This afternoon the Chancellor of the Exchequer, Jeremy Hunt detailed his Spring Budget – only three and a half months since his Autumn Statement – and the latest in a dwindling list of set-piece milestones for the Government to try and turn the dial on the direction of travel ahead of the local elections on 2nd May and the General Election, whenever that may be.
The context for this Budget is important. This was a speech from the same man who in only January, compared himself to Thatcher’s tax-cutting Chancellor, Nigel Lawson. The same Party who already this week have engaged in yet another, public spat over cuts to NI vs cuts to income tax. The same breed of government who have had nigh on 14 years to stamp their ambitions on our economy, and the same Party whose popularity currently sits at a 45-year low.
Addressing a fired-up House of Commons, Hunt used his statement to drive a wedge between the Conservatives and Labour’s fiscal plans. The Government have been building a “high skilled, high wage” economy, he proclaimed, as opposed to Labour’s plans for “high tax, high migration.” At the Dispatch Box, he adopted the expected tone and rhetoric, along with details on all the interventions trailed in the media for the last few weeks. ‘Fiscal responsibility’, the ‘Conservative approach to balancing the books’, and taking ‘difficult decisions’ to get the economy back on track, all played their expected roles in the Chancellor’s speech.
To this extent, he welcomed OBR statistics that show debt is no longer predicted to rise above 100% of GDP, and that public sector borrowing is due to fall to below 3% of GDP, while economic growth is 1.1% higher than had been predicted at the start of his tenure (due in part to the catastrophically low nature of these forecasts in the first place), and real household incomes have risen 0.8%.
As was expected in this context, Hunt focused on headline announcements of what he called ‘permanent tax cuts’ and support for the families who need it most. The headline policy announcement had been long-trailed as a 2p cut in the pound for National Insurance – a tax which Hunt referred to as “a penalty on work”. The cut is predicted to lead to average savings of £450 per year for someone on a full-time salary of £35,000. Other measures for households included increased debt support, an extension to the Household Support Fund, an extended freeze on alcohol and fuel duties, and making 170,000 more families eligible for child benefits.
Focus also fell on boosting investment, through extending measures on business expensing to include leased assets, increasing the VAT threshold for small businesses, and a smattering of new levelling up packages. Measures to stimulate investment were also high on the list of priorities, including new vehicles for UK pension funds and the introduction of a new ISA to invest in UK businesses. Also on investment, a specific nod to all of those that supported our pro-bono campaign investHER, successfully reversing the asset and income thresholds for angel investors within today’s Budget. In less than 6 week’s we secured a reversal – thank you.
Labour made a calculated decision not to offer the Shadow Chancellor to the broadcast media this weekend. A decision which allowed Labour to create distance between themselves and the Government on economic policy, but also to avoid being drawn into the longwinded and entirely pointless speculation about what the Chancellor may or may not have been planning to announce today.
In his response to the Chancellor, Sir Keir Starmer attacked the Government’s economic record. He said that over the past 14 years we had grown used to economic delusion from the Conservatives, adding that as desperation grows among the Conservative benches, the Government continues to put their Party before working people.
The Leader of the Opposition went on to point out that of the Chancellor’s headline announcements, many of the most notable were borrowed from Labour. Sir Keir labelled the Government as ‘out of ideas, out of touch, and running out of road.’ An energised Leader of the Opposition took delight in reminding the Chancellor of his record in government, listing some of his and the Treasury’s commitments from today – such as the commitment to make the NHS paperless – as re-hashed policies from as long as a decade ago.
Overall, Hunt’s statement was punctuated by the exact announcements we expected. Announcements designed to create headlines and good news stories aimed at the part of the electorate that the Conservatives are most scared of losing support from.
This Budget was one of contrasts. Contrasts between the buoyant mood of the Autumn Statement, and today’s less optimistic tone; contrasts between this Government’s commitment to ‘under-promise and over-deliver’, and the current stark reality; contrasts between the Prime Minister’s ambitions to halve inflation, grow the economy, and cut debt, and the context of a very real recession; and contrast too between a tired government limping toward the end of its tenure, and an emboldened opposition with, if not clear ideas, a welcome energy.
What this wasn’t, was a clearly signposted Election Budget.
As the day rumbles on, more questions will be asked about the rationale of some of the Chancellor’s announcements. More questions will be – rightly – asked about what Labour would actually do differently. But in reality, there is only one question which matters. A question that every voter in every constituency will be asking themselves between this Budget and polling day – ‘Am I better off now than I was 14 years ago’. The answer to that question, for most, is a resounding ‘no’, and in reality, nothing that the Chancellor could have announced today would be able to change that.
Please see a full round-up of the measures announced by the Chancellor below, and do let us know if you have any questions on what these developments might mean for you and your team.