside headline-grabbing sums on important initiatives to tackle rape and violence against women, or repeating a commitment to the largest capital spend on prisons in a generation, when there is only short-term funding for the middle-end, the engine room of the system, the court process and once again under-funding to pay for the publicly funded lawyers whose role is fundamental to whether or not prison becomes a relevant consideration ...

This budget once again exposes a lack of joined up thinking and concomitant funding end-to-end across the criminal justice system without which a core government duty will continue to fail - that a state should do its utmost to protect all its citizens from harm and that includes complainants, defendants and witnesses be they men, women or children.

The early years sector was decidedly underwhelmed by the chancellor’s announcements, with one pointing out that he spent more time on the details surrounding alcohol duty than on childcare.

In addition to the £18m for family hubs and £20m for parenting support trailed in advance, the chancellor announced a £170m increase by 2024/5 in the hourly rate paid to early years providers for the government’s free childcare offers.

Neil Leitch, CEO of the Early Years Alliance said while any increase in funding was welcome, the fresh commitment was not enough to safeguard the future of the sector. He said:

With huge rises in national living and minimum wages set to come into effect next April, alongside increases in national insurance contributions, the cost of delivering early years places is set to soar, and the harsh reality is that the investment announced today - likely to amount to little more than a few pennies extra per hour for early years providers - won’t come close to covering this.

Viewed from the north of England, a big omission from Rishi Sunak’s budget was any commitment to fund the two most symbolic (and expensive) infrastructure projects in the north of England: Northern Powerhouse Rail and HS2 phase b.

The former is a new rail line from Liverpool to Hull via Bradford and the second is supposed to whizz rail passengers on two new spurs from Birmingham to Manchester and Leeds. At the moment, HS2 is only guaranteed to go from London to Brum.

All Sunak said today was that the Integrated Rail Plan (IRP), which will presumably decide whether to recommend the new lines, would be published “soon”.

Henri Murison, director of the Northern Powerhouse Partnership, a thinktank set up by George Osborne when he left government, said:

There is still a huge hole in the government’s plans for levelling up with no clear commitment to either HS2 or a new Northern Powerhouse Rail line through Bradford in today’s speech. Until the IRP is published, uncertainty will continue to undermine business confidence and put a dampener on attracting investment to the north of England.

And Marcus Johns, a fellow at IPPR North, another thinktank, said:

The absence of the levelling up white paper and integrated rail plan by this budget mean that there is still no strategy, framework, or leadership behind levelling up funding promises and little clarity is available for the north’s mayors and local leaders for their ambitions after the pandemic.

Rishi Sunak has left himself limited headroom to hit his four new fiscal rules, compared with previous chancellors George Osborne and Philip Hammond.

That means that slightly lower GDP growth, or slightly higher spending, would wipe out this headroom, and the OBR warns that it’s already looking tight.....

Combined with news about inflation and energy prices since we closed the forecast, we estimate that the Chancellor’s headroom has already been reduced by £1.9bn.

The full text of Rishi Sunak’s budget speech is now on the Treasury’s website, here.

Taking his March and October budgets together, the chancellor has raised taxes by more this year than in any single year since Norman Lamont and Ken Clarke’s two 1993 budgets in the aftermath of Black Wednesday, the OBR reports.

All the Treasury’s budget documents are now available here, on its website.

And here is the Office for Budget Responsibility report (pdf) published alongside the budget.

Shares in UK pub chains have jumped, after Rishi Sunak announced “draught relief” - a new, lower rate of duty on draught beer and cider.

JD Wetherspoons are up 5.5%, the top riser on the FTSE 250 index of medium-sized firms, while Mitchells & Butlers (which owns the All Bar One and Toby Carvery chains) have gained 4%%.

Pubs had been struggling under the impact of rising costs and supply chain problems, so this cut could help them (although Wetherspoons did already announce it’s cutting some prices to 99p/pint this morning)

Sunak ended his statement by saying this was a budget with a pay rise for 2 million people and a £2bn tax cut for the lowest paid.

