Monday 22 October 2018

Budget 2018 Preview: Chancellor Philip Hammond will try to patch together competing demands to present a positive vision - which must be closely scrutinised

So, Prime Minister Theresa May announced austerity will come to an end. The Chancellor Philip Hammond told Conservative members they must not surrender the 'party of change' label. Their right-wing colleagues want a bold, positive statement with Brexit just around the corner.

Where does that leave the government ahead of the Budget?

When the Chancellor stands at the dispatch box on Monday, he will have meet a number of commitments and all of them will require him to open the public purse and spend money - something anathema to Hammond's own favoured fiscally conservative approach.

So beware of the narrative. Whatever the Tories in the Treasury have cooked up, take careful notice of how it is being framed. Hammond needs to carefully wrap up his policy announcements in a positive vision, promising a bright future that brings money to spend.

To spend 'sensibly', of course - the note of fiscal responsibility won't be going away. It's how the Conservatives like to paint themselves (despite the way the national debt has ballooned) and they have spent a decade marking it as separating them from Labour.

But something will have to change if the Conservatives are to find £20 billion for the NHS. To find the more than £8 billion a year needed to keep the various taxes and duties from rising. To at least bring a halt to cuts for long enough for it to seem like austerity has stopped - if not been reversed. Is there any room for movement to find this money?

Well there is pressure to bring the tech giants to heel with a tax - though it's not a move without complications. And the Chancellor has already set out his stall, with a brand new narrative, to increase National Insurance contributions from the self-employed - a policy that went down in flames less than a week after last year's Budget.

The other targets for more taxes are only the rich - the main constituents of the Conservatives. From Pensions to private school fees, there are reliefs and loopholes aplenty. But will the Chancellor be willing to close them?

Far more troubling for almost everyone else is that local councils fear even further cuts to their funding are on the way. That would be devastating for essential frontline services, that are already under pressure - as the government forces local communities to raise money in their own neighbourhoods, even those with few resources.

If the Chancellor decides to hold off on these further cuts, it will likely depend more upon halting or deferring various tax cuts, rather than raising taxes in a more direct or conventional sense. But even then, it trimming one advantage for ordinary workers to protect those same people for a new disadvantage. Hardly a progressive pitch.

Hammond will try to dress up these trade offs as the hard-won rewards of decades of hard times and the promise of better to come. Progressives can't let him present that narrative unchallenged, because these measures will be little more than a government that imposed austerity trying to ride the wave of discontent their policies have stirred up.

References

Phillip Inman's 'Philip Hammond urged to make moves to end austerity: Thinktank promotes measures to help chancellor increase NHS spending and reverse planned cuts to services'; in The Guardian; 22 October 2018.

Caitlin Morrison & Ben Chapman's 'Budget 2018: What can we expect from chancellor Philip Hammond’s budget this month? This year's Autumn Budget falls earlier than usual due to Brexit negotiations'; in The Independent; 19 October 2018.

May Bulman's 'English councils brace for biggest government cuts since 2010 despite 'unprecedented' budget pressures: Main source of government funding for local authorities set to be slashed by 36 per cent next year, warn councils'; in The Independent; 1 October 2018.

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