Hammond ready to call time on age of austerity in Budget
CHANCELLOR Philip Hammond has said he will use today’s Budget to “invest to secure a bright future for Britain”, in a strong signal that he is ready to start bringing down the curtain on the age of austerity.
In his keynote statement, Mr Hammond is expected to respond to intense pressure for Government spending to boost industrial productivity and ease the housing crisis, as he promises to build “a Britain fit for the future”.
But his room for manoeuvre has been limited by surprise figures showing that state borrowing jumped to £8bn last month, adding to pressure from the Office for Budget Responsibility’s expected downgrade of productivity projections.
The director of the Institute for Fiscal Studies, Paul Johnson, said Mr Hammond was caught “between a rock and a hard place” and may be forced to abandon his target of balancing the nation’s books by the middle of the next decade.
Meanwhile, Labour is demanding large-scale investment in infrastructure to boost “sluggish” manufacturing industry, along with new cash for the public services, a major house-building programme and a pause in the Government’s flagship Universal Credit welfare reform.
CHANCELLOR Philip Hammond’s pledge that he will use today’s Budget to “invest to secure a bright future for Britain” has been taken as a signal that he wants to move towards an end of the era of austerity.
He will stand up at the despatch box under intense pressure to deliver measures that will boost productivity and address the housing crisis but he will have to overcome dismal economic mood music.
State borrowing jumped by £8bn last month and there is speculation he may be forced to ditch his target of balancing the country’s books by the middle of the next decade.
Paul Johnson, director of the Institute for Fiscal Studies, said Mr Hammond was caught “between a rock and a hard place,” saying the Chancellor faced a “genuinely difficult Budget”. He said: “If he is serious about his fiscal rules, he won’t be able to give in to the pressure for spending. If he gives in to the demands for spending, that’s pretty much a statement that his fiscal rules are out of the window.”
Mr Hammond is also facing calls to ensure that planned benefit changes – and in particular the rollout of Universal Credit – do not plunge families into greater difficulty.
Cerys Furlong, chief executive of Chwarae Teg, which promotes the role of women in the economy, said: “Women in Wales are in danger of facing a double hit if problems with Universal Credit are not resolved and European funding is not replaced post-Brexit... Chwarae Teg wants to see the roll out of full-service Universal Credit paused so that emerging issues and fundamental flaws with the policy can be dealt with.
“It is also crucial that the UK Government commits to ensuring that those services currently in receipt of European funding will continue to be funded and available beyond Brexit...
“It’s also imperative that monies do not get locked in the UK Treasury but instead come direct to Wales.”
The Chancellor will also come under fire if he does not announce good news for public sector workers.
Margaret Thomas, of Unison Cymru, said: “The seven-year pay cap has squeezed the household budgets of 390,000 public service workers in Wales by more than 20%. That means families worrying about paying the bills and deciding what to chop from the supermarket shopping.
“It also means less money on Welsh high streets going into local businesses. We need an immediate end to the public sector pay cap.”
Liberal Democrat UK leader Vince Cable has pushed for the Chancellor to give the green-light to the Swansea Bay Tidal Lagoon.
The project received the thumbsup from a long-awaited independent review at the start of the year but the UK Government has yet to respond.
Mr Cable said: “Giving the goahead to the Swansea Bay Tidal Lagoon would not only be a significant economic boost for Wales and provide jobs, but it would help the UK to meet its vital climate change targets.
“Using the tides to power our homes is an important part of building a sustainable future for Britain.”
UK Labour leader Jeremy Corbyn visited an Aston Martin factory ahead of the Budget. The company, which has plans to manufacture vehicles at St Athan in the Vale of Glamorgan, has expressed strong concerns about the impact of Brexit.
Last week it warned that leaving the EU without a deal on vehicle certification could lead to a “semi-catastrophic” halt in production.
Mr Corbyn said: “Companies and workforces need clarity and certainty from the Government, but the Tories’ chaotic handling of the Brexit negotiations is putting jobs and living standards at risk. Our manufacturing sector has had notable successes, but it has been held back for too long: investment has stalled and productivity lags behind many of our European neighbours.
“Despite the fall in the value of the pound, UK manufacturing growth remains sluggish. The Chancellor must use the Budget to invest in infrastructure to give our economy the boost it so badly needs, invest in our public services and the people who provide them, halt the disastrous rollout of Universal Credit and begin a major new house-building programme.”
In his speech, Mr Hammond is expected to say: “In this Budget, we express our resolve to look forwards, to embrace change, to meet our challenges head on, and to seize the opportunities for Britain.
“Because for the first time in decades, Britain is genuinely at the forefront of a technological revolution, not just in our universities and research institutes, but this time in the commercial development labs of our great companies and on the factory floors and business parks across the land. [We] must invest to secure a bright future for Britain, and at this Budget that is what we choose to do.”
He will cast a vision of Britain as an “outward looking, freetrading nation, a force for good in the world, a country fit for the future”.