IF NOT THE END OF AUSTERITY, AT LEAST A NOD TO THE FINISH
THERE was good news for everyone in yesterday’s Budget. Scotland got £950million in Barnett consequentials and a whisky duty freeze. This allows the Scottish Tories to tout the ‘Union dividend’ and the SNP to drink themselves insensible while they come up with a grievance at being handed a billion quid.
Chancellor Philip Hammond, in a lovely touch, said keeping down the price of a single malt meant ‘we can all afford to raise a wee dram to Ruth Davidson on the arrival of baby Finn’. A few days old and he’s already in Hansard. Takes after his mum, that one.
On all matters south of the Border, though, things were more workmanlike. This was the adaptation Budget, where Hammond was forced to bring Tory policy in line with changing political realities.
This time last year, the Conservatives assumed Jeremy Corbyn’s electoral bounce, and the 2017 Summer of Corbynmania that followed, would melt away by Christmas. But voters did not come to their senses and Corbyn’s economic rabble-rousing is now treated as a viable alternative to austerity.
Hammond had to adapt to this and he did it via a smash ’n’ grab on Labour territory. He confirmed more than £20billion extra for NHS England’s coffers over five years, £2billion a year for mental health, and extra cash for schools and social care. There would also be an end to PFI deals and a Google Tax on digital giants with sales over £500million.
General Election 2017 saw affluent metropolitan voters peel off to Labour and those on lower and lower-middle incomes edge towards the Tories. This presents new opportunities for the Conservatives and Hammond duly adapted to accommodate these electors, as backbenchers had been lobbying him to do. That is why Universal Credit got bunged a further £2.7billion.
It’s also why the personal allowance threshold – Derek Mackay take note – was upped again along with the National Living Wage.
Similarly, a stamp duty exemption for Southern first-time buyers snapping up shared equity properties under £500,000, and £500million to build 650,000 homes, will appeal to those desperate to get on the property ladder. This signals that the Tories are finally taking the cost of living crisis seriously, but two questions spring to mind: What took them so long, and is it too little too late?
The Chancellor’s most dramatic adaptation was to public exhaustion with a decade of austerity. Paying down the national credit card bill was essential when the Coalition came to power in 2010 and, initially at least, voters were behind the painful measures needed. On the far side of a decade, however, they expect to see an end in sight.
Hammond appeared to deliver that by saying austerity was ‘coming to an end’ – not quite the same as Theresa May’s Tory conference pledge that it was ‘over’ – and he forecast growth of 1.6 per cent next year, revised up from 1.3 per cent. The real reward, though, was the ‘jobs miracle’ which had seen 3.3million more in employment than when the Tories came to power and which, he promised, would create 800,000 more jobs within the next five years.
Budget 2018 felt like an election Budget: broad strokes, sunny words, giveaway goodies and hard numbers hidden by corny jokes. A fresh poll is unlikely, though. The Tories will not risk another snap election while support for Corbyn hovers around the 40 per cent mark. Instead, they shored themselves up and displayed some grasp of the challenge ahead.
CORBYN is an improbable mix of Brezhnev and Brexiteer, and defeating him will take wits. The Tories will have to shift leftwards in some instances but they will also have to make Britain’s exit from the European Union ‘feel’ like an immediate success.
Hammond foregrounded the former strategy plenty in yesterday’s speech but he did almost nothing on the latter. This was, astonishingly given how close Exit Day is, a Brexit-lite Budget.
George Osborne liked to claim he was ‘fixing the roof while the sun is shining’.
Hammond has flung up a patch job and it might keep out the downpour for now but there is none of the optimism his predecessor projected. Osborne had a mission – restoring order to the public finances – and to pursue it he sold austerity as medicine that, however bitter when swallowed, would do us good in the long run.
Hammond has no comparable project. It ought to be Brexit but he is a Remainer who struggles to see any upside to quitting the EU. He may well be right but it is his duty as Chancellor to pump optimism into the economic bloodstream. He didn’t do it yesterday. Eventually, he will have to – or make way for someone who will.