This morning Philip Hammond, the chancellor, claimed that overall the poorest gained most from the budget. (See 8.22am.) As evidence for this, he cited the Treasury’s distributional analysis. But this focuses on the impact of all changes since autumn 2016, and this timescale means that the impact of the massive welfare cuts announced in the George Osborne summer budget of 2015 are not included. In its own briefing on the distributional impact of the budget the Institute for Fiscal Studies looks at the impact of all changes since the 2015 general election and, over this timescale, it is clear that the poor have lost the most; policy has been regressive.

Here is the key chart. It shows that what was announced yesterday made almost no difference to the overall pattern since 2015 (see the difference between the black and orange lines).

John McDonnell, the shadow chancellor, has been speaking to journalists and defending his decision to accept the income tax cuts in the budget (see 10.13am), my colleague Heather Stewart reports.

As the Guardian reports, Hammond is being criticised by some of his own colleagues for this decision.

Turning back to the IFS briefing, here are the main points from the briefing (pdf) from Paul Johnson, the IFS director.

• Johnson accused Philip Hammond, the chancellor, of gambling with the economy with the budget. (See 1.15pm.)

• He said that, on a wider definition, austerity was not ending. (See 1.22pm.)

• He said the government was no longer serious about wanting to eliminate the deficit by the mid 2020s. (See 1.22pm.)

• He said there would be “more difficult years ahead” for many in the public services.

All that said, this is no bonanza. Many public services are going to feel squeezed for some time to come. Cuts are not about to be reversed. If I were a prison governor, a local authority chief executive or a headteacher I would struggle to find much to celebrate. I would be preparing for more difficult years ahead.

• He said taxes would have to go up if NHS spending was going to continue at the rate set out in the budget.

This is a long term trend and a big one at that. Health spending will have risen from 23% of public service spending in 2000 to 29% in 2010, and is set to reach 38% by 2023-24. That is a remarkable increase. Other public services have been paying the price. At some point, we will need to pay more tax if we are to continue to increase spending on the NHS like this.

• But he also said that, despite the increases announced yesterday, health spending was rising at a rate less than the historic average.

As for health, despite its favoured status, there is nothing particularly historic about these announcements. Depending on exactly what you are measuring spending is rising by between 2.6% a year (an estimate of total health spending increases between 2017-18 and 2023-24) and 3.4% a year (NHS England RDEL between 2018-19 and 2023-24). That compares with average increases of 3.7% a year over the NHS’s entire history, and a 6% a year over the period of the last Labour government.

• He said the extra money for universal credit was “just about enough” to make the new system more generous than the old one.

With some other changes designed to smooth its roll out, this will increase planned spending on universal credit by around £2bn a year. For many people this increase in work allowances will essentially undo the cuts announced by George Osborne in 2015 – though not for the childless non-disabled. Their work allowances were cut to zero in 2015 and there they remain.

These changes, on top of the cut in the taper rate announced last year, will help “make work pay” for many recipients. They are just about enough to push the expected cost (and hence generosity) of universal credit higher than the system it replaces.

• He said the cuts to other benefits already planned were much more significant than the extra money allocated to universal credit yesterday.

This is a small increase in generosity compared to the cuts to working age benefits introduced since 2015 and it is small relative to cuts still to come in. Four years of benefit freezes, and the ending of family premiums and of payments in respect of third and subsequent children are a much bigger deal than this increase in work allowances.

• He said basic rate taxpayers would gain around £44 a year from the increase in allowances, but higher rate taxpayers would gain £176.

Of course these changes benefit the better off – though you only need £12,500 in income to benefit from the personal allowance increase. On average they will benefit over 30m people by an average of around £44 a year, with the typical higher rate taxpayer gaining £176 and the typical basic rate taxpayer gaining £24. Contrast that with the changes to universal credit. They help far fewer people – about 2.4m families – but help them a lot more, by over £600 a year.

• He said the rise to £12,500 would make the income tax personal allowance 55% higher than it was in 2009-10 (before the coalition and Tories starting raising it above inflation), meaning that there will be almost 6m fewer people paying income tax than there otherwise would have been.

• He said the Office for Budget Responsibility does not believe the claims Hammond makes about long-term increases in capital spending.

Whilst capital spending is still set to rise and to reach a high level by historic standards, Mr Hammond actually raided some of the increases he announced a couple of years ago to pay for more day-to-day spending. Capital limits were cut by a pretty chunky £7bn for 2020-21. Mind you the OBR had assumed that most of this would not have been spent in any case. To announce big increases in capital spending, fail to persuade the independent fiscal watchdog that you are capable of actually spending it, and then raid it a couple of years later, does not speak to the highest quality of spending control and planning.

