Deficit rise, a ‘miraculous discovery’ and an increase in the personal allowance: The need-to-know from the recent Budget
If you are a Conservative, or at least a “traditional” Conservative, I expect you listened to the Chancellor’s Budget on 29 October with a growing sense of disbelief.
Of course, his political room for manoeuvre was very limited indeed, thanks to the Prime Minister’s claim in her recent party conference speech that austerity would come to an end in 2019.
That was the political backdrop against which the Chancellor had to deliver his Budget and if he had done anything other than turn on the spending taps, he would have fallen foul of the Prime Minister’s bold claim.
‘Worrying Budget’
But for traditional Conservatives this will have been a worrying Budget. The deficit, which is already at record levels, will actually go up next year as a share of national income after years of decline, and in his generosity, the Chancellor will be splashing out an extra £103b over the next five years. This represents a genuine change of direction, a final break with the George Osborne post-crisis years. Gone is the idea that the Treasury’s priority is to balance the books to prepare for the next inevitable economic downturn or even to stash money away for a rainy day.
Of course Lady Luck was smiling on Philip Hammond courtesy of the Office of Budget Responsibility’s miraculous discovery that the public finances were in much better shape than expected.
That may be, but a traditional Conservative Chancellor might have been expected to have banked this windfall and used it to carry on eradicating our colossal debt mountain, or even done that most traditional Conservative act of all – slash taxes to make the economy more competitive. But no, instead public spending is to shoot up with an extra £20.5b for the NHS over the next five years, and extra £1b for defence, £400m extra for schools and more cash for roads and social care. The long-standing ambition of a Conservative government to balance the Budget, something which was almost an article of faith, has been abandoned.
There were some tax cuts of course, with the Chancellor bringing forward a planned increase in the personal allowance by one year to April next year. Which brings me to perhaps the most surprising aspect of this Budget – the tax cuts actually got the support of the hard-left shadow Chancellor, John McDonnell. Never in a million years did I ever expect to hear Mr McDonnell agreeing with a Conservative Chancellor.
Coming soon
Meanwhile, the Transport Select Committee has started its latest inquiry into the bus industry with the first oral evidence session on 30 October, with witnesses from Bus Users UK, Greener Journeys Transport Focus and the Campaign for Better Transport.
I can’t get too excited about this as I’m at loss to work out what we will be told about the bus industry that we haven’t been told on countless occasions before. Still, I suppose I should watch a recording of the session and I’ll pass comment next week.
