Philip Hammond doesn’t do box office. Unlike his predecessor George Osborne, he doesn’t do burgers either, with his austere pre-budget picture showing the Chancellor looking characteristically gloomy as, we’re told, he prepares Britain to be ‘match fit’ for the future. So what do we know about Hammond’s first – and last – spring Budget?
For those who have accused Hammond of being too downbeat, there’ll be some glimmers of hope. It’s expected that the Chancellor’s ‘upbeat assessment’ of Britain’s economic outlook which he will deliver at the despatch box will mean the country’s growth forecast will be revised upwards – giving the Chancellor an extra £12bn to play with over the coming year. Don’t be fooled if you think Hammond will use that news to splash the cash: this will be a Budget with no rabbits out the hat. Instead, we’ll see a few relatively piecemeal changes and a number of tax rises to pay for them.
A £320m pot, allocated to the building of free schools and the opening of new grammar schools, is one such move the Chancellor will announce today which offers a big headline figure but won’t go far. Nor, too, will the £500m injection to fund new ‘T’ levels – technical and vocational qualifications which, it is hoped, will have parity with A-levels.
Even for a Chancellor not given to spending, there are some areas which cannot be ignored. The sticky issue of social care falls firmly into that category. Amidst controversy yesterday over just this issue (which almost certainly means Corbyn will return to this subject at PMQs), Hammond is expected to allocate an extra £1bn fund for social care over the next two years. Given that Tory MPs were somewhat annoyed by the Chancellor’s refusal to talk much about social care in his Autumn Statement, his hand was forced this time around. But the cash being stumped up has the appearance of a sticking plaster given the huge problems in the sector.
There’s been controversy, too, about the planned rise in business rates which is likely to hit small firms based in London and the South East hardest. Hammond has stood firm on pushing through this change. There is a small olive branch to critics, though: the offering of support for those businesses which will lose out the most as a result of these reforms. High street pubs will also benefit from a ‘permanent annual discount’ on benefits rates – cutting the rate paid by 90 per cent of pubs by £1,000, according to the Sun today. A proposed rise on tobacco and alcohol duties is likely to offset some of that good news for drinkers, however.
Elsewhere, there’s more controversy in the plans to up the National Insurance rate paid by the self-employed by 3p in the pound. The self-employed are a soft target for the Chancellor, given that manifesto promises made by the Tories prevent NI increases elsewhere. But this doesn’t mean this proposed change hasn’t come without controversy, with the Daily Mail – something of a cheerleader for Theresa May’s Government – warning Hammond to have a re-think. The signs are that he chose to ignore that advice and will press ahead with this move.
There’s been much talk from the Treasury that this Budget is about preparing Britain for a future outside the EU. And Hammond puts (some of) his money where his mouth is on this with a £500m boost for research into new technology such as electric vehicles. The Chancellor is also planning to plough some of this cash into the rollout of super fast broadband, which was also touted in his Autumn Statement.
No Budget is complete without a token gesture or two, designed to generate headlines cheaply. Hammond is no exception: A £5m fund to mark the centenary of the Representation of the People Act, which gave women the vote for the first time, next year, is one such move. While the promise to launch a crackdown on small print which prevents consumers from cancelling contracts – dubbed ‘Netflix and Phil’ – costs the Chancellor next-to-nothing but acts as a talking point and will keep some happy. Hammond is also likely to ‘re announce’ an increase to the personal allowance, which is already scheduled to rise from £11,000 to £11,500 from April 6 this year. And we could see plans to raise the rate at which workers pay the top rate of tax, which we already know about, mentioned again.
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