• He said that, despite the recent improvements, government borrowing was still much worse than expected two years ago.

It’s important to put improvements in the forecasts in context. Yes they got better. Borrowing this year is set to be £12bn less than forecast in March. But that is still nearly £30bn more than was forecast in March 2015. Borrowing next year, after the measures announced yesterday, is forecast to be £2bn less than expected in March this year, but £40bn more than forecast in March 2016.

• He said debt was “not on a decisively downward path in the long run”.

And when considering the public finances don’t forget the debt. The deficit is down a lot on its peak. Debt is not, it is 50% of national income higher than it was pre-crisis, and it is set to fall only gradually – by about 3% of national income between now and 2023-24 once Bank of England interventions are stripped out. It is not on a decisively downward path into the long run.

• He said Hammond had failed to use the budget to announce the total amount of money set aside for the next spending review, despite having suggested in March he would do this.

This is what Paul Johnson, the IFS director, says in his statement at the briefing on whether the budget means that austerity is over.

So to the inevitable question, “is austerity over?”. Well we will only really know when we have some firmer plans, but from the numbers we have I think we can say the following:

There was a big upward revision to overall spending plans;

Spending on the NHS will rise substantially – though less quickly than spending has risen on average over its 70 year history;

Total day to day spending on public services (RDEL) is planned to rise by about 8% between now and 2023-24, but spending outside of protected areas is essentially flat – and indeed ticks up next year before falling a bit. It falls on a per capita basis;

Despite more money for universal credit there are still £4bn or so of net welfare cuts working their way through the system, most obviously with the freeze to the rates of most working age benefits next April;

Total spending is set to rise in real terms but to fall very slightly as a fraction of national income.

Does that add up to the end of austerity? On a narrow definition perhaps it does, on wider definitions it doesn’t, at least not yet. But whatever the precise definitions this is certainly a considerable easing in spending control and a change of fiscal direction. Any idea that there is a serious desire to eliminate the deficit by the mid 2020s is surely for the birds.

Philip Hammond has taken a “gamble” on the future health of the public finances by using better short-term borrowing figures to raise spending on the NHS, according to Britain’s leading tax and spending thintank.

The Institute for Fiscal Studies warned that the public finances could deteriorate next year, at a time when Britain leaves the EU, which could pose difficult questions for the government after the chancellor increased spending on the health service.

It said there was perhaps a one in three chance that the public finances would deteriorate significantly next year.

Paul Johnson, the director of the IFS, said:

When push comes to shove it’s not tax rises and it’s not the NHS that Mr Hammond is willing to gamble on, it’s the public finances.

In the Commons there is increasing interest in “Norway for Now” as a Brexit option - staying in the European Economic Area after Brexit, as a stepping stone towards a Canada-style free trade agreement. The Conservative MP Nick Boles, a remain-voting ally of Michael Gove’s, has been championing the idea, and the leading Brexiter Frank Field recently came out in favour in a Guardian article.

But this morning, in Norway, Theresa May rejected the idea, as Sky’s Faisal Islam reports.

And even the Norwegian PM, Erna Solberg, expressed doubts.

Men will benefit more from yesterday’s budget than women, according to an analysis commissioned by the Labour MP Yvette Cooper. Cooper has asked House of Commons library statisticians to develop a methodology for assessing the gender impact of budget measures and in the past she has published figures showing that women have lost disproportionately far more than men from the tax and benefit measures introduced since 2010. That research has been updated overnight, and it shows that yesterday’s budget also favoured men.

Cooper said:

The gender gap in the Tories tax and benefit policies is getting worse. After 8 years of Tory austerity, women are now bearing nearly 90% of the losses from the changes to tax and benefit since 2010. Each time the chancellor has the chance to narrow the gap he does the opposite. By choosing to put more into raising tax allowances including for the highest earners than into tackling the problems with universal credit, the chancellor has ignored the fact that low earners are still being hardest hit, and that means women are still losing out.

Women are more likely to be hit by welfare cuts including universal credit whilst men are more likely to gain from the increased tax allowances. The chancellor’s decision to cut taxes for those on £100,000 a year helps more men, when he could have done more to sort out the problems with universal credit and the welfare system for families in poverty instead.

In the centenary year of the first women getting the vote, it is shocking that the Treasury still refuses to carry out its own gender audit of the impact of its policies.

This table has the latest figures. Negative figures indicate spending (a loss to the Treasury), and this analysis suggests that men will gain £2bn from the measures in the budget, while women will get £1.6bn.

