Hammond manages to walk the tightrope. But is there drama around the corner?
Every time Philip Hammond gets up to deliver an Autumn Budget or Spring Statement, I’m reminded of an acrobat about to take the first step on a particularly narrow tightrope. And today was no exception. Pushed and shoved from every angle, Hammond’s primary concern for #Budget 2018 seemed to be keeping himself upright.
To that end, he threw out handfuls of sweets to keep the braying mob of critics at arms length, but avoided outlining a definitive, bold narrative which might unsettle anyone important and make his position even more precarious.
Given that his spending promises are based on forecasts which may change at any moment depending on the outcome of the Brexit negotiations, this may have been a wise decision – but for MPs hoping to persuade their constituents that May’s Government has a big, bold Conservative vision for Britain post Brexit, it will have disappointed… again.
Here are the five key points at a glance:
On public spending
Hammond has had a Michael Gove, Gavin Williamson, Matt Hancock and Damian Hinds all clamouring at his door for cash over the past few weeks, and given May’s “end of austerity” rhetoric (more of that later) he could hardly let them all down.
Williamson had the biggest win with Hammond pledging to give an additional £1bn this year and next to the Ministry of Defence’s budget in order to boost the UK’s cyber capabilities and anti-submarine operations – but the relatively recently installed Hancock didn’t do too badly either.
Hammond promised an additional £650m boost for local authorities to spend on social care for 2019/20, along with £45m for the Disabled Facilities Grant in England in 2018/19 and £84m over the next five years to expand the Children’s Social Care programmes to 20 further councils.
It won’t go unnoticed that the Conservatives still haven’t come up with a proper strategy for social care to replace the disastrous dementia tax, but for now, this sticking plaster will be useful for keeping campaigners quiet.
The sticking plaster approach was also adopted on education, with the Chancellor announcing a £400m in-year bonus for schools to buy “the little extras they need”. It will be in the form of a one-off capital payment directly made to schools, averaging £10,000 per primary school and £50,000 per secondary school.
It’s not huge, but again, it may prevent a full blown crisis erupting over the next few months.
On business
In a nod to some sort of narrative, Hammond opened his speech by promising that Britain’s future would be “for the strivers and the grafters”. To help them, he will be launching a £675m fund to transform high streets by improving infrastructure and transport access and provide business rates relief for small retailers.
Hammond said the government had already introduced business rates relief measures worth £12bn, but he will go further. All retailers in England in premises with a rateable value of £51,000 or less will have their business rates bill cut by a third over the next two years.
According to Hammond, this will provide annual savings of up to £8,000 a year for up to 90 per cent of all independent pubs, shops, restaurants and cafes in England.
It will go down well with some MPs worried about their constituents businesses, but others will feel it has come too late: thousands of shops have already succumbed and closed their doors for the last time.
On welfare
The Conservatives have backed themselves into a corner on Universal Credit – and they know it. They’ve passed over too many opportunities for a U-turn, but the horror stories from people on the receiving end of the cock-ups are still coming in thick and fast, and it’s become clear that ignoring them would be political suicide.
Today, Hammond admitted he has concerns about both implementation and rates and allowances.
To help with implementation, he has promised a cash injection worth £1bn to aid the transition over the next five years, and to allay concerns about rate fairness, he has announced an increase of £1,000 in work allowances – meaning people will be able to earn more before losing benefit. This second change will will cost the Treasury £1.7bn.
It’s a big backtrack on the cuts to the generosity of Universal Credit which were announced by George Osborne – and boils down to what is essentially a U-turn – but to save face, Hammond ostensibly stuck to the Government line that Universal Credit is a “long overdue and necessary reform” which is “here to stay”.
On Big Tech
To get with the zeitgest Hammond was bound to do a bit of Big Tech bashing, so the announcement that the Government will introduce a UK digital services tax which has been “carefully designed” so that “established tech giants rather than startups shoulder the burden” came as no surprise.
Hammond emphasised that this was not a digital sales tax that would be paid by consumers (although some have pointed out that any tax on social media will ultimately always be swallowed by consumers), and made clear that start-up companies will not be affected as it will only be payable by “profitable” companies with revenues of £500m or more.
It’s a politically safe tax – as Peter Walker of The Guardian points out, not many MPs will receive constituents’ letters complaining about an extra burden on the likes of Google and Amazon – but it’s hard to work out how much revenue it will really raise.
On Brexit
Brexit was more of a shadowy spectre than a point of focus in the Chancellor’s speech. Hammond barely mentioned it – other than to promise that an extra £500m has been put aside for no-deal preparations – but given his warning that a whole new budget would be needed in the event of a no deal Brexit, it was difficult to forget it altogether.
Conclusion: With a huge Brexit shaped question mark hanging over the OBR forecasts, a bitterly divided party, and a leader teetering on the brink of a no-confidence vote, this budget was never going to be meaty. Instead of sharing a vision or a narrative, Hammond has handed out little sweets to everyone – and hinted that if MPs vote for a good Brexit deal, he’ll hand out some bigger ones next time.
In a generally low key budget, there just two hints of the drama that may be around the corner.
Firstly, and most obviously, the rift between Number 10 and Number 11 seems to be growing. Whereas May said yesterday that austerity is over, Hammond used the phrase “coming to an end” – and was at pains to emphasise that the Conservative party is the party of “discipline”. Couple that with the “I didn’t come into politics to raise taxes” line, and you begin to see the outline of a truly economically Conservative politician who is moving further and further away from his paternalistic leader.
Secondly, sweets to keep the mob at bay are all very well, but looking at a breakdown, Hammond gave out rather a lot…
Could it possibly be that a General Election will be upon us sooner than we think?