The UK economy has been through a monetary squeeze and an unplanned fiscal squeeze over the last year and a half. The Chancellor reported that this year they are collecting £7.4bn more in tax than planned, and spending £4.5bn less than planned in March. Added to the halving of money growth thanks to Bank of England policy, it is no wonder growth has slowed down.
The Chancellor has decided to put back the money that has been removed by higher tax revenues and lower spending in his figures for next year. There will be an £11bn fiscal boost from lower taxes and higher spending. Is this truly a boost as the OBR say, when it is merely trying to get back to their forecast figures from last March which turned out once again to be too pessimistic? It is not easy for a Chancellor to chart a course for spending and taxing, when the numbers he relies on for the year in question, let alone future years, are so wrong. At least recent forecasts have not been as wildly and wilfully wrong as the prediction of a recession in the winter after the Brexit vote made prior to the referendum by the Treasury and Bank.
There was much discussion of what constitutes an end to austerity. As argued here, to many people austerity is high taxes on their incomes and spending, or an absence of real growth in their pay or living standards. The Chancellor raised Income Tax allowances to help boost the net pay packet. He has also proposed above inflation increases in the Living wage and some improvements in benefit payments. He argued that austerity is a private sector as well as a public sector matter, and rightly argued that higher taxes do not solve the problem of austerity for individuals and the private sector. Indeed, they are an important cause of the problem.
The spending increases were largely as briefed out over the week end and already discussed here.The task still remains to see how value and improvement can be bought with the large headline figures pencilled in for the NHS, and to find sufficient for social care and schools. £400 million for schools capital for small projects as a one off is not quite what the schools had in mind when lobbying for more money for their revenue budgets to meet mainstream costs. The government will continue to spend more on Universal Credit as roll out continues and issues arise that need more generous treatment.
October 30, 2018
Good morning
It is important to remember where this word, austerity, came from – Labour.
What they meant by, ‘austerity’ was a cut to state spending and a reduction in personel / union members and monies.
For the likes of the SNP it meant no reduction in the bungs to keep them quiet.
Of course someone had to pay for their lack of austerity and in that they found a willing and gutless Chancellor and First Lord of the Treasury who, where only too willing to fleece not just the productive part of the economy but the English past of the economy.
But like all Socialists they have to learn that when the state starts to consume more of what the private and productive economy have, it will end up with less in the end. Sadly it is a lesson that has to be learnt repeatedly.
October 30, 2018
Oh. And I believe it is only 150 days until we leave the EU. Albeit in name only.
October 30, 2018
So Hammond ratted on your central economic plank to balance the structural deficit and decided the opposite was to tax and spend! Next year the deficit increases and the burden of debt will increase as well. Was this a Labour budget? Your party got elected in 2010 for promising t balance the structural deficit by 80 cuts ad 20 tax increases. Tell us the truth JR has Hammond achieved this or Osborne before? Was this achieved in 2015 or 2017?
Hammond skipped over VAT that wa static for two years because the EU controls it. Neil points out the OBR forecast with based on a two year punishment extension not the twenty one period! So the EU gets to oversee the UK budget for another two years allowing Hammond limits to operate in.
What happened to responsibility and thrift and putting money back in the pockets of individuals, strivers and grafters? Insurance premium tax, National Insurance hikes were all there.
October 30, 2018
Funny how Hammond keeps finding extra billions to give away to the devolved nations. This on top of their over generous block grant which already gives them much more of English taxes per head than the English themselves and the fact they get a disproportionate amount for every penny spent on England via the skewed Barnett Formula. This Government is taking the English voters for mugs and sees us as nothing more than voting fodder and a cash cow for the benefit of the rest of the dis=UK. Everywhere except England it seems.
John, why did Hammond refer to ‘the proud nations and the English regions’? Obviously England is not a nation in the eyes of your anti-English Government.
October 30, 2018
You are spot on, over 950 million for Scotland! Despite poor outcomes from SNP spending on public services. Where are our English representatives?
A £20 billion deficit until future notice and more gaff about reduction to GDP. The debt is a ball and chain around the UK neck which will be pulled very tightly when another recessesion bites. £51 billion in interest payments, more than some public services receive!
Yet May and Hammond happy to give the EU £100 billion of our taxes to talk about a trade deficit. Only talk, as the political declaration can be changed!
If you were a young English person at uni with a life time of debt while May and Hammond pisses taxes down the drain would you vote Tory? No.
October 30, 2018
‘the proud nations and the English regions’
That enraged me too.
