Hammond’s Budget delivers jokes but no shocks
Should we cheer Philip Hammond’s Budget? Yesterday, the chancellor announced slightly more generous spending than expected. But overall, he lived up to his reputation for caution.
It had been touted as the trickiest Budget in a generation. Philip Hammond, the Chancellor of the Exchequer, faced a dizzying set of problems: weak economic growth, the uncertainty caused by Brexit, and the government’s lack of a majority with which to deliver big reforms. He had promised “no magic bullet” to cure these ills.
Having set the bar low, Hammond gave a relatively polished speech. He even belied his boring image by cracking jokes. But he confirmed his other reputation for caution: his plans for the nation’s finances involve no major shakeup.
The headline announcement was a big cut to stamp duty – a tax on house purchases – intended to help first-time buyers (experts dispute its effectiveness, however). It came as part of wider reforms to housing policy, although Hammond himself admitted that they would not solve the housing crisis.
The chancellor pledged emergency funding for the NHS, but not as much as the service had asked for. He set aside £3 billion to prepare for a no-deal Brexit. There were promises to help tech startups, boost maths teaching and eradicate rough sleeping. Some issues in June’s election, like social care and public sector pay, barely got a mention.
It was a Budget of small concessions, not big giveaways. The reason for that came early on, when Hammond read out a forecast of UK economic growth. It was, simply put, the worst in recent history. It means the government is set to receive less tax revenue, and thus have less to spend, in coming years.
Hammond’s speech received a mixed reaction from his party. Some Eurosceptics had hoped that he would prepare radical reforms to coincide with Brexit — even if this meant borrowing money. They were disappointed, but the big sum allocated for Brexit pleased them. “I’ve heard a lot worse Budgets,” said Nigel Evans, a pro-Leave MP.
Labour was scathing. Jeremy Corbyn slammed the Budget as a bunch of “accounting tricks and empty promises”. Although it contained less austerity than expected, Corbyn argued that it lacked the revolutionary measures needed to improve living standards.
Phil the pinch
Well done Hammond, say some. He has taken no stupid risks, while still addressing concerns from all directions. His emphasis on housing, Brexit and technology shows that he is looking to the future. This Budget restores credibility to the government just when it needs it. We should be optimistic.
Rubbish, reply others. If the predictions are right, the UK is headed for some very tough times. Throw in the wild card that is Brexit, and this entire Budget could soon be irrelevant. What it does show is that Hammond lacks the vision to deal with the challenges ahead. There is no reason to cheer.
- Which of the policies mentioned in this article are you most excited about?
- Should a chancellor always be cautious?
- As a class, come up with one policy that you would like the chancellor to announce in his next Budget. Write him a letter to let him know.
- You have been given £100,000 to spend on your area. In groups, draw up a budget explaining how you would allocate it. If you have the time, get some ideas by interviewing locals!
Some People Say...
“The function of government is to obey orders, not originate them.”Mark Twain
What do you think?
Q & A
- What do we know?
- The Budget is an annual event, though each one plans beyond 12 months into the future. Hammond has changed the previous process of Spring Budget and Autumn Statement to an Autumn Budget and a simpler Spring Statement. So 2017 has had two Budgets. Chancellors traditionally bring their speech to Parliament in Gladstone’s 1860 red briefcase (see image above).
- What do we not know?
- What the fallout from this Budget will be. After the chancellor delivers his speech, his plans are revealed to the media in full. At this point, contradictions or awkward details sometimes come to light, although it can take days for criticism to build. After his last Budget, Hammond embarrassingly had to make a U-turn on an unpopular plan to raise taxes for the self-employed. Let’s wait and see whether the same will happen this time.
- Cracking jokes
- For example, when announcing more maths tuition, Hammond quipped: “Don’t let anyone say I don’t know how to show the country a good time.”
- Leading experts in economics and the housing market predicted that people will just use this as an excuse to sell their homes for more. In other words, only homeowners will profit.
- Reforms to housing policy
- Other announcements include a higher tax on empty properties and a £44 billion fund to help with the target to build 300,000 homes per year (until the mid-2020s).
- No-deal Brexit
- The scenario in which the UK and the EU fail to reach an agreement.
- Maths teaching
- Other than this and a pledge to train more computer teachers, Hammond did not offer much to schools or students.
- Rough sleeping
- Hammond promised to set up a task force with the aim of eliminating rough sleeping by 2027. According to the charity Crisis, homelessness has risen by nearly a third since 2011.
- Since 2010, the independent Office for Budget Responsibility has provided regular five-year forecasts of economic activity. It has consistently over-estimated growth.