Red box in hand, the Chancellor, Philip Hammond, posed outside 11 Downing Street in front of journalists who had been informed only a few weeks previously by the Prime Minister that “austerity was over”. Delivering his last Budget before Brexit, ‘Spreadsheet Phil’ (as the Chancellor has been hilariously monikered) poured some cold water on that claim, suggesting, instead, that austerity was ‘coming to an end’.
With the PM and Chancellor unable to quite agree on whether austerity had ended, or was about to begin ending, you can only imagine how the rest of us watching felt about it. With sleight-of-hand a hallmark of most Budgets, arguments are easy to come by, both in support and in opposition to the claim that times of plenty and rich harvests are once more upon us.
A name like ‘Spreasheet Phil’ doesn’t immediately conjure images of the sort of man who would blow the family savings on a trip to Vegas, and so it proved to be the case that his Budget was not going to be the big cash giveaway some envisaged and hoped for. Instead, we were told that overall government spending would increase by 1.2% over the next five years and that a full spending review would be undertaken next year. Of course, with the NHS receiving the lion’s share of the new money, the reality is that most department budgets will remain frozen or possibly even contract slightly.
Use all the technical analysis you like, but feelings in politics are more important than the facts (currently, anyway). To use an analogy: if for, say, eight years, you’d be forced to endure a daily round in the ring with Mike Tyson and one day he said “as of next financial year, there will be no further beatings” you’d certainly feel pretty relieved, but probably not like the lucky recipient of a great reward – no matter how punch drunk you were. For many people, the ‘end’ of what was a prolonged punishment will certainly not feel like a victory that was well worth the going through, but a cruel and unfair ritual that they were subjected to. For that reason the chancellor’s big ‘thanks for all your hard work’ felt slightly jarring – insinuating, as it does, that some sort of pact between willing participants was entered in to. Further, the explicit suggestion that this budget was for people who work, care and drop kids off at school rubbed salt further in to the wound.
Of course, claiming that austerity is now over (which it technically may be) doesn’t mean that things are somehow magically returned to pre-austerity condition. Many services have been cut to the bone, while others have disappeared completely. A modest increase in public spending will not undo those changes (many of which are irreversible anyway). It will be a fairly cunning trick by the fiscally conservative chancellor if people completely adjust to this new reality and accept the changes of the last decade as settled.
Behind the headlines, the chancellor did deploy a few other cunning tricks and traps for his opponents, stealing their clothes on some issues (scrapping PFI, increasing public spending and scattering money on several causes which at least gave the impression that the government wasn’t cold hearted and deaf to the concerns of everyday folks). An increase in the personal allowance for income tax also placed Mr Corbyn and Labour in a tricky position. On the one hand, this change will lower or remove the tax burden for many low paid workers. On the other hand, it also benefits the very wealthy and will cost the public purse around £3bn a year.
Forced on to the new territory of trying to attack a Tory Government who (at least on the face of it) are ending austerity and increasing spending, Mr Corbyn seemed to struggle, but looked at his most capable when tackling the concept of austerity ‘ending’ and pointing out the tax cuts granted to the richest individuals and corporations.
In Scotland, the SNP were also quick to try and pick holes in what the Chancellor had set out – claiming the Scottish Budget had been cut by £2bn in real terms since David Cameron’s coalition government took power in 2010/11. They have also made interesting claims that despite the NHS funding boost, Scotland will not necessarily receive the Barnett Consequentials that should naturally follow. Certainly this looks likely there will be heated exchanges between the Governments in London and Edinburgh on these points.
Worryingly, much of the budget was based on assumptions and is predicated on Brexit proceeding smoothly – which isn’t hugely encouraging. Despite phasing out the Spring Budget, Mr Hammond has reserved the right to write an entirely new Budget in the Spring should he feel the need to after Brexit. Again, this is a fairly shrewd move and could help to keep Brexiteer rebels in line with the promise of even more goodies if they don’t upset the Brexit applecart too much.
In many ways, the Budget does have a pre-election feel to it. Handing out rewards, outflanking opponents on key issues and applying some armour to the areas in which you are most vulnerable. Coupled with the PM’s recent attempt to woo disaffected Labour voters, I’m more convinced than I was a few months ago that another election could be on the cards. Sorry to break it to you this way.
From a third sector point of view, there was some recognition of the role charities play, and the difficulties they currently face. Changes to gift aid, administrative burdens and tax thresholds are all welcome – as are some of the giveaways to certain groups. However, there seemed to be a lack of strategy for the sector and its long terms viability. Successor funding for European structural funds went without mention, as did progress on the Dormant Assets Fund, a new fund which looks likely to dwarf the Dormant Bank Accounts fund which unlocked millions for charities in Scotland a few years ago. Progress on both these points needs to be urgent – especially given the increased demand being faced by the sector at a time when funding is scarce and big challenges are still set to materialise.
From the Chancellor’s point of view, this was a successful budget – allowing him to play the good guy for a change and offering him an opportunity to keep his backbenchers in line and his opponents fairly quiet. With more detail yet to emerge, his opponents and the sector will need to be on their toes to ensure promises are kept and delivered in transparent and effective ways.