So did his insistence, twice, this morning that a government must keep its manifesto promises. He was talking about raising the tax thresholds, which is all well and good, but he obviously excluded delivering Brexit.
He is an enigma. He sounds so like a conservative at times and yet he doesn’t want our independence back so that we can launch out and improve our prospects.
October 30, 2018
‘the proud nations and the English regions’
Me Too!
You have Sturgeon meeting Barnier to discuss Scotland, you have Khan meeting Barnier to discuss London, you have Aileen meeting Barnier to discuss Northern Ireland, well where are the seven English representatives meeting Barnier to represent the views of the Leave voting regions? Did we line up seven key English leave MPs to discuss their majority leave voting areas requirements and what they wanted from the EU? Have they even been consulted? It’s all talk, England does not get a say, you have even filled the Westminster parliament cabinet with remain wishing MPs talking down what is or is not possible.
Who talks with Barnier for:
SE England
SW England
West Midlands
NW England
NE England
Yorkshire and the Humber
East Midlands
East of England
?
How did each of these regions vote? Why don’t they have an equal say to London and Scotland and Ireland and Wales?
October 30, 2018
Jools. Your observations are quite right. While the Scots carry on enjoying free eye test, free dental check ups, free hospital parking, free university, free prescriptions and free care in the home, our chancellor sees fit to throw them another bung courtesy of the English tax payer. It won’t stop them moaning or going on about how many have to go to food banks. It would be good to see just what these people are spending their money on but looking at the problem of obesity here in Scotland it isn’t too difficult to work out. The SNP will be heroes as far as the Scottish voter is concerned and all this extra money does it make them look good with less chance of getting rid of them. Stop pandering to the Scottish devolved government.
October 31, 2018
And yet again John, despite purporting to speak for England, you are silent on this matter. Not you or any of the other 649 self serving UK MPs speak for England. Shame on you all!
October 31, 2018
Be fair Jools, John has spoken up several times for England in the House, he gets called Little Englander and all manner of insults but he is just trying to get what Cameron promised us. Blair and Brown when they devolved the regions what did they have to say for England, what did they offer for the left behind NHS England, English Schools Education, Education, Education – all we seem to have got from all this extra spending is more and more children with mental health problems.
October 31, 2018
What Cameron promised was a sop and an insult to every man, woman and child in England so I hope John is trying to get us more than that. You are right he does speak up more than the majority of useless spineless UK MPs with English seats and I have a lot of respect for him but even John doesn’t believe England should have equality and the same rights as the rest of the UK, ie. a voice and self determination otherwise he would advocate an English Parliament which he doesn’t.
October 30, 2018
Austerity just mean the state living within its means. Ending it is very foolish indeed from the current hugely over taxes position. The highest taxes for nearly fifty years and these are the taxes that Hammond wants to “keep” low!
It would be far better for the economy, jobs and living standards if the government spent more like 25% of GDP rather than nearly half. This with the further cost on the productive of excessive red tape, bonkers employment laws, expensive energy laws, restrictive planning and absurdly complex taxation.
“But like all Socialists they have to learn that when the state starts to consume more of what the private and productive economy have, it will end up with less in the end.” Indeed take the money of the people who would invest or use it wisely, waste a lot in the collection process, then waste most of it on lunacy and unworkable thinks like the dire state monopoly NHS or HS2. What a great plan!
October 30, 2018
The Chancellor was thankfully very clear on how disastrous a no-deal Brexit would be. We are very fortunate to have him and Mrs May steering us to sensible future pattern of close collaboration and binding agreements with the EU, our largest trading partner
October 30, 2018
Alec
Well they say there’s always a note of truth in sarcasm.
October 30, 2018
Sure, except of course that both the Chancellor and Mrs May are liars who have no scruples about pulling the wool over the eyes of the people they are supposed to be serving and who are paying for their maintenance.
Yesterday while I was looking for something else in my files I happened across this article from June 2017:
https://www.politico.eu/article/germany-even-worst-case-brexit-will-be-bearable-for-eu/
“Germany: Even worst-case Brexit will be bearable for EU”
“A new study simulates the effects of eight different Brexit scenarios on the German and EU economy.”
“Germany has delivered an ominous message to British negotiators in impending Brexit talks by insisting that even the worst-case scenario would be bearable for the EU.
Germany’s Economy Minister Brigitte Zypries said Friday that “even in the most adverse case,” Brexit would be “bearable for the EU economy and in particular for the German economy.””
“In the most positive scenario with a comprehensive free trade deal between the EU and the U.K., the study predicts a long-term output loss from a pre-Brexit trajectory of 0.1 percent for the EU and 0.6 percent for the U.K.