Sunak confirms the increase in the national living wage announced on Monday.

Britain’s banks may be lifting a glass to the chancellor, even at the old duty rates.

Lowering the bank surcharge, levied on their profits, from 8% to 3% from April 2023 (see 13.19pm) will cushion the City from the impact of the rise in corporation tax.

It should help bolster London’s competitiveness as a global financial centre after Brexit.

Sunak confirms that planned rise in fuel duty will be cancelled.

Here are the key points of today’s business rates changes:

Green MP Caroline Lucas says the ‘shameful’ cut to UK aid spending should be reversed now, not by the end of this parliament (see 12.51pm).

Sunak confirms that corporation tax is going up.

The £1m annual investment allowance will be extended to March 2023, instead of ending in December.

But the bank surcharge will be cut, he confirms.

Sunak says the UK now has the freedom, ouside the EU, to deliver a simpler, fairer tax system.

He starts with what he says is a small tax but an important one - the tonnage tax for shipping.

In the EU ships had to fly the flag of an EU state. Now the tonnage tax will reward companies for adopting the UK flag, the red ensign.

He says he is sure Labour will be delighted “that red flags are still flying somewhere in this country - even if they are all at sea”.

That is the first joke of the speech.

Sunak says providing a world class education is also crucial. That leads to higher productivity, and higher wages.

Skills spending over this parliament is increasing by £3.8bn, or 42%, he says.

But millions of adults have numeracy skills lower than those expected from a nine-year-old.

This costs people up to £1,600 a year.

He says a new scheme, Multiply, will address this, changing lives across the UK.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, suspects the chancellor is teeing up some pre-election sweeteners in the future....judging by today’s borrowing forecasts.

Sunak says the R&D tax relief rules will change.

The scope will be expanded to cover cloud computing and data.

But the current system subsisies R&D happening outside the UK. That is not fair, and inconsistent with what is happening in other countries.

From April 2023 the relief will have to subsidise investment at home, he says.

Sunak says a £1.4bn British investment fund is being set up to promote inward investment.

And a new scale-up visa will make it easier for firms to hire talented people from around the world.

By revising down its estimate of the long-term scarring caused by the pandemic, from 3% to 2% of GDP, the OBR are signalling that Covid-19 will cause less permanent damage to the economy.

That should give the chancellor more fiscal room for manoeuvre.

But, that’s still above the Bank of England’s recent estimate of 1%.

It should still mean higher tax revenues and lower borrowing requirements, as shown by the new estimates for public sector net borrowing as a share of the economy:

• 2021–22: 7.9% of GDP, down from 10.3% of GDP in March’s Economic and fiscal outlook
• 2022-23: 3.3% of GDP, down from 4.5% of GDP in March
• 2023-24: 2.4% of GDP, down from 3.5% of GDP in March
• 2024-25: 1.7% of GDP. compared with 2.9% of GDP in March
• 2025-26: 1.7% of GDP, compared with 2.8% of GDP in March
• 2026-27: 1.5% of GDP

Sunak says the government will invest more in innovation.

The UK has four of the world’s top 20 universities, he says.

By the end of this parliament spending on R&D will be £20bn a year. That is a 50% increase. And it is in addition to the R&D tax relief, he says.

That will take R&D spending to 1.1% of GDP, he says. The OECD average is just 0.7%, he says. For Germany the figure is 0.9%, for France 1%, and for the US 0.7%

Sunak says, if the government wants growth, it must tackle the country’s uneven economic geography.

There is a choice - retrench or invest. This government will invest, he says.

He says infrastracture drives productivity and levels up.

He summarises the transport spending announcements that were briefed at the weekend.

Sunak says what matters is not what is spent, but what is delivered.

Sunak says the devolved governments are also getting record settlements.

Sunak says museums and cultural attracting are getting £800m.

And the tax relief for museums and galleries, that was due to end in March next year, will be extended for another two years, he says.

Sunak is now running through a list of places that will benefit from the levelling up fund. The first round of successful bids to the fund, worth £1.7bn, are being announced today, he says.

