A budget for Brexit

The Chancellor intends to move to one budget a year. He also made clear that budget will be each Autumn. The budget we have just witnessed was designed to change little, and to launch various consultations ahead of the main event. It is therefore a little unfair of some to complain that the March budget did not set out what he intends to do post Brexit, nor did it herald and develop the economic opportunities Brexit presents. Let’s hope that comes in the autumn.

Over the next few weeks I will include some articles on this site looking at the opportunities in various departments and sectors. The first general point to make in today’s opening article is that post Brexit the government will have more money  at its disposal to cut taxes, increase spending or reduce the running deficit, thanks to the cancellation of our substantial net contributions. The balance of payments will get an immediate and substantial continuing boost once we cease making those payments abroad for our financial contributions. As the balance of payments deficit has been all too large during our years in the EU and especially in recent years, this will  be a welcome improvement.

The Leave campaign by way of illustration of the advantages of cancelling the payments said it could be spent on the NHS. They always made clear it would in practice be up to the government of the day to decide  what to do about the saved money. As part of the Vote Leave campaign I set out a detailed possible post Brexit budget, which combined increased NHS spending with more money for social care and a series of tax cuts taking VAT off tampons, green products and domestic fuel. These proposals made it to the Today programme and the Telegraph amongst others.  That illustrative budget had some worthwhile ideas in it. Indeed, the extra money for social care has just appeared in the latest budget and is welcome.

One of the big advantages of Brexit will be the restoration of our own control over taxes. The VAT cuts I suggested should be popular across the political spectrum, tackling excessive energy bills which fall hardest on people on low incomes, and encouraging more energy saving which makes sense. I would also like to see in the Autumn budget measures to cut tax rates where the rates are currently too high to maximise the revenues. It seems clear, for example,  that the last Chancellor’s penal Stamp Duty rates have cut  property transactions markedly, to the detriment of total revenues and getting in the way of people improving their property and tailoring their home to their latest family and income circumstances.

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31 Comments

  1. Lifelogic
    Posted March 12, 2017 at 5:31 am | Permalink

    Indeed.

    It seems the chancellor briefed the cabinet on his dire budget but the problems were not picked up and the disaster still it went ahead. Which shows what a dire, lefty, central controlling out of touch Cabinet we have too.

    Simon Heffer has it right today May and Hammon need some Conservative vision. Though I think she need a bigger majority too. They are just not Conservatives.

    http://www.telegraph.co.uk/news/2017/03/11/theresa-may-doesnt-need-early-election-needs-proper-conservative/

    The NI increases are totally misguided even if they were not ratting on the Manifesto. Also wrong are the absurdly high Stamp duty tax and non deduction of interest tax (falling mainly on tenants), the new secondary inheritance (probate) tax, the dividend tax, the sugar tax, the expensive, religious energy tax, the proposed reduction in the rent a room scheme, the insurance tax now up to 12%.

    Cut out the daft vanity projects like HS2, greencrap, Hinkley and halve the size of this bloated, inept and often corrupt government. Cut the red tape (did Hammond even mention it?) cut taxes and watch the growth of the economy. Grow up and get of the damn way woman and man at 60+ they should have leaned this by now.

  2. Nig l
    Posted March 12, 2017 at 6:44 am | Permalink

    I see that it is being suggested that to offset the disastrous ruse in NI the self employed get paternity and maternity leave. They have got that already. It is called an unpaid holiday.

    • Sir Joe Soap
      Posted March 12, 2017 at 9:19 am | Permalink

      …and potentially a dead business when they return. That’s seen as fair.

    • a-tracy
      Posted March 12, 2017 at 10:28 am | Permalink

      Holiday pay is not a national insurance benefit? It is a business expense.

      Self employed get Maternity Allowance for 39 weeks, if class 2 is paid at a flat rate, this class 2 is due to be cancelled. I’m not sure if that would have ended the rights to Maternity Allowance.

      After discovering the manifesto pledge to not increase NI this decision needs reversing..

    • Lifelogic
      Posted March 12, 2017 at 10:31 am | Permalink

      The last think they should do is give them more benefits they should just keep NI down. Take it down for the employed to and reduce their benefits too, that would be a far better way to go for efficiently and the economy.

