While Philip Hammond likely ended his week quietly satisfied with the reception to his Budget statement, what should we make of it and what does it mean for British politics in the coming months?
Those were the questions facing an expert panel at iNHouse Communication’s first iNConversation event.
According to economist, broadcaster and Sunday Telegraph columnist Liam Halligan, there was a glaring omission in the Chancellor’s statement. Mr Hammond had missed an opportunity to demonstrate how the UK could not only cope with a no deal Brexit, but thrive outside the European Union. Commenting that the Chancellor could have used an expected windfall (courtesy of revised OBR borrowing forecasts) to shore up public finances, Halligan also noted Mr Hammond had added his own giveaway on top of that of the Prime Minister – but that an apparent end to austerity had little impact on the value of the pound, with traders waiting to see the content of a Brexit deal.
It was, Halligan suggested, a very risky Budget.
It might have been a risk, but it was a Budget for Number 10 and the politics behind the Chancellor’s decision making were overwhelming, according to Times Political Editor Francis Elliott. But while the Budget might have well been received within the Cabinet, that the tax cuts announced appeared to benefit higher rather lower rate tax payers was not a good look. There were also some clear winners and losers according to Elliott – with the police, schools, housing and local authorities not benefitting in the same way as defence and, inevitably, the NHS.
For Baroness Ruby McGregor-Smith, despite the Chancellor’s somewhat unexpected largesse, more was needed in education and social care funding and while the living wage was going up, it still failed to match rising living costs. But still, increased funding for Universal Credit was welcome, while Mr Hammond turning on the spending taps would address some of the issues of austerity seeping into business confidence – although companies would continue to hold inward investment until after Brexit.
And this was a real problem, said Halligan. Business was tearing its hair out at the uncertainty, which Mr Hammond could have helped address by a more serious tone that talked up the post Brexit opportunities for the UK. In fact, claimed Halligan, the Chancellor could have hamstrung the remaining negotiations by his suggestion of a Spring Budget in the event of no deal.
No so, argued Francis Elliott, who suggested that claiming the UK would thrive in the event of no deal wouldn’t help negotiations. Elliott also commented that uncertainty over Brexit was leading to underspends in preparations for no deal amongst government departments – but while the Chancellor might not have not talked up Brexit, he had silenced a number of critics amongst both Leavers and Remainers. Baroness Ruby McGregor-Smith, meanwhile, could not see how the country could get to March without a Brexit deal, which could prompt a crisis in April due to business confidence.
And did we see the end of austerity? It’s difficult to judge, according to McGregor-Smith, and to even determine what austerity means anymore. But, there were opportunities to do more in the Budget to prompt investment in start-ups, AI and technology. For Francis Elliott, there was clear dissonance between Number 10 and Number 11 Downing Street. And for Liam Halligan, there was far more fiscal stimulus than there needed to be, potentially challenging current economic growth.
It was Budget, according to the panel, framed by the Prime Minister’s insistence on more for the NHS but dominated by Brexit. One in which the Chancellor went beyond expectations in announcing additional spending, but with issues like training seemingly overlooked.
Our thanks to our panellists – Francis Elliott, Baroness Ruby McGregor-Smith and Liam Halligan – for taking part in our iNConversation Budget briefing.