As he started the Budget ‘Spreadsheet Phil’ – also known as Philip Hammond, the Chancellor of the Exchequer – made a joke at his own expense. He had been very beady in his assessment of the country’s finances and no tax giveaways were going to be made unless he raised other taxes to pay for them.
So, gone from this Budget were the politically charged announcements made with the customary rhetorical flourishes. Instead, we had a more practical approach with the hatches battened down for what could be the (unmentioned) Brexit headwinds ahead.
Running sores of the funding of social care and the hikes in business rates were temporarily plugged with cash – while promises of a more in-depth solution to these issues were promised in forthcoming consultations.
Meanwhile, a growing hole in the public finances arising from reduced national insurance for the self-employed and tax-free dividends from private firms was plugged with tax hikes for both. This could cost the Government some damage to its reputation as increasing national insurance contributions was specifically ruled out in the Conservative’s 2015 General Election Manifesto. Mr Hammond argued that the changes were necessary to move towards equalisation of the amount of tax being paid by the employed and the self-employed, especially now that state benefit entitlements were pretty much the same for both types of employment.
In the wriggle-room he had, the Chancellor was keen to take measures to address the long-running problem of the UK economy – its poor productivity. Hence there were announcements for investment in roads, new technologies and broadband, education and skills.
As we have heard in the last few days, the Government is determined to press ahead with the opening of new grammar schools and are unafraid to make the meritocratic arguments in favour. So not only will new grammar schools be opened where local communities want them, but children on free school meals will get free transport to reach them. There will be more opportunity for technical qualifications, more apprenticeships and a greater recognition that people need to reskill throughout their lives to stay in the labour market.
Labour’s leader, Jeremy Corbyn claimed the budget was ‘entirely out of touch with the reality of life’ for millions and had not addressed the ‘crisis’ facing public services.
Over the next few months, we will see whether Labour’s critique hits home, as although the economic news was better than expected and the economy will continue to grow, so inflation is predicted to pick up putting a squeeze on real incomes.