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Autumn Budget 2017 – Mike Wilson gives his views: Hammond Plays to the Gallery

Mike Wilson

Attention, Michael Gove. You might have persuaded yourself that a journalist can become chancellor of the exchequer, just because the last chancellor is now a newspaper editor, but trust us, it’s a bit more difficult than that. Especially since you’re forced to spend a lot of your time listening to experts, damn them. Some of whom might not even agree with you. Oh, the injustice of it.

 

Consider, for instance, the measured and utterly confident way that Spreadsheet Phil Hammond delivered a Budget speech on 22nd November that wasn’t ever going to be easy. Did he try to dodge the bad news from the Office for Budget Responsibility, to the effect that its growth forecast for this year would be cut from 2% to about 1.6%, and the forecast for 2018 from 1.6% to about 1.4%? Did he duck the assumptions for productivity growth, which were due to drop from around 1.5% this year to 1.3% in 2019/2020 before returning to 1.6% by 2022?

 

No, he didn’t. And nor did Mr Hammond attempt even once to blame anyone else for his predicament. (Apart from the inevitable jibes at the Labour opposition, obviously.) After seven years in power, after all, that line would have been getting a bit thin. But nor did he follow his predecessor George Osborne’s line in blustering and braying about the rosy future. This was a Budget speech that actually had fairly little to offer in the way of large gestures; but perhaps that was why it seemed so much more credible than usual?

 

Yes, Mr Hammond certainly sounded a little nervous as he got to his feet. Dismissing the suggestion that he ought to have had a drop of something stronger than water, and gratefully waving a pack of Strepsils donated by th Prime Minister, the Chancellor opted to follow the old schoolteacher’s maxim: “Tell them what you’re going to tell them, and then tell them, and then tell them what you’ve told them.”

And that, to be brutally frank, is how the next hour passed. Mr Hammond is no Martin Luther King, but he did seem to be spending a lot of time having a dream – about affordable housing, creating a beacon of civility, ensuring better training, a better geographical balance of prosperity, and – goodness! – a return to the Northern Powerhouse, which had almost entirely dropped out of his March address. Whatever could it all mean?

 

What it meant was that the Chancellor was able to wave away a lot of the troubling stuff that we might have supposed was on his mind. Such as the incessant grinding noise that’s been emanating from the EU exit process – not just from the country’s manufacturing sector, which has been pleading for better guidance – indeed, any guidance! – about what will happen on the day after Brexit, if only so that it can get its investment and job creation plans into line.

 

Hardly a word about it, in fact, except to pledge an extra £3 billion of new money for the negotiations over the next three years. (Hang on, aren’t we supposed to be out by then?) And nary a syllable about how the banking fraternity are already setting up their corporate parachutes in readiness for the big day – not very cunningly disguised as continental European command-and-control centres that could move their decision-making away from London and Edinburgh in case the B-bomb should ever drop.

 

And so it went on. If any of us were expecting vast sweeping crackdowns or earth-shattering spending programmes, they weren’t there – at least, not in the speech. (The small print in the blue book may prove to be a different matter.) So what was there, actually?

 

Housing

First on the list, of course, one of the best-trailed measures in this year’s Budget was the intention to build 300,000 homes a year. Which was probably a better response to the housing shortage than George Osborne’s help to buy programme, which had been accused (not entirely unfairly) of helping to drive up house prices rather than helping to make them affordable.

 

And on this, the chancellor did not disappoint. 300,000 homes a year are due, with £44 billion of loans and guarantees behind them, – although the target won’t materialise until the mid 2020s. Which is a long time. Mr Hammond also extended the stamp duty exemption for first time buyers to properties worth £300,000, or to £500,000 in London (of which the first £300,000 will count). He declared that councils should be able to use more public land, and that it should be easier to force construction on land that developers were holding back for future capital gain. Some five new garden cities are to be built by 2050 – but gosh, that’s a long way away, so no need to cost it.

 

As far as we can judge, Mr Hammond’s housing plans are aimed at benefiting the smaller housebuilders rather than the bigger ones. That, certainly, has been the direction of recent share prices in the construction industry, so we can’t say we weren’t warned. But where does all this leave the larger contractors?