In the scenario where the U.K. and the EU fail to strike a trade deal and fall back on World Trade Organization rules, the study predicts the U.K. economy would lose 1.7 percent of economic output over the long-term, while German and EU GDP would be 0.2 percent and 0.3 percent below their previous pre-Brexit trajectories, respectively.”
I hope you can appreciate that the important point here is not that according to the German Economy Minister the UK would be hurt more than Germany but that all the UK numbers are much smaller than predicted by the UK Chancellor:
“In the scenario where the U.K. and the EU fail to strike a trade deal and fall back on World Trade Organization rules, the study predicts the U.K. economy would lose 1.7 percent of economic output over the long-term”
Not Philip Hammond’s “disastrous” 8% of GDP, but a very manageable 1.7% over the long term – similar to the recent forecasts from Open Europe:
http://johnredwoodsdiary.com/2018/10/28/yes-chancellor-we-coukd-afford-a-better-budget-if-we-leave-without-a-withdrawal-agreement/#comment-969556
according to which the deficiency might be only about 2% spread over 13 years, or with the correct government responses possibly only a quarter of that.
October 30, 2018
It would be nice to have “agreement” or even “collaboration” with the European nations we trade with, providing we also return to being an independent nation once more.
Other non EU countries have that relationship why not the UK?
October 30, 2018
“We are very fortunate to have him and Mrs May steering us to sensible future pattern of close collaboration and binding agreements with the EU, our largest trading partner.”
Under current EU rules we have an £80bn+/year trading deficit with our “largest trading partner” for which we pay a membership fee of £20bn/year (£15bn loss of control and £10bn net) in order to subsidise EU farmers, improve other countries infrastructure and allow unlimited immigration.
No PM/Chancellor would sign us up today to such a one sided trade deal and although Parliament may like to sign us back into the EU’s SM/CU/ECJ through a back door Chequers deal, to do so would be totally against the referendum result, which was 64 : 36 to leave measured by Parliamentary constituency results.
Worse still, the PM’s/Chancellor’s Chequers proposal means that we accept EU rules, laws and regulations etc. without any representation. This would not lead to long-term political stability in the UK or to a close, stable relationship with the EU.
October 30, 2018
The EU – ‘ our largest trading partner’ – well, yes, if you like trading deficits.
October 30, 2018
Surely you can only be a partner with something outside of yourself? How can we be a partner of the EU while being a member? We’re more a patsy than a partner.
October 30, 2018
Alex Strong. We trade with the member nations, not the EU institution. If it disappeared overnight, trade would still continue. In reality,the EU is a parasite on it’s members and is superfluous in the world of commerce.
October 30, 2018
Alec Strong, I thought you Remains insisted that the EU was just an association of friendly European nations, not a federal state? Our biggest trading partner is the USA. Germany is second.
Most nations in the world have “no deal” with the EU but it is not a disaster for them. Do you Remains ever look up from your obsession with the EU, to see the rest of the world? Even in the C16th England traded world-wide. The notion that we need to hold the EU’s hand in the C21st is absurd.
October 30, 2018
Sigh…the monetary y stance is highly stimulative and the fiscal splurge necessitated by Brexit has not been undone. This way of describing things is bizarre but otherwise I agree with most of this.
Welfare reform we must regard as a work in progress at best .The problem is with so much political capital lost to Brexit nothing much can be done about anything .
Years of drift lie ahead but Mr Hammond gives me hope that there is one sensible man left in the country
October 30, 2018
More wishful thinking, I see. Sigh……
October 30, 2018
Newmania, Sigh . . . . the purpose of Leave is to become an independent nation again. There was no fiscal “splurge” necessitated by Brexit. In fact, no “splurge” at all. £7.5bn in £2tr is tightening but not a splurge. And there has been no Brexit yet.
With the Chequers plan there will be no Brexit at all. The plan is to tie us economically, legally, and militarily to the EU in perpetuity. That’s what Remains want. But the result of Remain will be UK dismemberment and years of constitutional turmoil compounded by EU economic decline, not “drift”.
October 30, 2018
Good to see the higher rate threshold go up to 50K.
I did not hear if he raised the NI secondary earnings limit to take it back again, he did last time so it would not surprise me to hear he did the same again
October 30, 2018
I have now checked an yes he has increased the NI secondary earnings limit to 50K.