Sunak says the government is spending more than £200m on holiday activities and food for school pupils.

And there will be an extra £2bn to help pupils recover from Covid, taking the total education recovery fund to almost £5bn.

As pre-briefed, Sunak announces more funding for families.

Sunak says health spending will increase by £44bn, to over £177bn.

Social care will get the biggest increase in its budget for over a decade, he says.

Investment in housing will total nearly £24bn, he says.

And a levy on developers with profits of more than £25m, worth 4%, will help fund a £5bn fund to remove unsafe cladding.

Sunak says the OBR is saying today the fiscal rules have been met.

Underlying debt is forecast to be 85.2% of GDP this year, he says. It will rise to 85.4% of GDP in 2023 before peaking at 85.7% in 2024.

It then falls in the final three years of the forecast from 85.1 to 83.3%, Sunak says.

Sunak says the OBR expects the recovery to be quicker than originally forecast.

They think it will return to pre-Covid levels at the turn of the year.

Growth is now forecast to be 6.5% this year, followed by 6% next year.

Sunak turns to inflation, saying it is forecast to reach 4% over the next year.

This is a global problem, he says. It has been caused by rising energy prices and problems with supply chains.

It would be irresponsible to pretend these problems can be solved overnight, he says.

The UK cannot address them on their own. But it will act where it can.

He says the government has taken measures to address the HGV driver shortage, and today there is new funding to improve lorry parks.

And he says the HGV levy, already suspended until August, will be suspended for a further year. And vehicle excise duty for heavy goods vehicles will be frozen, he says.

Sunak says today’s budget does not draw a line under Covid.

But it begins the work of looking to a post-Covid economy. It will be an economy for a new age of optimism, he says, “where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make”.

Sunak says the government will always give people the support they need.

And it will level up. For too long the location of your birth has determined too much of your future.

Eleanor Laing, the deputy speaker who is in the chair for the budget, starts with a statement about the pre-briefing of budget announcements. She says in the past stories have been briefed under embargo, for use after the statement has been delivered.

This year has been different. Information has been briefed for use ahead of the budget, she says.

(Laing’s summary of the situation is not quite right. This is something that has been happening regularly for years - although it has been more extensive this year than in the past.)

Laing says she hopes this will not happen again.

She tells Rishi Sunak they are looking forward to hearing “the remainder of your announcements”.)

Stephen Kinnock (Lab) says the steel industry needs support with high energy prices. Will the government put in place a wholesale energy price cap?

Johnson says this is an important point. Energy intensive industries have had about £2bn to help since 2013, he says.

And that’s the end of PMQs. The budget statement is starting now

Martin Vickers (Con) asks if the government will continue to develop renewable energy.

Yes, says Johnson. The UK now produces more offshore wind energy. That is going to increase massively, he says.

Zara Sultana (Lab) asks about donations to the Tories from fossil fuel companies. Will the PM pay back this money and never again take money from these companies?

Johnson says all Tory donations are registered in the normal way. He says the GMB opposes Labour’s policies because it sees them as anti-flight and anti-car.

Ben Bradshaw (Lab) asks if was a mistake to abandon all Covid measures in July. And if it wasn’t, why are the UK’s figure so bad?

Johnson says he sees no reason to deviate from the roadmap. He says the UK has the fastest economic growth in the G7.

Anna McMorrin (Lab) asks what is being done to protect women from spiking.

Johnson says spiking is already a criminal offence. People with information about this should contact the police, he says.

Robbie Moore (Con) asks the government for a new hospital in his constituency.

Johnson says there have been 120 applications for the biggest hospital building programme in a generation.

Sir Jeffrey Donaldson, the DUP leader, says the PM will know the damage the Northern Ireland protocol is doing to the settlement in the region. It is not sustainable. Does the PM agree the conditions exist to justify triggering article 16?

Johnson says he is sad to say Donaldson is completely right. They are working to reach an agreement with the EU by negotiation. If there is no “rapid progress”, the conditions for invoking article 16 have already been met.