  3. Lifelogic
    Posted March 12, 2017 at 6:48 am | Permalink

    A great shame JR, Rees-Mogg and some other sound people were not in the Cabinet’s pre-budget briefing. I cannot imagine they would have listened to Hammond without pointing out what a disaster it was both, politically and for the economy. It was after all very obvious to anyone sensible.

    • Richard1
      Posted March 12, 2017 at 12:17 pm | Permalink

      It seems there is a need to review the process of making budgets. Having civil servants put up ideas to Treasury ministers is asking for these kind of errors in the absence of a strong radical reforming chancellor like Nigel Lawson. Given there is no such thing as budget purdah these days, there needs to be a group of Tory backbench MPs (JR should allow his name to go forward) who scrutinise measures for political practicality and economic rationality. The NI changes fail both tests – it’s a battle that doesn’t need to be won and therefore shouldn’t be fought.

      • Lifelogic
        Posted March 12, 2017 at 6:15 pm | Permalink

        Indeed it is as though the civil service are in charge and Hammond is just a puppet dancing to their tune and for taking all the flack. But he should have taken control and have spotted what a disaster it was, as should the cabinet. Even if it had not been ratting on the manifesto it is 180 degrees out for the economy and tax base too. He needs to govern for the 80%, who do not work for the feather bedded state sector for a change.

    • Chris
      Posted March 12, 2017 at 2:59 pm | Permalink

      I believe the PM should have known what was in the Party manifesto for 2015. The buck stops ultimately with her. She has a reputation for 1) keeping a very close eye on Ministers and their policies and 2) being cautious, so how did this (and other tax blunders in the Budget) happen?

  4. bigneil
    Posted March 12, 2017 at 6:49 am | Permalink

    Any cuts to VAT on domestic fuel would be welcome to pensioners who have to “eat or heat”. It would, at the same time help the NHS as it has been proven that if the pensioners can keep warm, they are kept healthier.

    • Lifelogic
      Posted March 12, 2017 at 10:13 am | Permalink

      Indeed but it is not just the VAT it is the climate alarmist religion and hugely damaging rigging of the energy markets.

  5. Jerry
    Posted March 12, 2017 at 7:07 am | Permalink

    But John, if leaving the EU will allow the government to cut taxes what the hell was the Class 4 NI tax hike all about last week (amid talk of lost tax revenue), the government either has a tax receipts deficit or it doesn’t.

    Oh forgot, the first post Brexit Budget is also likely to be the last Budget before the 2020 general election, silly me…

  6. alan jutson
    Posted March 12, 2017 at 7:55 am | Permalink

    If the Chancellor was just putting forward some idea’s then why did he not say exactly that, instead of just messing about at the edges and unpicking a conservative manifesto pledge about NI, especially when the sums are so small.

    You mention the punitive rates of stamp duty, but how about the punitive rates of Probate which will be introduced shortly.
    You can put off a house purchase, but unfortunately not death.
    The last Chancellor knew this, and that is why it is going to be imposed, because there is no escape.
    This present Chancellor could have used common sense, and delayed it pending a revision, knowing that £ billions will be saved when we leave the EU, but he did not, did he.

    Perhaps the present Chancellor does not really believe we will be making the savings you suggest, perhaps because he thinks we will still be paying into the EU for something in the future, and thus he will not have such savings as you suggest. !!!!

    Sorry John, but I simply do not believe your suggestion that the Chancellor was putting up areas for discussion at all.

    Hammond failed his first test big time, typical accountant who can add up figures from history, but does not have a clue as to how to generate funds and at the same time generate more cost effective business for UK LTD.

  7. Sir Joe Soap
    Posted March 12, 2017 at 9:22 am | Permalink

    This post seems 50% an excuse for Hammond doing nothing of sense or linked to the future and 50% saying what should be done later. Warming up on the touchline like the rest of your party.
    Please get on with it.

  8. Kenneth
    Posted March 12, 2017 at 9:48 am | Permalink

    What is the problem with having a slogan on a bus about NHS spending?

    I notice that Jeremy Corbyn has not been criticised that bombs still exist despite CND’s “Ban the Bomb!” banners.

    • Dennis
      Posted March 12, 2017 at 2:05 pm | Permalink

      “What is the problem with having a slogan on a bus about NHS spending?” – nothing at all.

      I have asked about 50 random people recently when I’m out and about if they remember what exactly was written on the the side of those busses but not a single person could repeat it. When I mentioned that “Let’s…..instead” means a suggestion only and not a guarantee, commitment or promise I see realisations come into their minds.

