Philip Hammond played safe with his Budget announcements – which means nothing will actually change

The fact remains that, for all the fuss and the gags and the futurology, Britain is faced with the lowest run of economic growth in decades

Wednesday 22 November 2017 17:59 GMT
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The old funereal Phil would be more appropriate for the substance of the miserable news he was delivering
The old funereal Phil would be more appropriate for the substance of the miserable news he was delivering

If the Chancellor of the Exchequer wanted to distract his audience (perish the thought) from a generally bleak economic outlook, dominated as ever by the looming darkness of Brexit, he certainly did his level best.

He joked about Lewis Hamilton, Jeremy Clarkson and cough sweets. From Stirling to Milton Keynes, from Belfast to Kensington – there were name checks and special measures guaranteed to win favourable coverage in local media. There was much space-age talk of driverless cars, artificial intelligence, 5G. The Northern Powerhouse, Midlands Engine and City Deals were duly hyped.

In his “fit for the future” Budget, Philip Hammond also cleverly delivered one voter-friendly tax cut that will dominate the headlines and discussion for some time to come – the abolition of stamp duty for the vast majority of first-time buyers. Symbolically and politically it was a powerful move: in terms of the wider economy, and the “central mission” he has set the Treasury of boosting Britain’s productivity problem, it was irrelevant.

Budget 2017: Philip Hammond puts aside £3bn for 'all Brexit outcomes'

The fact remains that, for all the fuss and the gags and the futurology, Britain is faced with the lowest run of economic growth in decades, with the new forecasts even lower than before. Even growth of 1.5 per cent or so a year – poor by historical and international standards – might be too optimistic, if British productivity growth remains stubbornly slow and Brexit wreaks the kind of damage many fear.

Not since the 1970s has the UK been through such an indebted, low-productivity, low-growth phase, and with little prospect of a return to old norms of growth and rising living standards. Mr Hammond has been much praised in his own party for his new upbeat demeanour, but the old funereal Phil would be more appropriate for the substance of the miserable news he was delivering.

Still, even the ropiest of Budget speeches usually contain some hope and some progressive measures, and Mr Hammond made some admirable announcements as well. For a Tory chancellor, for example, to pledge to end rough sleeping is certainly a novel and very welcome change of tone, though he set far too distant a deadline – 2027, and, as with the housing crisis generally, is allocating an inadequate amount of funding to this priority. So that’s another decade of cold winters on the streets for some.

The pay review for nurses was something that almost everyone would support, whether it is dressed up as “modernisation” of NHS salaries or not. Nor will many object to railcards for 26 to 30-year-olds, the promotion of maths teaching, cleaner diesel technologies and driverless vehicles, or the discouragement to consume white ciders. The promise of £400m for new charging points for electric cars will also give a small push for this truly green and revolutionary change in driving habits, but, again, it is a modest investment given the scale of the challenge.

And will that tax cut for first-time buyers do much good? As the Chancellor himself concedes, only a rapid increase in the supply of homes, and especially “affordable” accommodation, will solve the crisis. In fact there is reason to suppose that encouraging more young people to climb into the housing market when it stands at historically high levels, and especially so in London, might merely drive prices even higher.

That, presumably, will prompt chancellors in future budgets to add even more public subsidies and schemes, in turn pushing real-estate values to ever more stratospheric levels in a sort of state-fuelled Ponzi scheme.

It is a shame, because there is much that could be done relatively easily to increase supply beyond the review of planning permissions he announced. A radical budget would have allowed local authorities to borrow to invest in the social-housing stock that has been lost in the decades since “right to buy” was introduced. Councils could, and should, be allowed to build and rent out properties for those who will never be in a position to buy their own homes, whatever the level of stamp duty may be.

The Chancellor labelled his Budget, among other things, as “balanced”; but on housing, on productivity and on investment in the country’s future more broadly, he erred too far on the side of caution. Mr Hammond was too timid by far for the momentous times ahead.

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