David Warburton (Con) says today is national cheese toastie day, and Somerset is the home of cheddar cheese. He mentions a local producer making carbon-neutral cheddar.

Johnson says it should be international cheese toastie day.

Ian Blackford, the SNP leader at Westminster, raises the “dire” humanitarian situation in Afghanistan. He says 3.2m children under five could suffer acute malnutrition. The UK has a deep responsibility to the country. What is the government doing?

Johnson says the government must do all it can to mitigate the impact of the Taliban takeover. Aid to the country has been doubled, and the government is working with NGOs. But it will not write a blank cheque to the Taliban.

Blackford says there is a crisis. People are in need. It feels as if “the government is washing its hands of the legacy it left behind”. Promises on resettlement are also being broken, he says. The Afghan people are being left with no updates and vague targets. When will the resettlement scheme open?

Johnson says the UK will resettle 20,000 Afghans, in addition to the Afghans evacuated by the airlift. He says Blackford is wrong in the way he characterises what happens. The UK continues to engage with the Taliban; it was one of the first countries to reach out to them. It is insisting on safe passage for people wanting to come to the country.

Responding to the budget speech is one of the toughest tasks for the opposition.

And today it will fall to Rachel Reeves, the shadow chancellor, after Keir Starmer tested positive for Covid-19.

Miliband says Cop26 is not a photo opportunity. He says boosterism won’t work.

Johnson says the UK has cut emissions by 44%. He says the net zero plan will create jobs. Growth is up, he says. And if Labour were in power, the country would still be in lockdown.

Miliband says Johnson does not even know what is in his own budget. He has cut aid spending. He is also flirting with a new coal mine in Cumbria and allowing the Cambo oil field development. He says the PM’s own actions are undermining Cop26.

Johnson says Miliband is completely wrong. He says the UK is working with countries around the world to make Cop26 a success. He cites Indonesia, Australia and Russia as examples.

Miliband says the PM should not be making party political points on this issue. Hasn’t the PM made it harder getting agreement at the summit by cutting the aid budget?

Johnson says Miliband’s desire to keep away from party politics didn’t last long. He says the government is keeping its commitment to help developing countries with climate finance. He says the challenge is there; the leaders of the world need to rise to the challenge.

Miliband says it is easy to make promises for 2050. It is harder to do it for now. He says the PM “mustn’t shift the goalposts” for Glasgow. The focus must be on 2030.

Johnson says the focus will be on 2030.

He says 122 countries have made national determined contributions.

But he says they must not move in advance of what people are willing to do. That is what Labour is doing, he says. He says even the GMB criticised Labour’s climate change plans.

Miliband asks if the PM realises “how far away we are” from the action needed this decade.

Johnson says he does realise. But he also realises how far they have moved since Paris in 2015. They are trying to keep the goal of 1.5C alive, he says.

There are solid commitments being made. But it is too early to say if they will be enough.

“Just like the old days,” Miliband says as he starts.

It is “one time only”, he says.

He asks about Cop26. Does the PM agreed that we need to roughly halve global emissions to keep the goal of reducing global warming to 1.5C.

Johnson says Miliband is right to say they need to keep 1.5C alive. He says substantial pledges have been secured.

But he says it is “too early to say” if these pledges will be enough.

Sir Lindsay Hoyle says Ed Mililband is leading for Labour because Sir Keir Starmer is isolating.

And Boris Johnson has a mask too.

Rishi Sunak is putting on a mask for PMQs, the Mail’s Jason Groves reports.

PMQs will be starting shortly.

Labour’s Chi Onwurah has an update on mask wearing in the Commons.

The chancellor, Rishi Sunak, has conducted the traditional red box photo op on Downing Street, before heading to the House of Commons.

Here he is with members of the Treasury team, although not Simon Clarke, chief secretary to the Treasury, due to his agoraphobia (see 9.54am).

Rishi Sunak has been urged to use the budget to help families with “immediate pressures” through the winter, as pay rises alone are unlikely to make up for the cost-of-living crisis and universal credit cut.