  9. fedupsoutherner
    Posted March 12, 2017 at 10:13 am | Permalink

    “tackling excessive energy bills which fall hardest on people on low incomes, and encouraging more energy saving which makes sense.”

    Whilst cutting VAT on energy bills would help, there is more the government could do to tackle this problem. Start by repealing the Climate Change Act and get shot of expensive, unreliable forms of energy. I certainly couldn’t cut down anymore than I do now on my usage and Smart Meters are proving to be expensive and a disaster. I don’t need to be shown what I am using. I only use what I have to. There have been an avalanche of studies and reports given to the government showing how to bring down energy costs but so far all have been ignored. It is nonsense to carry on regardless when we need more than ever for our industries to be more competitive with those in Europe and win back contracts. Consider offering companies tax incentives to come back to the UK just as Trump is doing in the States.

  10. Atlas
    Posted March 12, 2017 at 10:27 am | Permalink

    I was less than impressed by the scale of the Probate Fees hike. It is a stealthy ‘Death Tax’ as it stands and should be ‘revisited’ with a view to reducing it substantially. I remember the furore from the Conservatives about Labour wanting to introduce one, so is this another manifesto type pledge broken?

    With Hammond the Tories are rapidly losing their shine.

    • alan jutson
      Posted March 12, 2017 at 9:20 pm | Permalink

      Atlas

      Remember that Probate is paid on first death of a couple, and then on the second as well, so same estate gets taxed twice, as well as IHT on second death as well.

      To rub our noses in it, it is reported that in Scotland it will remain at the £200 figure with no increase.

      The English savers are screwed over yet again.

  11. Bert Young
    Posted March 12, 2017 at 10:37 am | Permalink

    The Budget was an opportunity to stimulate and encourage ; it failed hopelessly. Hammond – a remainer showed his true colours and in doing so torpedoed the efforts of Theresa . He should now be replaced by someone else who believes in and understands the benefits of low taxation . The 3 proposals ( increased NI for the self-employed , dividend increases and the stealth taxation on death duty ) are entirely out of character in a Conservative Budget and have sent the wrong message to the people . From previous statements and pledges the Budget has shown that trust can not be relied on .

    A Cabinet that includes individuals who are not capable of supporting the intent of Government is wrong . The last thing that was wanted at this time was something so unpopular and a drag on our Brexit position . Hammond is wrong and not capable of the job he has been allocated to do .

  12. Party Strategist
    Posted March 12, 2017 at 10:45 am | Permalink

    The Referendum was a turning point to the Democratic Deficit. Interest in politics soared. Participation in voting rose. Since then the Remoaners and the media have burnt out most people with continual moanings and bleatings and we’ll sign it, not now but later, irrespective of your vote which meant “The Next Day!”
    Then as if just to remind everyone the Nasty Party hasn’t really gone away we get Mrs May’s push forward with re-instituting Secondary Modern Schools and shoving forward via the Chancellor a war on people of individual nature who are brave enough to go self-employed.
    All the Tories needed to do to win the Next Election hands down with a thumping majority was nothing! Nothing. Nothing at all except get us out of the EU successfully. They may have blown it because of the vanity policies of Mrs May and odd conservative beliefs of Mr Glum

    • rose
      Posted March 13, 2017 at 6:27 pm | Permalink

      The stupidest thing of all is the triple whammy: the new Probate fee or death tax; the new threshold for dividends or widow’s tax; and the Nics you mention, the tax on enterprise.

      On top of that we can expect a revaluation of domestic dwellings for council tax rises and attacks on old people’s pensions and bus passes. The clever young men have given us more than enough warning in their repeated talk of “intergenerational theft”.

      In their potty quest for “the centre ground”, otherwise known as the Big State, the Conservatives will have no-one left to vote for them.

  13. Antisthenes
    Posted March 12, 2017 at 10:50 am | Permalink

    It is never possible to please everyone especially these days with it’s culture of entitlement creating ever greater demands on the limited resources of the treasury. Hence the considerable displeasure displayed by the now numerous vested interest if they do not have their needs satisfied or believe that privileges they have already gained are threatened. That burden plus others manufactured by government policies create considerable demands on income from taxes and borrowing.

