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22 November 2017

Budget 2017: Philip Hammond is not serious, and neither is this budget

The speech was lousy with bad jokes and poor solutions.

By Stephen Bush

Philip Hammond’s second Budget was not serious, and I’m not talking about the jokes, though his speech was littered with them. “Littered” is the right word, too, because the jokes was of poor quality and made an awkward contrast with the revised growth figures (terrible), the United Kingdom’s productivity (abysmal) and the continuing weakness of the public finances (effectively, every lever that Gordon Brown and Alistair Darling pulled to tackle the last crisis is still where they left it, leaving the United Kingdom badly exposed in the next one).

But the big problem wasn’t the bad jokes, but that the Budget wasn’t serious about any of the problems it discussed. The first announcement: £3bn to plan for Brexit was a case in point. Admittedly, Hammond is in a no-win situation here: it’s too late to get Britain in a position where it is ready to leave on 29 March 2019, so any money is a waste of money. But while £3bn is a life-changing amount of money for you and I, as government spending goes, it’s not very much money at all: the equivalent of an expensive night out for the average family.  What the £3bn really is is hush money: Hammond is hoping that it will buy a period of silence from the Brexit ultras and their supporters in the press.

That same attitude – which can be summed up as “I hear you, now here’s a bad joke and a derisory amount of money” – typified the announcements on housing, in which there simply wasn’t enough money or regulatory change to move the dial. Although the headline figure (£44bn) is close to what Sajid Javid asked for (£50bn), Javid rightly wanted that £50bn to be exclusively for capital spending aka actually building. This money includes loans and other interventions – these aren’t bad policies, they’re just well below anything like what’s needed to fix the problem.

In fact, the biggest change in this field, the increase in the stamp duty threshold, will inflate prices of homes and flats between £250,000 to £300,000. (Readers in big cities should remember that actually most first-time buyers are able to buy within this bracket.) Despite the government’s spin, the Office for Budget Responsibility has modelled the impact of previous similar changes and finds that the winners will overwhelmingly be people who already own.

As far as increasing maths and computing uptake at school, again, a vitally important task, it is not immediately clear how the extra per-pupil funding for increasing the number of students taking maths at A-level is going to translate into improved outcomes, particularly as schools have to achieve the success first to get the funding, and it is among teachers of maths and computer science that the retention crisis is at its most acute.

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And it was the same on Universal Credit: Hammond is cutting the waiting time from six to five weeks, and crucially is making an advance payment available after five days. This is probably the most significant and positive change, but the programme’s painful incentives remain in place. And crucially, many people on Universal Credit won’t be able to repay the advance payment within 12 months. Hammond may well have seen off headlines this Christmas about “hard-working families” who have “done the right thing” being left broke at Christmas due to late payments of Universal Credit but at the cost of headlines next Christmas about those same families struggling to repay the advance payments.

The net effect of all of the measures sums it up very well: the government will be spending an extra £4.5bn a year – not a significant amount in terms of the public finances or policy outcomes, but just enough, hopefully, to silence some of its critics.

Is this what the Conservatives need to get them back on their feet? No. It’s just not serious.