Press speculation in the run up to the Budget was firmly of the view that this would be a low-key affair. That proved to be very much the case with the Chancellor Philip Hammond – or spreadsheet Phil as he is known in Westminster – living up to his reputation for caution. Perhaps, after so much political upheaval and associated uncertainty over the past couple of years, the Chancellor was aiming for just such a low-key outcome.
So, what were the main elements of the Budget? Here are some of the highlights.
To be fair, the Chancellor had very little wiggle room, as the Office for Budget Responsibility (OBR) downgraded their growth forecasts for each of the next five years, and upped the borrowing forecasts accordingly. He chose to react to this by reiterating the Government’s commitment to reduce the deficit and National Debt over the course of this Parliament. This is an important political dividing line between the Conservatives and Labour, who have pledged to spend – through borrowing – substantially more over the next decade should they win the next election, whenever that may be.
An eye on political pitfalls
With the little room he had to manoeuvre, Hammond tried to undo some of the political issues created over the last few years and avoid other upcoming potential pitfalls. Not the least of these was the way Universal Credit has been rolled out, with a substantial number of his own Conservative backbenches joining in the recent criticisms from the Labour Party about the delays welfare recipients were experiencing in receiving the Credit, and the associated hardship that was causing. He therefore put £1.5bn into cutting the waiting time and making it easier for people on housing benefit to carry over their claims to Universal Credit. However, the small print seems to suggest these measures will not come in until 2018, presumably as it will take time for the DWP to implement them. He also found extra money for the NHS, designed to head off Labour attacks over the winter period when the NHS is at its busiest. However, the £1.6 billion for next year is well below the £4 billion the head of the NHS recently said was necessary. The truth is, whatever amount the Chancellor found for the NHS, Labour would have immediately outbid him.
A nod to the JAMs
Theresa May made much of helping those she dubbed ‘Just About Managings’ (JAMs) when she became Prime Minister. However, with the twin distractions of Brexit and the June General Election, this aim of helping to ease the cost of living has slipped down the political agenda. The Chancellor focussed a fair portion of his Budget at keeping the cost of fuel down, by freezing fuel duty increases yet again, and also by freezing alcohol duties for beer, wines and spirits. An increase above inflation of 4.4% to the Living Wage will also be a major talking point for Conservative MPs doing the media rounds over the next few days. Likewise, yet another increase in the personal tax allowance – to £11,850 and the £46,350 for the lower and higher rates respectively – will cut income tax bills for most people and take many more out of paying tax altogether. Whilst there was no promise of removing the public sector pay cap – something that had been floated as a possibility in the media over the past few weeks – Hammond indicated he had set aside extra money for the Health Secretary to negotiate a new pay deal for nurses in the near future. It is these measures that the Conservatives will be keen to communicate as widely as possible, to try to get back to their narrative of doing what is best for ‘hardworking families’ across the country.
Devolution continues apace
This Budget continued the trend of recent years to increase funding to existing devolved bodies and to increase the number of places across the UK that have devolution deals. Hammond announced that a second devolution deal with the West Midlands Mayor across the policy areas of housing, skills and transport. Likewise, new deals for Greater Manchester, more funding for a major regeneration project in the Tees Valley region, and progressing talks on City and Growth deals for other areas of the UK, such as Stirling, demonstrates that the devolution agenda will continue to develop over coming years.
Building on existing housing policies
Housing – the lack of and affordability of – has become the major political topic of the past year or so, and certainly moved up the Government’s agenda following the poor General Election result in June. As a result, there was heavily trailed talk of policies being put in place to deliver 300,000 extra homes a year. The major announcement saved for the end of the Chancellor’s speech, scrapping stamp duty on properties under £300,000 for first time buyers – and on the first £300,000 of properties worth up to £500,000 – received huge cheers from the Conservative benches and gives their MPs a major campaigning tool over the coming months. However, even that, and a raft of accompanying measures – from new Garden Towns to making available £15.3 billion of new financial support for housing over the next five years – did not give the impression it would not be enough to guarantee solving the housing crisis. Yes, some more people might now be able to buy their own home, but will the various housing announcements really lead to the 300,000 annual target being met. The fact that the Chancellor focussed on talking about building this housing at ‘higher densities’ in urban areas, and specifically reiterated pledges to protect the Greenbelt, only reinforces the feeling that the Government is not prepared to undertake the genuinely radical changes to the planning system most experts agree are needed to get housebuilding to really take off. We will have to wait and see how these new measures – and others likely to be contained in the Government’s response to the Housing White Paper consultation, together with a new Green Paper on Social Housing – play out over the coming year.
What was missing?
Perhaps the biggest political surprise was the lack of any announcements on social care or pensions. Obviously, the Chancellor did not have the money available to make major changes, but with an ageing population total silence on such major issues seemed odd.
All in all, a low-profile budget but a seemingly safe one. The Chancellor will now be hoping that the few headline-making measures it included do not unravel over the next few days, as happened with his last two Budgets.
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