Bridget Phillipson, the shadow chief secretary to the Treasury, said the chancellor was so far “giving with one hand and taking away with the other” as the national living wage rise would not in many cases make up for the £20 a week cut to universal credit and rising inflation.

Sunak is expected to announce a flagship measure to help with the cost of living at the budget, which is due to be announced in the Commons at 12.30pm.

He could offer help with energy bills, which have risen by 12% on average, and may also reduce the taper rate on universal credit (see 9.43am), which would allow those in work to keep more of their earnings.

Phillipson told Sky News:

A lot of families started receiving universal credit because of the pandemic. It is a massive hit to families’ incomes. We want to see immediate action to deal with the cost-of-living crisis facing families as we are entering a pretty tough winter for lots of people, but also businesses too.

We have had a lot of smoke and mirrors going into this budget, and it’s all very good and well the government promising things, but if that doesn’t lead to people feeling that extra support in their pocket, that will be the real test for the government.

Here’s the full story:

Miatta Fahnbulleh, chief executive of the New Economics Foundation, has been busting some of the familiar budget claims:

The NEF has argued for wide-ranging reform to universal credit to allow recipients to keep more of the money they earn.

Their proposals included lowering the taper rate from 63% to 50% (so for every £1 earned over their work allowance, a UC recipient would lose 50p, not 63p), and extending the work allowance.

Torsten Bell, chief executive of the Resolution Foundation, has more on the signifciance of the universal credit taper.

And here is Thérèse Coffey, the work and pensions secretary, leaving Downing Street this morning after the cabinet meeting where ministers were briefed on what would be in the budget.

Rishi Sunak is also expected to unveil new fiscal rules, after suspending restrictions on government borrowing early in the pandemic.

Those rules could force the government to balance the books for day-to-day spending with income by the end of the parliament, bring down the national debt in relation to the size of the economy, or rethink its spending plans if inflation pushes up debt repayment costs.

In the 2019 election manifesto, the Conservatives pledged that debt would be lower at the end of the Parliament (this was before the Covid-19 pandemic ripped up its plans, and much more), saying:

We will not borrow to fund day-to-day spending, but will invest thoughtfully and responsibly in infrastructure right across our country in order to increase productivity and wages.

Our fiscal rules mean that public sector net investment will not average more than 3 per cent of GDP, and that if debt interest reaches 6 per cent of revenue, we will reassess our plans to keep debt under control.

Earlier this month, Sunak suggested new ‘guardrails’ could be introduced to keep spending in check, and today’s Financial Times says the chancellor will “commit to fiscal discipline” in the Budget.

But some economists argue that investing to grow the economy is the best way to bring down debt levels... especially when borrowing costs remain relatively low.

As Michael Jacobs, professor of political economy at the University of Sheffield, wrote:

Public debt is indeed higher than in recent years, but it was more than double the current level after the second world war, when the economy grew particularly strongly. The ratio of debt to GDP is not a significant number, whether 100% or any other. Economically what matters is the cost of servicing the debt, and the value of the things that government borrowing is paying for.

Due to near-zero rates, the interest payments the government makes on its debt are now at their second lowest level in 70 years, at just 6% of tax receipts. The Bank of England now owns 37% of all government gilts, and repays the profit it makes on the interest back to the Treasury. (This has saved the government as much as £100bn over the last decade.) The Bank can continue to finance government debt at low interest rates, which means that financial institutions will continue to buy UK bonds: there is no sign of demand for them falling away.

The government therefore still has room for further sustainable borrowing. More important, it has many highly productive investments for which it should borrow.

This is from the Resolution Foundation thinktank explaining the significance of lowering the universal credit taper rate - which is tipped to be the surprise news story in the budget speech. (See 9.43am.)

Sir Keir Starmer has been tweeting ahead of the budget, highlighting Labour’s call for a six-month VAT cut on fuel.

The Independent’s John Rentoul thinks that, on this, Labour has made a mistake.

Many of today’s budget measures have already been well flagged, including raising the national living wage from £8.91 an hour to £9.50/hour, and ending the public sector pay freeze (although this may well not compensate for rising inflation).