    This is a situation that you work within when you make suggestions on how best to tax and spend and commendable they are. However apart from leaving the EU the situation itself is not addressed. If it was then much of what you propose would be unnecessary as the problems would not exist. Eliminate dependency and entitlement and replace most of that which is provided by the public sector and give it to the private sector and then displeasure will be muted or at least aimed in other directions.

  14. Denis Cooper
    Posted March 12, 2017 at 11:28 am | Permalink

    I’m afraid it’s easy to believe that Hammond deliberately engineered this furore over NICs to muddy the waters just as the UK was about to put in the Article 50 notice.

    Just as it’s easy to believe that Rogers was deliberately seeking to muddy the waters when he advised May against a unilateral guarantee of the rights of resident EU citizens.

    On and on and on it goes, thanks to May accepting that bad advice from Rogers politicians and the media find it impossible to discuss our future immigration policy without at the same time referring to the position of EU immigrants who have already settled here, and I expect that the same kind of thing will now happen over NICs.

  15. Horatio
    Posted March 12, 2017 at 11:36 am | Permalink

    Where is the UK with fracking JR? we have huge natural resources and it would greatly aid the economy. US intelligence reports showed that as well as attempted electoral meddling, Russia has been helping anti-fracking organisations around the world. Has Russian self-interest, as a major supplier of natural gas to Europe, been behind the success of anti-fracking movements in the UK?

    It’s a national disgrace that we Brits have not harnessed the fracking potential of this island, it would be fantastic if we could shake off the ecofascist manacles in congruence with Brexit.

  16. sam
    Posted March 12, 2017 at 11:53 am | Permalink

    Redwood and Reese Mogg and other similar conservatives are great but the ones who run the party are bad. As pro brexit as I am I think 50% of the bad decisions this country has done can also be blamed on westminster. Take IHT much of europe does not have that kind of tax at all yet the lib dem (the most pro eu party) are credited with blocking a derisory cut in the scheme of things all those years ago. And the conservatives are not doing anything truly game changing now the lib dems are gone.

  17. Man of Kent
    Posted March 12, 2017 at 12:09 pm | Permalink

    Most disappointed there was no reference even to Brexit .

    The biggest potential revolution in attitude in our country since WW2 .
    At last we have the possibility of regaining our outward -looking global perspective of trade and culture ;even the buccaneering spirit of adventure for some .
    What did we get – a pathetic mish mash .
    Where was the optimism ,the preparatory work to bring us up to world-beating standard ?
    Zilch !

    I am afraid that while we have people at the top who adhere to Blairite policies ,the Remain outlook and believe that government is always a force for good, and that they can spend our money better than we can then we will achieve little in the future .

    It is the big picture that is missing !

  18. Dennis
    Posted March 12, 2017 at 2:15 pm | Permalink

    Your text, JR, that ‘post Brexit the government will have more money at its disposal to cut taxes’ could be diminished if what Mr Gove said in Laura Keunssberg’s 1 hour BBC 2 TV programme last week that the UK could have exit payments to make but was not quizzed on what they could be. Have you had a word with him?

    PS re Captcha – do the street sign poles count or not?

  19. lojolondon
    Posted March 12, 2017 at 7:11 pm | Permalink

    John, I am glad you mentioned ‘control over taxes’ – but I think you have missed an important point – along with the rest of the media and politicians on both sides. When we Brexit and leave the EU, surely the companies (like Microsoft / Amazon / Starbucks) that pay ‘European tax’ in a nominated EU country (eg. Ireland / Lichtenstein / Luxembourg) – will start to pay British tax on profits realised in Britain – surely this will represent a multi-Billion ‘windfall’ for the British Chancellor? Am I mistaken? Or why is the righting of this wrong never mentioned by any political party or the MSM?

  20. Christopher Hudson
    Posted March 12, 2017 at 10:44 pm | Permalink

    To keep pouring endless amounts of money into the ever deepening bottomless pit that is the NHS is lunacy and unsustainable.

    The country is broke why do we send tens of billions to countries who run a space program

    Again, lunacy

  21. Lindsay McDougall
    Posted March 14, 2017 at 2:33 am | Permalink

    Sorry, Mr Redwood, but fiscal incontinence is no more attractive when it comes from the pen of a Right wing Tory than from other politicians. The brutal truth is that this Government is poor on economics and all the likely alternatives are ten times worse. How often do I and others have to stress the impotance of getting State debt on a downward trend before interest rates start to rocket. The only reason that it’s difficult is that so many categories of public expenditure are ring fenced.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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