I wonder if I will get guaranteed social care in my dotage as a quid pro quo for this additional tax
October 30, 2018
NS, Unlikely 🙁
Don’t you know that those that pay in get nothing in return!!!… (sarcasm)
October 30, 2018
I actually believe the Labour MPs such as Yvette Cooper, David Lammy etc don’t understand direct taxation and isn’t Yvette in the Treasury. Hammond, as you said, raised the NI threshold at the same time so the saving between £46,350 and £50,000 of £3650 only saves 10% not 20% giving a saving of £365. The Personal Allowance increase is wiped out for higher-earning families because the High-Income Child Benefit Charge takes their personal allowance away (so Lammy’s attack on High Earning Families isn’t true either) and I’m not sure if he raised that or that got caught up in fiscal drag.
October 30, 2018
Sorry, the HICBC takes their child benefit away and Yvette mentions the highest earners who have their personal allowance increase wiped out.
October 30, 2018
Throwing money at the NHS isn’t the full answer.Quality of staff is just as important as quantity.Of course more money is needed to meet the cost of the NHS reliant queues of peoples wanting to see a Dr for colds , sore fingers , spots,bruising and hygiene related problems but the main problem is a new public perception that Dr’s are the only medical practitioners in the NHS and they cost a lot of money. We need to dissipate the power of these professionals and use others with more knowledge and experience.
The paper work needs to be cut down. Many trusts and general practices are computerised , however paper work has been replaced by the tapping of characters.Care plans which are repetitive and a waste of time and cause staff to be writing non information or ticking boxes day in day out need to be replaced by a simple informative report at change of practice or at the end of a shift.
We need staff to be intelligent enough to be able to rely on their own expertise, not others long winded comment about every single bodily function . We need to stop belittling UK staff who have built up their expertise for years and being ready to manage wards and practices are put down because others are cheaper.
October 31, 2018
margaret, perhaps the GPs need to start taking on more of the responsibility of abusers of their system. If someone presents to them and should have booked to see their practice nurse, they should send them back out to the waiting room to wait for the nurse and see their next patient, they always have at least three patients waiting in the waiting room at any time and also have paperwork and booking appointments or calls to make that they could catch up on with the extra time.
People being sent back outside to wait will soon learn to book directly with the nurse practitioner next time.
October 30, 2018
I see he is planning to punish us for using Amazon by taxing them more and increasing their prices. He is also pushing up house prices for first-time buyers by removing stamp duty.
October 30, 2018
Another Tory attack on the productive private sector to finance Labour’s unproductive, expensive, unreformed client state.
The Tories have been owned by Labour and now they meekly trot out their pro-public sector announcement like zealots knowing full well that these increases are throwing good money after bad.
The Tories are using other peoples money to play Client state politics. They are stewards not owners.
We want State reform not more spending on the unproductive. Reform involves conflict with Labour’s client state and the Tories have got the guts for the fight and so that cowardice is financed by the private sector
Both parties are set against the productive and see him as nothing more than a bank account
October 30, 2018
Hammonds magic money tree. Gordon Brown could have presented it. So he reduces business rates to help the high street and increases the minimum wage to be paid by, yes, a resource intensive sector like retail. How does that work then?
And tax on Google and Amazon. No it isn’t. Guess who will pay it. We will. So Canute like he penalises the efficient to prop up the past its sell by date.
Nothing for savers and continuing with insurance tax. So the prudent continue to get hit whilst those who will fall back on someone else, the State, pay nothing.
Universal credit which we have been promised umpteen times is now fit for purpose and would save us money, get people back to work, another two billion down the drain.
Call yourself a conservative Government. Contravening the trades description act springs to mind.
October 30, 2018
It was a socialist budget, more power and money to the state, and less to the individual.
Throwing money at the failing Stalinist NHS with zero reform, or patient empowering, or learning from the best of the rest of the world.
Punitive tax on freelancers and more encouragement for out of control immigration.
Very poor quality politicians and treasury.
October 30, 2018
The inheritance tax racket continues unchanged.
October 30, 2018
So does stamp duty.
October 30, 2018
Firefighter Phil.
October 30, 2018
No large strategic change in the tax system, a nod by picking on the tech companies.
October 30, 2018
When I see 55 year old retired teachers on BBC’s Pointless then I realise there’s no austerity in the State sector. Austerity’s just another wheeze invented by Labour’s client state as they feed off the taxpayer
My father retired at 66 with a pension of 10k pa. He worked in the private sector. There’s no magic money tree in the private sector
The UK would die without the productivity, energy and vibrancy of the private sector
October 30, 2018
It is the increase in pension contributions and NI (state pension contributions) that is directly attributable to the so called funding short fall in school.
Lots of pupils who were not born here do not help either.
