The Budget should be bold but balanced
Philip Hammond has a difficult balancing act to perform in his Budget today. The Chancellor must demonstrate that the Tories remain serious about fiscal responsibility, at the same time as finding the money to put fat on the bones of the Prime Minister’s suggestion that the end of austerity is in sight. He must come up with measures that undermine the cult of Corbyn, while not committing the Conservatives to a Dutch auction with Labour on ever-higher taxes and spending. And all the while Brexit looms large, with this the last Budget pencilled in before the UK’S official departure date from the EU.
Mr Hammond will be helped by forecasts of higher tax revenues, but it would be an error for him to treat this Budget as a mere accounting exercise. Budgets are an opportunity for a party to take the initiative and to set out a distinctive vision for the future of the country. Mr Hammond is not known for radicalism, and will remember how his first Budget misfired when he was forced to abandon a tax increase on the self-employed. His room for manoeuvre will be constrained by the difficulty of getting anything through Parliament. This, however, is not the time for half-measures.
From what we know so far, there will be a welcome commitment to investment in rural broadband, an issue that this newspaper has long been campaigning on. Some may sneer that Mr Hammond is to recommit to George Osborne’s pledge of more money for the roads to fix potholes, but poor infrastructure is a significant break on productivity and a nuisance for millions of drivers. There could be extra money for defence, too, and detail of how he intends to increase NHS spending.
But higher spending must not come at the cost of losing control of the public finances. The national debt is still rising in cash terms, and taxes remain high by historical standards. It is to be hoped that Mr Hammond will combine any softening of the rhetoric on austerity with a recommitment to Tory pledges on tax cuts, and to fix problems like the excessive burden of business rates on the high street.
Above all, he must set out a bold and upbeat vision of the UK economy post-brexit. It is not enough to rely on promises of a “deal dividend”. The public and business need the confidence that the Government is ready to take whatever steps are necessary to ensure the country thrives, however the Brexit talks turn out.