PHIL-GOOD FACTOR! BUDGET SPECIAL
Tax breaks for Middle England. Help for the High Street as digital giants ham mere d–and£20bn for the NHS. It’ s goodbye austerity, hello to the ...
PHILIP Hammond unveiled a £100billion spending spree last night in a bid to end austerity and prepare the UK for life after Brexit.
In a dramatic shift in strategy, the Chancellor signed off the biggest loosening of the nation’s purse strings since 2010.
He handed £20billion a year to the NHS and used a Budget aimed at ‘ strivers, grafters and carers’ to announce large tax cuts for 32million workers next April.
It means basic-rate taxpayers will receive a £130 boost days after Britain leaves the EU. Higher-rate payers will pocket up to £860 extra a year. Mr Hammond bowed to pressure from Tory MPs by finding £6.6billion to ease the roll-out of the Universal Credit benefit scheme.
And he announced that millions of low-paid workers would benefit from a 4.9 per cent rise in the National Living Wage to £8.21 an hour.
There was also rate relief for high street shops and a £400million tax raid on web giants such as Amazon.
The Chancellor promised a ‘double dividend’ for the economy if a Brexit agreement is agreed but warned of an emergency Budget next year if talks fail. Echoing a pledge from Theresa
‘Clearing the way for an election’
May, he said the era of austerity was coming to an end – triggering speculation of a snap election.
The nHS was the biggest winner, with the Chancellor confirming plans for a £20billion-a-year cash injection funded largely by higher- thanexpected tax receipts. But, in a sign of possible tension with no 10, Treasury sources cautioned there would be little, if any, new money left over for other departments unless the UK gets a good Brexit deal.
In a wide-ranging Budget presentation, the Chancellor:
announced plans for a £400million digital services tax on amazon, Facebook, Google and 30 other web giants;
agreed an extra £1billion for military spending to fund improvements in the UK’s cyber, nuclear and anti-submarine defences;
Responded to the Daily Mail’s campaign for action to save the high street by slashing business rates by a third for small companies;
Shelved plans for a ‘latte levy’ on disposable coffee cups, but announced a new tax on firms that fail to use recycled plastic;
Faced Labour claims that his ‘giveaway’ Budget was clearing the decks for an election in the coming months;
Confirmed plans to freeze fuel duty for the ninth year in a row, and announced a £420million fund to tackle potholes;
announced an end to the Private Finance Initiative, saying he would never sign another of the costly deals championed by new Labour;
abandoned plans to raid pensions and raise taxes following warnings they would be voted down by MPs;
Unveiled a string of measures designed to unlock business investment as the UK leaves the EU.
Small print in the Budget documents revealed that Mr Hammond’s pledges total £103.5billion over the next five years. of this, around 80 per cent will go to the Health Service.
The office for Budget Responsibility described it as the ‘largest fiscal loosening’ since 2010. The spending watchdog said stronger tax receipts and employment were handing Mr Hammond a windfall worth £18.1billion a year by 2023, which he had decided to spend in full rather than use to cut the deficit.
Stewart Wood, a former adviser to Gordon Brown and Ed Miliband, said last night that Mr Hammond appeared to be clearing the way for a snap election.
Lord Wood said: ‘ This feels like Philip Hammond’s attempt at a pre- election budget. Which makes me think we are going to have an election in 2019.’
Treasury sources insisted that the Chancellor was simply recognising the need to reward voters after years of economic sacrifice. Mr Hammond’s Budget preparations were dominated by uncertainty about Brexit, and the need to fund Mrs May’s plans for a massive increase in health spending. Downing Street said yesterday the pledge would be met ‘irrespective’ of whether a Brexit deal is struck in the coming months. But the Treasury said a deal was needed.
Mr Hammond said a good result from talks would allow him to release the £15billion he has salted away to cope with the fallout from a no-deal exit. He added: ‘Get it right, and we will not only protect jobs, businesses and prosperity, but we will also harvest a double deal dividend – a boost from the end of uncertainty, and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment.’
He said the giveaways were possible due to the ‘tough decisions’ the Government had made over the past eight years, which had brought better growth forecasts and lower borrowing.
But Jeremy Corbyn told MPs: ‘ Whatever the Chancellor claims today, austerity is not over.’ The Labour leader said eight years of spending cuts had damaged the economy and delayed the recovery.
WHEN Chancellor Philip Hammond stood up at the Commons despatch box yesterday afternoon the nation was in need of cheering up. And — to put it frankly — Mrs May’s Government needed rescuing.
In the short term, Mr Hammond achieved both aims — and in doing so displayed a low political cunning of which I had not until now thought him capable.
He relaxed the iron grip of austerity and many of us will soon be feeling a little richer as a result. And about time too, after ten long years when incomes have stayed put or fallen in real terms.
So today we can have a drink on Chancellor Philip Hammond without an extra penny of duty on it!
He has made some well thought out and necessary adjustments to British economic strategy.
He should be congratulated especially for putting his hand in his pocket and finding some extra money for the Universal Credit welfare reforms.
