Chancellor Phillip Hammond sought to pull some electorate-pleasing rabbits out of the hat with his Autumn 2017 budget, but even these potentially popular policies risk being overshadowed by grim forecasts for the economy.
Hammond’s speech began full of optimism and was steeped in the notion of progress. He described the budget as ‘outward looking,’ ‘balanced’ and looking ‘forward, not backward.’ However, the statistics released yesterday (22 November 2017) by the Office of Budget Responsibility (OBR) told a different story. GDP growth over the next five years is now expected to average just 1.4%: falling to 1.5% in 2017, 1.4% in 2018, and 1.3% in 2019- 2020, before rising to 1.5% in 2021 and 1.6% in 2022. Productivity growth has also been revised down.
Attempting to address concerns highlighted at the last general election - particularly criticisms levied at the price of housing and investment in the NHS – appeared as a consistent theme throughout the Chancellor’s budget announcement.
For many, the headline news from the budget will be the promise of zero stamp duty on properties up to the value of £300,000 for first-time buyers and the stamp duty relief for properties worth up to £500,000, again for first-time buyers. This will be welcomed by many struggling to get on to the property ladder, but it is worth recognising that the OBR have estimated that this will increase house prices by 0.3%, meaning a £900 increase, for example, on a home worth £300,000.
The much-talked about increase of homebuilding was also confirmed in the announcement, with the government committing to build 300,000 new homes a year by the mid-2020s. One and a half billion pounds will go to the Home Builders Fund to assist with the amount of homebuilding required to meeting this target, as well as delivering one million new homes along the Cambridge-Milton Keynes-Oxford corridor by 2050, as recommended by Lord Adonis’ National Infrastructure Commission report.
In terms of the NHS, £6.3 billion of additional funding has been announced in total, with £3.5 billion to be invested by 2023 and £2.8 billion in additional resources for improving NHS performance. Although significant, some, such as Nigel Edwards, Chief Executive of the Nuffield Trust, have already suggested it does not go far enough.
The impact of Brexit is being felt to the tune of £3 billion being set aside over two years for the negotiations. This is more than the amount allocated for improving the NHS and may prove controversial in certain circles.
Despite some of the doom and gloom mentioned above, there is some good news for certain parts of the population.
The much-anticipated 26-30 railcard was announced, in another potential concession to younger voters. However, as the railcard discounts will not apply on season tickets and at peak times, this may be seen as a missed opportunity by some to support cash strapped commuters.
This shift in policy focus to appeal to so-called ‘millennials’ was also evident in what the Chancellor did not mention in his speech. Unlike budget speeches in years gone by, little was said about pensions or social care and much more time was dedicated to planning for the economic future ahead.
Devolution was also highlighted as an ongoing priority for the current government. The government has agreed a ‘minded to’ devolution deal with the North of Tyne authorities, which will see £600 million of investment in the region over 30 years and create another new metro mayor, due to be elected in 2019.
In all, an interesting budget which offered some relatively novel moves from the Chancellor.
Freshwater delivers public affairs and strategic communications consultancy services for across private, public and not-for-profit sectors.