Quote of the Day:
“Politics is the gentle art of getting votes from the poor and campaign funds from the rich by promising to protect each from the other.”
In a political move presumably aimed at burying anything which might actually be interesting, Philip Hammond attempted to take on the mantle of John Major and Iain Duncan-Smith by getting himself labelled as dull by the media, known for his love of spreadsheets and promising to deliver a boring budget.
In the end, it really was quite thin, but it is important to remember that the actual full Budget will now be in the autumn so we can expect much more later in the year – possibly followed by a snap General Election??
The Budget was at least notable for its narrowness and almost complete lack of investment and accelerator initiatives. No reference to industrial strategy, manufacturing, productivity, housing, development, wider business strategy. The almost sole focus was on taxation with a token nod to education and social care towards the end. Still, there can’t be a crisis in industry, housing or manufacturing if we don’t talk about it…
The JAMS apparently no longer exist, we are now back to a more Dickensian ‘ordinary working families’. Not quite as patronising as the ‘hard working families’ moniker of the Osborne years but not far off.
The usual smoke and mirrors about growth, shrinking deficit and growing employment commenced, conveniently ignoring the growth in vulnerable employment, inflation outstripping wage growth etc. So, moving on from that…
Hammond had a challenge, given the looming BREXIT deadlines and the almost inevitable economic and financial fallout which will follow. As usual, all the guff about BREXIT continues to talk about the economy confounding expectations, despite the obvious fact that this is because WE HAVEN’T LEFT YET!!
This Budget is all about setting the scene for our global future and apparently beginning to equip the population with the skills needed to ensure the economy doesn’t collapse if all those EU nationals who currently live in the UK decide, quite understandably, that they’ve had enough and are off. This inevitably means the need to stress that borrowing is simply not an option and clearly there is no end in sight to austerity.
Hammond made a joke about the ‘last Labour government’ implying that there will never be another. Judging by the faces of some of those on the opposition benches, this is a view that is widely shared. Cue more discomfort when he suggested that the Labour party has little connection or engagement with business, again, not many can disagree. The situation didn’t get better at the end of the speech when Jeremy Corbyn stood up and started his rant about everything that Hammond had got wrong.
So, given that he spoke for over an hour, he must have said something vaguely interesting? Well, not a lot but I’ve done my best to set out what was said of note below:
Oooh, business rates – apparently the Government has listened to concerns. Business rates won’t be abolished but the government will look at taxing the digital economy in future, which will please Google and Facebook no end. Government is going to consult on reforming the process of valuation – really, you really want to consult again? To prevent wasting time government could just review the vast responses they have had to date. That said, a few initial changes were announced:
- Any business coming out of SBRR will benefit from an additional cap so no increase will be more than £50/month with subsequent increases also capped.
- All pubs with a rateable value of less than £100,000 to get a £1,000 discount.
- Local authorities to get a £300m fund to provide discretionary relief – so that is a lawyers breakfast!
This is all positive, although DCLG are in charge and Sajid Javid is rapidly acquiring a reputation for not quite delivery. However, HMT and No.10 will probably draft everything and just get DCLG to publicise it, as that is how you empower your ministers.
Taxation and Pensions
And so to taxes… Since 2010, the top 1% of income tax payers now pay 27% of all tax. Widely leaked and widely opposed (at least by the self-employed), NI on self-employed is increased to create parity with those on PAYE. Hammond also managed to get in a very direct dig at George Osborne at this point. If we were ever in doubt that the two governments are flying very different masts, we aren’t now. To be fair, Osborne looked as if he couldn’t really care less – given his massive independent wealth he can afford not to care.
To add to this, the dividend allowance is to be reduced from £5,000 to £2,000 with effect from April 2018.
Hidden in the red book documentation is a further announcement that the government will be undertaking a statutory review on the state pension age. Without wanting to pre-empt the outcome, we can probably expect that anyone under 50 will probably work until about 70 and under 40 will probably now work until at least 75 before receiving a state pension. If you’re unlucky enough to be under 30, you may as well accept that you will be working with one foot in the grave so let’s hope you have a job you enjoy.
International Women’s Day:
There is nothing like a privileged, establishment pin-striped suited man talking about equality and International Women’s Day (IWD) to warm the cockles of every female heart. I would suggest Emma Watson deliver the Budget speech next time it falls on IWD, she would be much more eloquent and convincing. Anyway, moving on, in ‘honour’ of IWD – just to emphasise that the government knows what it is – a few female-friendly policies were announced including:
- Doubling of free childcare to 30 hours per week.
- Funding for those suffering domestic violence (mainly paid for through the Tampon Tax, so women paying for their own care).
- Funding for women returning to work after having children or having a career break – not really clear how this will help or how it will be invested, which is probably pretty important.
- £5m to celebrate the centenary of the enfranchisement of women next year.
Infrastructure and Devolution
- Various pots of money to go into roads, rail and infrastructure projects across the country including the local roads network, although unclear how much is new money and how much has already been announced.
- £16m for a new 5G mobile technology hub
- £770m to go to the devolved administrations – but the SNP is unhappy. It did look as if Philip Hammond flipped the bird to his SNP MPs but apparently it was more gracious flourish.
- Midlands Engine Strategy to be published tomorrow – sure that will be exciting.
- Little direct mention of London despite intense lobbying but the background paperwork suggests a Memorandum of Understanding has been reached by the Government and the GLA including the potential for land value capture on infrastructure mechanisms.
Also widely trailed was the education package. Hammond declared the intention to give every child the opportunity to go to a good school. In the minds of the Tories this means grammar schools and privately funded free schools, because it doesn’t appear to occur to them that middle class families have the money and means to tutor and cram their children to pass grammar school tests, whereas those from less affluent backgrounds do not.
So equally bright children are still disadvantaged simply due to being less well off. Still, it worked in the 1960s, well, for some people anyway and then was widely recognised to have failed vast numbers of children. So lets give it another go in exactly the same way!
The Government will also introduce T-Levels, to raise standards of technical education and therefore, presumably, look to bridge the inevitable BREXIT gap. Alongside this, students will be offered maintenance loans, similar to those given to University students. Although, given that Student Loans are increasingly offered on commercial rates, this is something of a false promise.
Social Care and the NHS
After immense public and media pressure, the government has finally announced additional grant funding of £2bn over the next 3 years to social care to allow local authorities to commission new care packages. A green paper on long term funding for social care will be released later this year – expect this to put the onus on the user.
In addition, £100m to be made available for new GP triage projects within English hospitals to reduce unnecessary A&E trips.
A drop in the ocean given the scale of the crisis, but still an important contribution. Perhaps the government has recognised that running the NHS into the ground based on political ideology masquerading as economic necessity is simply not a good electoral strategy. Although the pugnacious face of Jeremy Hunt nodding smugly and vigorously could still drive you to violence…
Property and Development
Well, nothing really. No announcement on stamp duty, nothing about small builders or housing delivery in general at all. So clearly it is all sorted and finalised with the White Paper…
And that’s it, really, that’s it. No fireworks, no excitement, no fun… Unless the analysts over the next few days tell us otherwise of course!