If you think that was the Chancellor’s last Budget speech for this Parliamentary session then think again. Despite Spreadscare Phil telling us last year he was reducing what were effectively two budget announcements a year to one Budget in the autumn and a financial statement in the spring, there’s a very strong likelihood that there will now be another Budget next April.
Yes, there was plenty of good news that makes life difficult for Labour and the SNP. There was effectively a tax cut for all earners by bringing forward the rise in personal tax allowances; there was the £1 billion to smooth out the transition over to the Universal Credit system and a further £1.7bn to uprate those benefits – totalling more than the £2bn that people had been demanding. Then there was the increase in the minimum wage which makes a big difference to the low paid.
There were the announcements about freezing duty on beer and spirits, on fuel duty and on domestic Air Passenger Duty. These all help save us money and make us relatively better off.
As well as the personal impact on people there were many spending announcements on the NHS, more for schools, more for cities, more for infrastructure and more for housing. It also meant £950 million more for the SNP government. There was so much detail of what more was being spent that I actually began to nod off!
Opposition politicians could only look on and say it should have been more – but the truth is that Chancellor Hammond has abandoned the previous Tory commitment to balance the books by wiping out the deficit and aiming for a surplus and is instead aiming for an annual deficit of £20bn per annum.
He’s able to do this because the economy is growing and probably growing more than he is admitting. Revenues are increasing because the number of jobs that are being created means greater tax receipts and in turn better consumption and hence VAT and duty receipts.
Mentioning Brexit only once, he has £15bn kept back for any help he thinks the economy might need if our EU departure becomes bumpy. With the Office of Budget Responsibility predicting 800,000 more jobs (predominantly in the private sector) in the next five years there’s even reason to believe he will have more than £15bn, possibly £20bn to spend.
When the spring statement comes, the rather flat economic growth he announced yesterday of 1.6 per cent, 1.4 per cent, 1.4 per cent, 1.5 per cent and 1.6 per cent over the next five years is, without any unforeseen shocks, bound to be uprated. That means more revenues than are in his calculations at the moment.
This is why I expect him to deliver another mini-budget in April – a Brexit Budget. And it surely does not matter what kind of Brexit we have.
If it’s a hard Brexit and he believes he has to cut taxes to keep business growth and employment prospects improving then he’ll have to make some announcements to attract investment. Reducing corporation tax and cutting capital gains tax and possibly stamp duty could be in his package.
If it’s a smooth Brexit and he has that £15bn-£20bn sitting around going spare, do you honestly think he’s going to leave it in his wardrobe? No, he’ll find uses for it to make people feel good, to raise their optimism about the future and that the Tories are delivering. So he’ll still have that Brexit Budget, one way or another.
The question I have is, with economic growth currently less than two per cent and likely to be that way for the future why not make some of the changes now? Why not give business confidence a boost sooner rather than later?
Whatever you think of the Budget, expect another one, with that word Brexit appearing all the way through it.