The Chancellor’s Spring Statement was just as he had planned and as far from previous statements as can be imagined. It was low key and focused on updates, rather than jam packed with jam tomorrow promises. Indeed, most announcements that Philip Hammond did make were in fact consultations to be put out in the coming weeks.
There was – as expected – good news. Borrowing is down, growth forecasts have been revised up, and inflation is expected to decrease so that real wage increases are expected next year. But the Chancellor had already made the case that any leeway shouldn’t be squandered, pointing out that he plans to set out the pathway for spending in 2020 and beyond, with a spending review in 2019. It does not therefore seem as though Hammond is about to break the habit of a lifetime and splurge this autumn, even if the Government does manage to find some money for the NHS to prevent another winter crisis.
With the Government recently having established a current budget surplus – taxing more than it spends not including investment – some ministers will feel vindicated in having prosecuted a term of austerity over the past 7 years. However, as the Prime Minister’s former Chief of Staff Nick Timothy recently pointed out, the Conservatives tend to leave it too late to start reinvesting after having fixed the finances wrought on the country by previous Labour administrations, and so lose subsequent elections having failed to spot the point at which the public decide it’s time to start reinvesting in public services. This point, Timothy argues, has been reached. It is not yet evident that Hammond feels the same way.
Despite this, the Chancellor was not completely politically deaf. He did announce money for new housing, notably affordable housing, as part of deals with local authorities across England. This has become a point of focus for the Government, convinced it is one of the reasons the young turned out to vote against them in the 2017 General Election. The Conservatives are going to need a lot more policy announcements like this, and indeed spending commitments, to keep the public onside and prevent a Corbyn-led government from entering Downing Street in 2022.
And what of Brexit? Most pundits have jumped on some graphs in the supporting documents from the Treasury pointing out how long we’ll be making payments into the EU, largely for pensions contributions for existing EU staff. Open Britain have pointed out that the UK has the lowest predicted growth among major industrialised economies, despite that growth forecast being revised upwards. But today doesn’t feel like a Brexit day in politics – with most politicians probably glad of the day off to talk about Russia and ill-mannered footballers. In due course Leavers will no doubt again point out that we aren’t in recession, and Remainers will counter that things could’ve been much better. But for now, Hammond will be simply glad of the fact that, by taking out any real announcements from today, he’s managed to halve the number of times in the parliamentary calendar that he can face accusations of an omnishambles. Well played, Hammond…
Authored by Michael Stott