Labour is determined to dismantle Universal Credit, and that’s madness. But as with all ambitious reforms, there have been teething problems and the Chancellor is sensibly coming to the rescue.
Hammond also deserved praise for listening to Defence Secretary Gavin Williamson’s protestations that Britain’s defence budget needs extra funds if we are to compete in a world full of dangerous new military threats.
I admire, too, the way he’s resisted pressure for a reduction in VAT thresholds. Through this display of quiet courage in the face of pressure from his own Treasury officials, he’s protected the self- employed and small businessmen and women — the backbone of this country — from a pointless and costly bureaucratic burden.
In addition, Hammond earns his place in history as the first finance minister of an advanced Western country to turn his firepower on the high-tech giants such as Facebook, Google and Amazon who fail to pay their fair share of taxes.
When the insufferable Mark Zuckerberg, of Facebook, next runs into bumptious Jeff Bezos, of Amazon, I suspect they will be exchanging words about Spreadsheet Phil — and they won’t be friendly ones. Succeeded
Zuckerberg, I feel confident, will be ordering his new spin doctor, little Nick Clegg (how humiliating to reflect he was once our Deputy Prime Minister) to do his worst.
Some commentators yesterday accused the Chancellor of cowardice for not going far enough. I disagree.
While the new taxes raise £400 million, a sum that it has to be said is puny in comparison with the billions these behemoths make in profits, no other country has had the courage to take them on at all. Hammond has set a trend which I predict will be followed by many others.
Normally the most cautious of solid citizens, he’s leading the way. Yes, Philip Hammond has put the wind up the money-grubbing plutocrats of Silicon Valley, and we should all thank him for it.
The Chancellor has also succeeded brilliantly in solving his Government’s greatest short-term problem. Yesterday’s Budget, more than anything else, was about attempting to prevent a Government defeat on the Brexit vote — if Mrs May succeeds in getting a deal — in December. He gave Tory MPs the good economic news they wanted to hear but there was an implied threat: toe the line or you may have to endure another Budget in April. A Budget that could be delivered by a new chancellor, Labour’s John McDonnell.
Some of Hammond’s best lines compared Labour’s insanely reckless and deranged economic policies with his prudence and good sense.
The downsides? There was no vision. No grandeur. Instead we had an accumulation of relatively small and finickety announcements, such as the £ 400 million allocated to repair potholes. Important and doubtless badly needed. But adding up to what exactly?
The blunt truth is that Hammond lacks the intellectual confidence and shameless verve of Margaret Thatcher’s great chancellor Nigel Lawson in the Eighties.
Equally, he lacks the heavyweight physical and moral presence of Tony Blair’s chancellor Gordon Brown, with his vows of fiscal prudence and schemes of virtuous investment. He even lacks an idea as big and meaningful as his predecessor George Osborne’s programme of cuts to corporation tax designed to make Britain the most competitive economy in Europe.
Indeed, I would go as far as to say that Philip Hammond would have done well to award a nod of thanks to Mr Osborne, whose hard work in bringing down the deficit during his time in office has given the present Chancellor the leeway to go on his spending spree.
But for Osborne, Hammond would never have been able to bring forward the rise in tax thresholds for the punitive 40 per cent rate to next year.
It was this unexpected move more than any other that injected a note of cheerfulness into what is a Budget expertly tailored for Middle Britain.
Philip Hammond should also be grateful for his luck. He long ago earned the sobriquet Spreadsheet Phil. From now on perhaps he should be known as Windfall Phil or even Phil-Your-Boots Hammond because he has been able to lift the spirits of the nation thanks to two spectacular pieces of good fortune. Magic
The first concerns much higher than expected tax revenues which enable him to spend more than he predicted as recently as last Spring.
The second concerns the decision by the independent Office for Budget Responsibility to raise next year’s predicted growth rate from 1.3 to 1.6 per cent, generating even more money for his coffers. Hammond had faced a choice about how to make use of the extra money. Reduce taxes or raise spending?
He decided to do both. To have his cake and eat it. So where did Phil find his magic money tree? The answer is simple. By adding to government borrowing.
He could have brought down the deficit so government finances were in balance. That would have been the responsible course of action expected of a Tory chancellor.
In his defence, this decision was made for him by the Prime Minister, with her 70th birthday gift of an extra £20 billion for the NHS in June, followed by her announcement at Conservative Conference that the age of austerity was over. Advantage
The political advantage of this course of action is obvious. Mrs May is fighting the battle of her political life and like many Prime Ministers before her has elected to buy her way out of trouble.
I guess Hammond has gone along with this reckless though understandable course of action with deepest reluctance. In the end though, I wish he had stuck to his fiscally conservative instincts.
At this stage of the economic cycle any Tory government worth its salt would be boasting sound finances. I hope I am wrong, but if the Tories have embarked on a spending arms race with Labour there will be only one winner. And it won’t be the Tories.
History is an unreliable guide. But yesterday was the first Monday Budget since 1962. The Tory chancellor who delivered that financial statement, Selwyn Lloyd, was out of office within a few months.
Yesterday, Philip Hammond secured a short-term political advantage for his PM. But over the medium term there could be a heavy price to pay.