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8 March 2017

Philip Hammond has no money to “set aside“ in his Budget

What the Chancellor actually means is that Brexit means that we will be borrowing more.

By Stephen Bush

It’s the most magical time of the year! Budget Day is the only time in the political calendar when the government can stop everything and make a big argument about what it’s doing and what it’s about. That’s one reason why Philip Hammond won’t just stand up and rattle off a long list of departments with a long list of figures. (The other reason is that it would make exceptionally bad theatre.)

Under George Osborne, the government’s big argument was all about the importance of the cuts and the dangers of letting Labour wreck everything. Under Gordon Brown, the big argument was that yes, there might be a Labour government but it could be trusted to run the show.

What’s Philip Hammond’s big argument? That the big news ahead of the Budget is the same old story for the same old money for new grammar schools (arrival date: still TBC) shows us that part of the argument will be that, contrary to what you might expect, Theresa May’s government has concerns that extend beyond merely implementing Brexit. That the announcement is old money also gives you an idea of how seriously you should take that one.

The second big argument is the government getting its excuses in early if it bungles Brexit, with a warning of “difficult decisions” ahead.

But the striking figure that will be in this afternoon’s budget is £60bn: the widely-briefed sum that Hammond will “put aside” to prepare for Brexit. I know that a balanced budget is so 2000-and-late, but I’m baffled as to what, exactly, this money is being “set aside” from. It cannot be the government’s day-to-day surplus, because it doesn’t have one. It can’t be from its reserves, because it doesn’t have any of those, either. So when Hammond says he is “setting aside” money, what he actually means is that Brexit means that we will be borrowing more.

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That tells you something about the really big argument Hammond and the government are making today: that everything is rosy in the British economic garden, and that any turbulence we experience as Brexit gets underway has been well-prepared for by our Conservative masters.

“Situation excellent” is the message of the day. But the situation isn’t excellent. It has big, pre-Brexit problems and the most of the levers Alistair Darling pulled in the last financial crisis are still where he left them. Add that to the demographic pressures of our ageing population and the rise in self-employment (the latter of which the Chancellor will also seek to tackle today) and you have the big argument that the Opposition ought to be making: that seven years into the life of the government, the public finances are still in a grim state. Despite what you may hear later today, that means Hammond is in no position to “set aside” anything, for Brexit or any other problems that may occur later down the line.