Blow for Chancellor as public-sector borrowing rises on eve of Budget
Hammond will try to silence opponents
CHANCELLOR PHILIP Hammond faced further pressure on the eve of his Budget speech today after the UK’s public finances unexpectedly worsened.
The Office for National Statistics (ONS) said yesterday that public-sector net borrowing, stripping out state-owned banks, jumped by £500 million to £8 billion in October.
The move was above economists’ predictions of £7.5bn, as interest payments hit a record high of £6 billion for the month due to higher inflation since the Brexit vote.
Despite October’s rise, the deficit excluding state-backed banks for the current financial year – April to October – hit the lowest level for a decade, dropping £4.1bn to £38.5bn.
The update comes as Mr Hammond braces for the prospect of a gloomy fiscal outlook in today’s Budget, with forecasts expected to show lower economic growth and higher borrowing.
In his speech, Mr Hammond is expected to set out his vision for “a prosperous and inclusive economy where everybody has the opportunity to shine wherever in the UK they live, whatever their background”.
He will hope to avoid badly received policies such as the plans to increase National Insurance rates for self-employed people, which were unveiled in March only to be dropped days later.
THE CHANCELLOR is facing calls to use today’s Budget to set out further details of a Government pledge to replace millions of pounds of regional funding after Brexit, as local leaders warn of an impending financial “cliff-edge”.
Addressing Parliament this afternoon, Philip Hammond will attempt to silence his opponents and draw a line under recent negative headlines as he announces a series of measures designed to create a Britain “fit for the future”.
Details have already emerged of a £1.7bn fund to improve urban transport links, as well as a £2.3bn boost for research and development, and he is expected to unveil an additional £42m investment in teacher training.
But Yorkshire council leaders are pushing for further clarity on plans to set up a UK Prosperity Fund, to ensure a replacement for EU funding streams is “up and running” by April 2019.
Today’s speech by the Chancellor will come under intense scrutiny from his critics and could prove decisive for his future in Number 11.
In recent months Mr Hammond has faced significant criticism for his perceived role in fuelling Cabinet divisions over Brexit, and for his refusal to back down over the public-sector pay cap.
Many Conservative MPs have been calling for the Government to ease off on its austerity measures, blaming the long squeeze on public services and household incomes for June’s disastrous election result.
However, they are unlikely to see any major concessions today, with Hammond expected to emphasis a “balanced approach”.
“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,” he is expected to say.
“We must invest to secure a bright future for Britain, and at this Budget that is what we choose to do.”
He will go on to set out his vision to create a “prosperous and inclusive economy where everybody has the opportunity to shine wherever in the UK they live, whatever their background”. “An outward looking, free-trading nation, a force for good in the world, a country fit for the future,” he will add.
In addition to the £1.7bn Transforming Cities Fund and £2.3bn for research and development, Mr Hammond will announce details of a new 26-30 young persons railcard and plans to boost the supply of new homes. This is seen as part of a renewed effort by the Conservatives to woo younger voters.
There will also be a £177m investment in maths teaching in addition to £42m for teacher training. But it is unclear whether he will bow to growing pressure to lift the cap on NHS pay.
The chair of the West Yorkshire Combined Authority Councillor Susan Hinchcliffe has issued a plea for the Chancellor to end uncertainty over the future of regional funding.
Authorities in Leeds, Sheffield, North Yorkshire and the Humber are all recipients of EU social and development funding, with the Leeds City Region alone in line to receive 396m euros by 2020.
“While there has been much debate about the potential cliffedge facing business as a consequence of Brexit, little attention has been given to the impending loss of hundreds of millions of pounds in European funding which currently supports economic growth,” Councillor Hinchcliffe said.
“The Budget is an opportunity for Philip Hammond to address those concerns by setting out clear proposals for the size, scope and allocation of his proposed UK Shared Prosperity Fund so we can be sure it will be up and running in April 2019.
“In time, we hope he will go further... and move towards a ‘single pot’ approach which gives combined authorities and LEPs the certainty they need.”