Before the Budget on Wednesday Philip Hammond’s no-spin Treasury has been churning out press releases as if it were printing money. Where recently we would have had pre-Budget silence from the Whitehall machine, filled with unverifiable speculation about the Chancellor’s intentions, we now have a succession of pre-announcement announcements.
Thus we report today that the Budget will include half a billion a year for technical education and a smaller sum for a new memorial for the D-Day landings. Previously, we reported the Treasury’s wheeze of protecting people from the small print in contracts. No doubt this means there will be no sneaky measures buried in the depths of the Budget red book.
All of which is interesting but not completely successful in diverting a restless populace from wondering what the Chancellor proposes to do about the increasingly fraught state of the NHS. As we also report today, a BMG poll for The Independent finds that 77 per cent of people want the cut in corporation tax, worth £7.5bn a year by 2020, to go to the NHS instead.
Our unverifiable speculation, for what it is worth, is that Mr Hammond will raise planned spending on the NHS over the remaining three years of this Parliament, not least to avoid the fall in real-terms spending per head that would otherwise happen next year. In addition, he will have to do something about social care, largely funded through local councils, which is exacerbating the NHS crisis by blocking the discharge of older patients.
Our fear, however, is that, welcome though any additional funding would be, it will be the bare minimum needed to keep the health service from becoming a political problem for Theresa May. It is “bare-minimumism” that has got the NHS to the pass it is in now, and, because the Labour opposition is so weak, that bare minimum is lower than it would be if the Prime Minister really were terrified of the prospect of a general election. This weekend's march for the NHS was well-intentioned, but hardly amounted to a national mobilisation behind a credible scheme for a better-funded health service.
George Osborne 2016 budget at a glance
George Osborne 2016 budget at a glance
1/8 Debt forecasts up, growth forecasts down
The OBR’s new forecasts have downgraded growth in all of the next five years to 2020. The watchdog says the economy will only grow by 2 per cent in 2016, as opposed to the anticipated 2.4 per cent. Borrowing and productivity growth are also down – with forecast borrowing in 2018-198 £16 billion higher
2/8 New tax on sugary drinks
The Chancellor announced a new tax on sugary soft drinks, which is projected to raise £520 million. At least some of the money will be spent on doubling funding for school sport, the Chancellor says. Labour leader Jeremy Corbyn welcomed the levy
3/8 Tax cut for higher earners paying the 40p rate
The Chancellor has raised the threshold for paying the higher rate of income tax to £45,000. The higher rate is paid by roughly the richest 15 per cent, currently people earning over £42,386
4/8 Increase in tax-free income tax threshold
The tax-free allowance increase to £11,500 in April 2017 – up from £10,600 now. The Chancellor previously raised the allowance from £6,475 in coalition with the Liberal Democrats. The Conservative manifesto pledges to put the allowance up to £12,500 by the end of the Parliament
5/8 New devolution for counties and powers for London and Manchester
The West of England, the East of England and Greater Lincolnshire will all get elected mayor-led combined authorities with new powers. The Chancellor says they are backed by £1 billion new funding. Greater Manchester will get new powers of criminal justice while London will keep its business rates – giving whoever is elected Mayor a lot more spending power
6/8 Fuel duty frozen for sixth year running
The Chancellor had planned to end the fuel duty freeze he had put in place for the whole previous parliament. In the event, he has announced a freeze for another year
7/8 All schools to become academies
As reported yesterday the Chancellor unveiled legislation to turn all schools into academies. He said all schools would either be academies or on their way to being academies by 2020, and that funding had been set aside to fund the change
8/8 Lifetime ISA
The Chancellor announced a new savings account to encourage under-40s to save for retirement – for every £4 saved, the Government will top this up by £1 up to the value of £4,000 a year. Tax-free ISAs will also be increased from £15,000 to £20,000
Ms May’s all-purpose defence, when asked about public spending, is to say that all public services require a strong economy to support them. That was her argument at Prime Minister’s Questions on Wednesday when she was challenged, rightly, by Jeremy Corbyn on the decision to overrule the courts and to refuse to extend benefits to people with severe mental illness. Of course, hers is a statement of the obvious: that a successful economy provides the tax revenue needed for public services. But it is a weak argument against better funding in this Budget for health services, including mental health services and social care.
Not only does the Chancellor appear to have £12bn a year in more money available than was planned for last year, but The Independent still believes that, as long as real interest rates are nearly zero, cutting public borrowing is not an urgent objective. Lord Macpherson, the former Treasury Permanent Secretary, wrote on Friday that, in Budget speeches, “the promised land is always four years away”. But in setting the path to get there, we believe that the Chancellor should lean in favour of more than the bare minimum for the health service, and against a cut in corporation tax or a rush to close the deficit.
Ms May does not have much to fear from the official opposition at the moment, but unless she delivers on her promise of a country – and an NHS – that works for everyone she will pay a heavy price in the end.Reuse content