Andy Burnham, the Labour mayor of Greater Manchester and Jeremy Corbyn’s main rival in the 2015 Labour leadership contest, has criticised John McDonnell, the shadow chancellor, for saying Labour would accept the income tax cuts announced in the budget yesterday. (See 10.13am.)

At the news conference at the end of the Northern Future Forum meeting in Oslo Theresa May said the government was not planning an early election. She said:

We are not preparing for another general elections. It wouldn’t be in the national interest.

Given that May repeatedly said she was not planning an election before she announced one in 2017, her assurances on this topic are not seen as especially reliable.

It is worth pointing out that no one thinks she is enthusiastic about an election. Instead, there is speculation that she could be forced into holding an election in the event of parliament voting against her Brexit deal - not something she thinks is ‘in the national interest”, but a possibility nevertheless.

John McDonnell, the shadow chancellor, has also been giving interviews this morning. Asked if he would reverse the tax cuts announced by the government yesterday, he said Labour would maintain them. He told Today:

We will support the tax cuts at the moment on the basis that it will inject some demand into the economy.

But we put forward in the general election a fairer taxation system so that does mean that we will be asking the top 5% to pay a bit more in income tax and we will be rolling back many of the corporation tax cuts that have taken place, and we will be cracking down on tax evasion and tax avoidance.

What we’ve said is we will leave those personal allowances at whatever we inherit but our focus will be on a fair taxation system.

Normally what the opposition says about government tax plans more than three years away from the next general election is relatively academic, but with people speculating about a Brexit crisis triggering one within the next few months, McDonnell announcement carries much more weight.

In another interview McDonnell himself speculated that an election might be imminent. He told Good Morning Britain:

The Tories usually do this. If a general election is coming, what they’ll do is they’ll splash out some money and then if they win the election they then start cutting it back again.

Philip Hammond, the chancellor, has given various interviews this morning. Here are the main points.

• Hammond confirmed that spending on government departments other than health would not go up. Sounding like a barista, he adopted a Treasury terms and said it would be “flat real” - ie, in real terms going neither up nor down. He told Today:

The overall envelope of funding that’s available in the spending review, once you take out the commitment we’ve made to health, gives flat real spending available for all other departments.

When it was put to him that, if the average was flat and some departments got an increase, others would face a cut, he did not accept that. He said:

That’s a choice that we make, isn’t it? You do have a choice of everybody having 0.0% real, in other words maintaining their spending power in real terms after inflation year after year after year.

• He defended his decision to raise the basic rate tax allowance to £12,500 and the higher rate allowance to £50,000, even though this move benefits higher earners much more than lower earners. This is at the heart of the Resolution Foundation critique this morning (see 8.56am); it says: “The richest tenth of households are set to gain 14 times as much in cash terms next year from the income tax and benefits giveaways in the Budget as the poorest tenth of households (£410 vs £30).” On BBC Breakfast Hammond said that too many people were paying the higher rate of tax anyway. He said:

We are raising both thresholds. Obviously people who pay higher rates of tax ... benefit from that. But 32m people who are paying basic rate tax will be £130 better off. 1.7m people will be moved out of paying high rate tax altogether. These are people on middle incomes who you could say should not be in higher rate tax at all. But over the years more and more people on middle incomes have been dragged into higher rate tax, and raising the threshold gets many of those people - who work in our schools, in our hospitals, in our police forces - back into being basic rate taxpayers again.

Hammond also argued that he had to raise the allowance for higher earners because the Tories promised that in their election manifesto. When Today’s Nick Robinson put it to him that he had made a choice to cut income tax, Hammond replied:

Nick, it is not a choice. When you make a promise to the electorate in an election manifesto, then you have an obligation to deliver on that promise.

This answer ignores the fact that the Tories made a choice to put this commitment in their manifesto in the first place. And it also ignores the fact that the manifesto only committed the government to raising the basic rate personal allowance to £12,500 and the higher rate to £50,000 by 2020. Hammond has made the mover a year earlier than necessary, at a cost to the Treasury of £2.8bn in 2019/20. Hammond also insisted that it was wrong just to look at the income tax cut when assessing the budget. It was important to consider the impact of all measures, he said, and he pointed out that the Treasury’s own distributional analysis showed the poor gaining most. It does, but in proportional terms, not in cash terms, and only if the impact of all budget measures since autumn 2016 are taken into account. In cash terms the poorest 10% gain least over the same time period, as this chart from the Treasury’s own document (pdf) shows.

