By Founder and Managing Director Matt Gillow
“The government chooses the future, and chooses to run towards change.” Supposedly.
Hammond’s budget speech was littered with groan-worthy gags and a decided lack of policy. On Twitter, Jessica Elgot voiced the thoughts of a nation, tweeting “wouldn’t mind some policies now, after the gags”. Though according to Hammond, “the economy continues to grow… continues to create more jobs than ever,” OBR forecasts have been revised down; for the last 15 budget events the forecasts have predicted growth of 2%, dipping below for the first time in recent memory.
Nonetheless, the OBR is also forecasting another 600,000 people in work by 2020 – promising statistics for a wavering government. After budgeting an extra £3bn for Brexit contingency planning, Hammond reaffirmed the commitment to keeping the deficit down – saying “debt is still too high and we’re passing it unfairly onto the next generation.”
Some more numbers: borrowing will fall to its lowest level this century by 2022, and this year it’s forecast to be £49.9bn, significantly down from spring budget forecasts.
Finally, some policy: £500m investment in a range of digital initiatives such as artificial intelligence, full fibre broadband, and 5G. A commitment to replacing any lost European investment fund money, a commitment to explore new taxes on plastic waste.
During the speech, the pound began to slide against the dollar, with economists suggesting that the market wasn’t primed for the scale of the OBR downgrades. Right-wing commentators also questioned Hammond’s pledge of cash to research electric car charging – noting there’s already a bulk of private money currently doing so. Here, another interesting policy; those who charge vehicles at work won’t be taxed on doing so in order to incentivise green driving.
There was some more criticism from the Conservatives after Hammond noted he’s accepted Trade Union Congress advice to continue funding UnionLearn – to be read as; more taxpayers’ money going to Trade Unions. Mark Wallace, Executive Director of ConservativeHome, tweeted that “any joint enterprise between government, the CBI and Trade Unions is inherently worrying“.
Despite some backbench protest and the popular #StopHS2 movement, Hammond refused to budge on the outdated infrastructure policy. Along this, he announced £30m to improve digital connectivity on the Trans-Pennine rail route, an investment in Redcar, and a new city deal in the West Midlands. Cue the quiet scrabbling for the small print as commentators asked: “how are we paying for all of this?” Rob Colvile, CapX Editor, noted a lot of ‘sweeties’ and no notion of how they’d be funded. The Taxpayers’ Alliance also questioned the funding commitments.
After commending the hard work of the NHS, and accepting the challenges they face, Hammond ‘exceptionally’ granted the NHS increased resource funding of £2.8 billion. £350 million (doesn’t that sound familiar!?) immediately, in preparation for the coming winter. Although a good, and much needed step, it is hardly a long-term solution to the profound crisis it is facing.
Then came the supposed showstoppers – Universal Credit and Housing. The big hitter was the absolute abolition of Stamp Duty for first time buyers up to £300,000 – a huge plus for those looking to get onto the housing ladder – but some Londoners argued that the policy discriminated against them due to the polarity in pricing across the country. Further on housing, the Chancellor committed to protecting the greenbelt at the same time as pledging £44billion for the housing market, prompting mixed reactions from Tory grassroots. With recent criticisms over the poor roll-out of Universal Credit, activists were happy with Hammond’s reaction – with noted Tory rebel Heidi Allen giving a thumbs up from the floor as Hammond announced the removal of the 7 day waiting period and an extension of the repayment period.
In line with inflation – though it wasn’t directly noted by Hammond during the speech – the national living wage will be increased from £7.40 to £7.83, as the tax threshold for basic rate of income tax will also rise to £11,850. The higher rate of tax will also increase to £46,350.
A couple of tax freezes, but no cuts: beer duty will be frozen, a win for many anti-tax campaigners and the pub industry – and air passenger duty will also be frozen; funded by an increase in tax on private jets. How’s that, Lewis Hamilton?
In summary; a dull budget from Spreadsheet Phil. With some notable exceptions – stamp duty, changes to universal credit, and funding for the housing market – the budget will be seen as inconsequential and will only prompt more questions on where the government is getting the money from.
Image: EU2017EE Estonian Presidency @Flickr