Skip to Content

Coffee House

I can’t get excited about this make-up and make-do Budget

30 October 2018

3:15 PM

30 October 2018

3:15 PM

I’m afraid that try as I might, I cannot be excited by Philip Hammond’s budget any more than he seemed excited to deliver it. How could it be otherwise when this is, in almost every respect, a make-up and make-do budget that is, in any case, held hostage to fortune?

For understandable reasons, the Treasury prefers not to talk about Brexit. More than any other government department, it considers Brexit a lamentable episode of self-harm. At best, gains on the swings will be forfeited on the roundabouts and the Treasury is not inclined to believe that the best of all possible worlds is actually anything like the most probable kind of world.

Brexit is mentioned just three times in the Red Book. The OBR, by contrast, is happy to wade into these murky waters. Brexit features 66 times in its budget report. Its forecasts assume ‘a relatively smooth exit from the EU next year’. By contrast, ‘a disorderly one could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances’. The impact of this disorder ‘would be very hard to predict, given the lack of precedent’. That is boffin-speak for disaster. Even so, a smooth-as-possible transition merely ‘delays the decline in trade intensity that we expect after we leave the EU’.

A no-deal Brexit, as preferred by at least some gobby Tory MPs, is not a good Brexit and it is not evident it is any better than a so-called ‘bad deal’ Brexit. It would however, as the chancellor made clear yesterday, require an emergency budget next spring. It would also – and you might think this ought to concentrate even Tory minds – be a disastrous failure of policy, of leadership, of vision, and of government. The kind of failure that earns a party a long spell on the opposition benches.

Thank heavens for Jeremy Corbyn, then. He is the only thing propping-up this government. Bad as things may seem now, they can always be worse. And they are not very great just now. Growth forecasts for the next five years hover around 1.5 per cent a year; not quite a disaster but not very good either.

Meanwhile, for all that the chancellor promises that austerity is ‘coming to an end’ – a hostage to fortune, that depends on what you mean by, well, ‘austerity’ and ‘an end’. If you strip out the pledged increased money available to the NHS, overall spending continues to flatline. That means most departments are still having to do more with less.

Elsewhere, there is a distinct whiff of making up for previous mistakes. An extra billion to the MoD might be welcome but no-one thinks it nearly sufficient to make up for the impact of previous, often savage, cuts. Equally, the new money available for universal credit is an admission that previous cuts to the welfare budget went too far. It is also, almost certainly, not going to be enough either. I bet a shiny new Brexit 50p that universal credit will require more – much more – money in the future.

Politically, the messaging was often clumsy at best, too. More money for schools so they can purchase the ‘things they need’ invites the obvious retort: ‘What? You mean they don’t have enough money for the things they need now? Why the hell not?’.

As for tax, well here the chancellor can at least point to the keeping of manifesto promises. Increasing the tax-free allowance and (except for viewers in Scotland) the 40 percent threshold to £50,000 will keep many Tory voters happy. It comes at the cost, however, of reinforcing the negative – but all too often all too accurate – perception that when push comes to shove the Conservative party is more interested in handing money to the most affluent fifth of voters than to the poorest. (It is possible to think too many people find themselves in the higher rate bracket while also wondering if raising the threshold by ten percent is still altogether wise.)

Still, by ditching the ambition to run a surplus the chancellor was able to buy himself some flexibility and some time. These are not ideal circumstances but given the prevailing conditions this was perhaps about as reasonable – and as responsible – a budget as was possible.

It will not, however, quell disgruntlement. The country has endured a decade of astringency and plainly thirsts for something better. The Conservative party remains gloriously fortunate that Labour is in no credible position to offer anything more palatable but that should not be taken as conferring any plausibility upon the Tories themselves. These are times that demand change but, because the change promised by Labour is not convincing, the country feels itself stuck with the known inadequacies of the government it has. Being better than the alternative is not the same as being any good yourself.

And all that before Brexit has even happened. If this budget has not unravelled quite as quickly as some of its predecessors it may still be sunk by the Conservative party’s awfully big adventure. At which point, god help us, other, still worse, possibilities will suddenly begin to seem more plausible.

Show comments