• He said he expected Tory MPs to vote for Theresa May’s Brexit deal even though they would not like all of it. He told Today:

While many people will look at any deal no doubt and say ‘I don’t like this bit of it, I don’t like that bit of it’, as with so many things in life, it isn’t about, ‘Can we get this exactly how we want it, exactly perfect?’ It’s about looking at the options available to use and deciding which is the best one to go with, which is in the best interests of this country and the future. And I’m confident that the prime minister will get a deal with the European Union which my colleagues in parliament will consider carefully and, although they may not like every last aspect of it, I’m confident that they will conclude in the end that it is right to do a deal.

• He confirmed that, if there was a no deal Brexit, he would need to boost spending to protect the economy. He said:

If the economy suffers a shock - and a no-deal Brexit is an example of a shock, but actually we know from history that sometimes the shocks that hit the economy are not the ones we are expecting but ones we aren’t expecting - if there’s a shock to the economy, we will deal with it in the usual way.

Very often a shock to the economy actually requires a boost to spending in the short term to support demand and to keep the economy going.

• He rejected suggestions that he was using the budget to pave the way for a general election. When this was put to him on Good Morning Britain, he replied:

I hope not. What we are preparing for is Britain’s future. We’ve now turned a corner and we are able to give Britain a bit of good news.

• He insisted that he would be able to make tech giants pay his proposed new digital tax. He said:

The large companies that are being targeted by this are global players, they are large serious companies. They are people that HMRC have contact with. When we introduce a law which says they have to pay tax at a certain level on certain of their activities, they will pay. We’re very confident of that.

These are not companies that are going to scuttle off and try to avoid that. At the moment there is no obligation on them to pay tax in the UK. We don’t have a tax that applies to them. That’s why it’s so important to introduce this digital services tax.

Now we have a tax that they are required to pay in the UK and just like all other large and established companies, they will pay the tax due. We are very confident that we will have a high level of compliance.

• He said that it was still his “ambition” to balance the budget.

We retain an ambition to balance the budget.

And he rejected claims he has abandoned fiscal rectitude. He told Today:

You are painting a picture here that is designed to show that I’m abandoning fiscal rectitude. In every year of this forecast our deficit will get smaller.

• He rejected complaints about his decision in his budget speech to set aside £400m for schools for what he called “little extras”. This did not mean he was ignoring school spending issues, he said:

Schools funding will be dealt with in the spending review. We put £1.3bn of additional money into schools funding last year to protect per pupil spending in our schools and all of these things will be dealt with in the spending review.

What I did yesterday was nothing to do with that process. It was simply giving back a little bit of the money that we have saved this year so that schools can buy the odd little piece of kit that they need.

I think that’s a nice gesture. Many of the schools that I know will be very happy to have 50,000 or even 10,000 to buy a whiteboard, buy a couple of computers - whatever it is that they want to buy.

Q: A lot of people feel you were giving money to causes to buy parliamentary support for Brexit. What is more likely? That the DUP won’t back a Brexit deal, or your party?

Hammond says neither. He thinks there will be a deal. He says in life nothing is perfect. But MPs will have to decide whether to back it. Although they “may not like every last aspect of it”, he expects them to support it, he says.

• Hammond says he expects Tory MPs to back the Brexit deal even though they won’t like it all.

And that’s it. The interview is over.

I will sum up the main lines from this interview, and from Hammond’s others this morning, shortly.

Nick Robinson is interview Philip Hammond.

Q: Have you found the magic money tree? This change in public finances has not come about through real economic change.

It has, says Hammond. He says the government’s policies have paid off.

Q: What has happened to the Tory ambition to balance the budget?

Hammond says he retains an ambition to get their.

Robinson says he has an ambition to be slim, but never gets there.

Hammond says in every year of the forecast period the deficit will decline.

Philip Hammond is giving interviews this morning about yesterday’s budget, and he is just about to appear on Today. I will be covering it live.

Here is our overnight budget story.

And this is how it starts.

Philip Hammond declared “austerity is coming to an end,” on Monday, as he sought to reassure voters, and shore up the morale of fractious Tory MPs Theresa May needs to back her Brexit deal by peppering his budget speech with spending pledges and a surprise income tax cut.

As negotiations with the EU27 enter their frantic final weeks, the chancellor cast off his cautious reputation and opted to spend almost all of a £68bn windfall handed to him over the next five years by the independent Office for Budget Responsibility (OBR).

“Austerity is coming to an end, but discipline will remain. That is the clear dividing line in British politics today,” he told MPs, repeatedly stressing that Britain was at “a turning point in our nation’s recovery”.

In an unexpectedly generous package, which will pump an additional £15bn into the economy next year, Hammond met colleagues’ demands to cushion the impact of universal credit, with a £1,000-a-year increase in the work allowance claimants can earn before their benefits are clawed back.

I will post the usual agenda for the day a bit later.

UPDATE: I’ve posted the agenda for the day at 8.51am.

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