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9 March 2017

The biggest Budget rows could be yet to come

A lack of funding for social care and spending cuts to schools could prove Philip Hammond's biggest headaches.

By Stephen Bush

Thursdays are the best days: the new issue of the New Statesman is in shops, and it’s almost the weekend. I suspect Philip Hammond will be particularly pleased about that last part.

The early verdict is in on his first Budget and it’s not good, with the planned increase to the national insurance contributions of the self-employed drawing particular ire. The Conservatives claim that they haven’t broken their 2015 promise not to increase income tax, inheritance tax or national insurance contributions as the vow actually covered class one national insurance contributions, not class fours. For a clue as to how well that line is working, take a look at the front page of the Telegraph: “Tories break tax vow” is their splash.

“No Laughing Matter” thunders the Mail. “Spite Van Man” wails the Sun. “Hammond hits white van man” is the Metro‘s splash, while the Star has a rare foray into politics with “Rob the Builder”. Still at least Ukip Pravda aka the Express can be relied upon: “Budget For A Smooth Exit” is their headline.

“Hammond’s £2bn tax raid” is the Times‘ splash. And those words no Chancellor likes to see together are on the front of the i as well: “Tax raid on the self-employed to fund social care”. The Guardian‘s frontpage sums up the whole situation: “Hammond falls into tax trap” is their splash.

Will the changes last? It will be a boost to Hammond’s morale that outside of SW1 the changes are popular according to a Sky Data poll: with 57 per cent of the public supporting them. The changes are both progressive – the rich pay more – and well-timed. There is the mother of all crises heading towards the public finances as far as the growing number of self-employed people are concerned but by making the change now Hammond has avoided either a black hole in the public finances or an even trickier political battle.

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But that the biggest losers from the changes will be well-paid columnists means that the issue will receive outsized coverage, rather like Ed Miliband’s mansion tax did. Tory MPs don’t like tax rises, and that all Hammond offered yesterday on business rates was a “review” means there is the potential for disaster. But most MPs are well aware that the alternatives are even more uncomfortable to Conservative instincts.

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Here’s something to watch out for: for the most part, the day after the Budget is dominated by good headlines as there is something eyecatching and exciting to pull attention away from the pain. That’s leading to a lot of critical commentary about Downing Street’s media management, or lack thereof. It’s true that Number 10 doesn’t cultivate friends in the media, but equally, the idea that a few more pre-packaged exclusives would mean that increasing national insurance would be easy for the Conservatives is for the birds.

But what is worth noting is that just because the big noise today is over national insurance contributions, don’t rule out the possibility that the big story of yesterday’s Budget turns out to be that there wasn’t quite enough extra money laid on for social care, or that the Chancellor laid out money for the PM’s grammar school vanity project while existing schools face what is effectively a real-terms cut. Hammond will comfort himself that Thursday’s Budget headlines often look very different to Sunday’s. There’s always the possibility they will be even worse.