Plus, almost £6bn of investment in buildings and technology to tackle NHS backlogs exacerbated by the pandemic, and £500m to help families. Sunak should also conclude the long-running review of business rates (though major changes may not be announced).

Here’s a breakdown of what’s expected:

Simon Clarke, who as chief secretary to the Treasury serves as Rishi Sunak’s deputy, has said that he will not be participating in the traditional pre-budget photocall outside No 11 later because he suffers from agoraphobia.

Clarke probably won’t be missed by the Treasury image police. He is 6ft 5in tall, which means that pictures showing him alonside Sunak (5ft 6in) are rarely flattering to the boss.

This is what Andy Burnham, the Labour mayor of Greater Manchester, told the Today programme this morning about what might be the surprise announcement in the budget.

On the rabbit out of the hat, I’m hearing that they are about to U-turn on universal credit, and actually that is a credit to the Labour party that’s campaigned on that particular issue, and I hope that is the rabbit that’s in his hat today.

The Mirror’s Dan Bloom says Burnham was referring to press reports that Rishi Sunak may lower the universal credit taper rate, which would allow people claiming UC to keep more of every extra pound they earn. It was reported last mont that the Treasury was considering this option.

Good morning. Budget day is always an exciting moment at Westminster, but one of several unusual characteristics of today’s statement is that Rishi Sunak will be delivering it several weeks after announcing by far its biggest fiscal component. The £12bn a year health and social care levy unveiled in September was almost certainly more significant than any of the single tax measures we will hear today.

Another feature of this budget is that it was proceeded by an unprecedented amount of pre-briefing by the Treasury. We have had 19 press releases already about what it will contain.

So, what is going to make the statement we’re getting this afternoon significant, or memorable? There are probably two aspects that will stand out.

First, don’t despair, there will be news. This is a spending review, as well as a budget, and that means we will learn much more about departmental spending than we do in a normal budget. Also, for presentation reasons, the chancellor is going to want to have the usual surprise for MPs, and for the country, at the end of his speech. There is a lot of speculation this morning about quite what it will be, and on the Today programme Andy Burnham, the Labour mayor of Greater Manchester, suggested it could come in the form of a U-turn on the £20-per-week universal credit cut.

Second, as or more important than the multiple announcements on tax and spending will be the overall story that Sunak seeks to tell the country. He delivered his first budget in March 2020, but within a week he effectively had to tear it up because of the Covid pandemic and ever since his chancellorship has been dominated by dealing with that crisis. This will be the first budget he has written not dominated by Covid, and looking ahead to a more normal economic environment. It will be a moment of definition. Sunak presents himself as a fiscal conservative, with a picture of Nigel Lawson on display in the study. But he works for a prime minister whose economic model is more tooth fairy than Milton Friedman, and so the budget will have to resolve those tensions.

As Rowena Mason reports in her overnight preview, Sunak will accommodate Boris Johnson’s innate boosterism in his speech by declaring that we are in an age of optimism. Sunak will say:

Today’s budget begins the work of preparing for a new economy post Covid.

An economy of higher wages, higher skills, and rising productivity.

Of strong public services, vibrant communities and safer streets.

An economy fit for a new age of optimism.

That is the stronger economy of the future.

For millions of people facing rising living costs, it may feel more like anything but.

The cabinet met at 8.30am this morning, and Sunak is briefing his colleagues on the budget. Here is the agenda for the day.

12pm: Boris Johnson faces Sir Keir Starmer at PMQs.

12.30pm: Rishi Sunak delivers the budget.

1.30pm: Office for Budget Responsibility publishes the October 2021 Economic and fiscal outlook

2.30pm BST: Richard Hughes, chair of the Office for Budget Responsibility, holds a briefing about the OBR budget forecasts.

I will be writing the blog all day with my colleague, Graeme Wearden. We will be covering the build-up to the speech, the statement itself, and then focusing on reaction and analysis, and in particular trying to identify the small-print surprises that Sunak may have glossed over.