 

Are we, for example, going to see government cash going into major public construction projects? Motorways, airports, the odd rail line expansion perhaps? There seemed to be more bluster on this topic than you might have expected, perhaps because the details would be better kept for the blue book – but yes, there would be £1.7 billion for urban transport, £2 billion for the Scottish government (all functions), £1.2 billion for the Welsh government (ditto) and £650 million for the Northern Ireland executive. All pretty much as expected.

 

Health

It would have been odd if the Chancellor hadn’t stepped up to the plate with a significant promise of new funding for the beleagured NHS, but at least he did. The figures looked slippery to us, but the gist of it was that as much as £10 billion was to be sunk into a capital investment fund for hospitals; that the English NHS was to get another £2.8 billion a year (no obvious mention of Scotland, Wales or Northern Ireland); and that £350 million was to be made immediately available to address this winter’s pressures.

 

Pensions?

The press has been feverishly awaiting today’s pension news for signs that the government might be planning to raid the wrinkly coffers, but on this occasion the Chancellor seems to have decided against uprooting the frequently-rehashed pension system yet again – apart, that is, from the changes to contributions and lifetime allowances already in force. Fortunately, the changes he announced today were closer to window-dressing. Nothing very new to report, then.

 

Personal Allowances

All pretty much as could be expected. Move along, there’s nothing much to see. And no mention of changes to the savings and investment environment in this speech. That’s something to be grateful for.

Tax Crackdown

The Chancellor ramped up his proud boast that he and his predecessor have brought in an estimated £10 billion a year in extra tax revenues, thanks to more than 100 new measures since 2010. In fact, as he informed us, the measures had brought in a rather impressive £160 billion. But there was always room for more.

 

We won’t see the full details until we get the blue book, but we can safely expect to see an enhanced crackdown on bogus self-employed workers who disguise their employee status under a tax-effective cloak of self-determination. And new measures against offshore companies that pay salaries via non-repayable loans that wangle their way past the tax laws.

 

And Mr Hammond’s efforts to chop the tax losses to non-doms operating offshore trusts. And so on, and so on.

 

More controversially, the Chancellor declared his intention to require that VAT should be collected at the point of purchase whenever consumer purchases are made online (so as to tackle tax-evading overseas sellers). That might be a more courageous step than it sounds – how do you force the rest of the world to comply with your own extraterritorial demands? But it sounded good.

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Universal Credit

Far be it from us to carp about the good news, but the Chancellor’s declaration that universal credit claimants are henceforth to get their benefits within a week of claiming, instead of waiting weeks or months without cash, is a little bit like telling them that Santa Claus won’t be stealing all their teeth after all.

 

If it’s taken the government this long to realise that it needs to spend £1.5 billion in enhancements to get Iain Dancan Smith’s support system working properly, that’s a pity. Or is it just me that see it that way? Either way, it should all be in place by Christmas. Ring the bells and praise the lord.

 

Renewable Energy?

Hardly a mention, apart from higher taxes for the oldest diesel vehicles and a cheap incentive that exempts workers from being taxed for benefits in kind if they charge their electric cars oin the company car park.

 

VAT Registration Thresholds?

A masterstroke by the Chancellor. He kept the House waiting for several minutes while he explained by Britain’s £85K registration threshold was the highest in Europe, and why it distorted trade, anent he said he wouldn’t be changing it. Ah well, it filled in a bit more time during a speech when he didn’t have that much to say.

 

Drink and Fuel?

All duties frozen, except for dangerous white cider. And business rate exemptions for small pub. Cheers again.

 

Was it a bad Budget?

No, whatever gives you that idea? But was it a good one? Only insofar as it didn’t rock the boat. Philip Hammond showed a mastery of technique over substance in this speech – and if he eventually left the stage without delivering any of George Osborne’s rabiit, and if that left us feeling a bit disappointed, perhaps that’s all to the good.

 

And perhaps that’s one of the reasons why the un-showy Spreadsheet Phil is one of the best assets this government has. Consider and wonder, Mr Gove.