The Budget: A Speed(y) Briefing
Fit for the future was the phrase repeated time and again in Philip Hammond’s Budget today. For a man who surely must have hoped that his little red briefcase contained a little more to enthuse, he stuck to this line rigidly.
Aside from an inside joke between Hammond and May about cough sweets, there was little to get excited about. That the Office for Budget Responsibility (OBR) has slashed its UK growth expectations over the five-year term of its forecast horizon was a black cloud over most of the proceedings.
Actually, we lie. Hammond did take the opportunity to make a quip about his namesake Richard Hammond and the PM’s equivalent James May, which did manage to raise a smirk for wordsmithery at Speed HQ.
On all other counts, this budget contained little that was revolutionary – a focus on housing, public services, business and (again) productivity. The braying that usually marks such occasions was also reassuringly present.
For a government struggling with voter apathy, that this territory-marking signal of the political elite still hasn’t abated is perhaps also a sign that Whitehall remains out of touch with the realities of the British public.
Hence, perhaps, the attempt to address the economic imbalance between the capital and the regions should be embraced. There was plenty of detail here, with funding announced for a series of projects, perhaps to distract from the bad news on GDP growth.
But we mustn’t allow ourselves to get distracted. Here is the bad news: The OBR’s 2018 estimate dropped from 1.6% to 1.4%. For 2019, the forecast fell from 1.7% to 1.3%, 2020 from 1.9% to 1.3% and 2021 unchanged at 1.5%.
Moving on swiftly, Hammond addressed the more important question. Yes, there is a continued tax freeze on fuel, beer and wine, which will no doubt be received with a warm glow of gratitude up and down the country as we head into the festive season. Christmas party goers rejoice.
The government’s plans for driverless vehicles was also tackled early on. Autonomous tech is something Hammond has mentioned in previous budgets, and in today’s he announced that regulations would be changed to allow tech firms to begin testing autonomous vehicles on public roads by 2021.
Public services is also high on the agenda, with Hammond announcing additional cash for the NHS in the form of £2.8bn more day-to-day funding in England, and an extra £10bn in capital investment across the UK over the course of the parliament. This is £1.2bn less than NHS England chief executive Simon Stevens recently called for.
Housing was another key area in today’s budget. Hammond has committed £28 million in a bid to halve rough sleeping by 2022 and eliminate it by 2027. He has also made it easier for first time buyers to afford to get on the housing ladder with stamp duty exemptions.
Tackling the housing supply side was also on Hammond’s list of To Dos, and here measures include capital funding and loans to the tune of £44bn to support housebuilding over the next five years, plus £34m to develop construction skills, which are regularly listed among shortages.
That we should leave productivity to the end is no measure of its importance to the future of the UK economy. Hammond outlined the OBR’s view that weak productivity growth is stubbornly persistent and does not bode well for the UK’s growth potential in the years ahead. Yes, those growth figures do seem gloomy, don’t they?
In many ways this budget sets out the battle lines for tackling the issue: Improving infrastructure, minimising down time through illness, raising the standard of living. For Hammond and businesses alike, the productivity question is far from close to being resolved. Perhaps driverless cars will contribute to the answer. If we could work while being driven to our destinations, think of the extra hours we’d gain.