October 30, 2018
Agreed Duncan
My sister retired mid fifties from public sector on a very generous redundancy package.
I am 9 years older and worked in manufacturing industry and paid loads more into my pension than my sister and still cant afford to retire fully.
But Im not bitter.
October 30, 2018
The Hammond budget shows this government does not mean business, is not ready to seize the day, and does not understand the needs and aspirations of the people.
The budget we wanted and needed, that would inspire confidence, was that set out in your 28, October post here. Time to table a rather large amendment to the Finance Bill?
October 30, 2018
We have 3 parties representing the 48%. There is an obvious gap in the market for someone to fill.
October 30, 2018
State spending (largely state wasting) is the main problem for the UK’s economy and UK productivity and Hammond has just foolishly increased it. More hidden tax increases, he still ratting on IHT thresholds, still mugging landlords/tenants, pension pots, and still stopping child benefit and personal allowance for many. The increase in personal allowance are welcome but trivial (about the same sum as you will pay back on the 12% insurance tax that Hammond increases.
Who will rid us of this dreadful socialist dope? His tax complexity is yet another tax on top of his absurdly high tax levels.
October 30, 2018
JR writes: “The UK economy has been through a monetary squeeze”.
This is why I agree with you on Brexit: because I need the democratic freedom to disagree with you at the ballot box.
October 30, 2018
Call me a cynic but I suspect a motive is to soften up some of the weaker Brexit MPs especially those who would prefer No Deal. After all he has said that if he and Mrs May get the deal they want with the EU there could be another budget in the Spring on the same lines, more tax cuts, more spending etc..
October 30, 2018
No, handling Brexiteer opposition has definitely shaped Hammond’s approach to this budget.
October 30, 2018
Surely the response to a so-called ‘no deal’ Brexit (It’s a WTO deal actually) should be a sharp reduction in Corporation Tax to encourage foreign investment and certainly not a return to higher taxation anywhere.
October 30, 2018
The PrangWizard said: “a motive is to soften up some of the weaker Brexit MPs especially those who would prefer No Deal”.
That is it in a nutshell. Parliament gave us the decision to make, not MPs – of any persuasion.
October 30, 2018
Mayor khan was quick off the mark to criticise the budget – No extra money for his London policemen, he said angrily, but that’s not quite what the chancellor said, although I recall no extra payments being announced.
If khan was to put all of his police back on the beat to control the streets of London, and reduce real crime, rather than using them for his own pet project to stigmatise free speech as a hate ctime, which amounts to them being thought police – we would have less real crime.
I’ve heard estimates of upwards of 1,000 London police officers engaged as thought police?
October 30, 2018
Bryan Harris
“Mayor khan”
Who ? Never heard of him.
October 30, 2018
Off Topic. Listening to BBC Breakfast right now and they are going on about how Trump used scare tactics during the election. What a joke!! What do the BBC think they are doing here in the UK with Brexit? Talk about pot calling kettle black.
October 30, 2018
Refuse to fund them, I stopped buying BBC Licences many years ago. I listen to Radio 4 just to keep an eye on them, it’s like a barometer for the latest subversion projects like the promotion of gender dysphoria and demonisation of the elderly.
October 30, 2018
It’s Andy’s recommended listening, no doubt!
October 30, 2018
Demonisation of the elderly is a new phenomenon which the extreme left are using to create a focus of blame about NHS failings and the cost of housing and the vote to leave.
Even more troubling is a rising attitude by the extreme left that state pensions paid for by a lifetime of NI contributions by senior citizens should not now be paid.
October 30, 2018
Order-Order.com this morning exposed the BBC’s “framing” technique when introducing contributors:
October 30, 2018
Apart from anything else, we need a revolution in our tax system – We’ve all heard how large and confusing the tax bible is, and the problems this causes due to confusion generated, and each budget adds to the complexity.
When are we going to see this revolution – When are we going to get a fair tax syetm rewrite that is fit for purpose?
October 30, 2018
So where does the money come from to pay for all of this new spending if the economy does not grow as expected.
£39 billion from the EU Bung, then more than £10 Billion a year for no future EU payments, then £13 Billion from our own foreign aid programme, Then another Couple of £ Billion from our contribution to the EU foreign aid programme.
Then we get all of the income from our own set tariffs on import duty if we go WTO.
Seems like there is plenty of money about to stimulate our own economy if we choose a different route and different priorities.
Sadly not with this Chancellor or Prime Minister.
October 30, 2018
Isn’t it wonderful that Britain is a centrally planned economy? Not at all like all the other socialist states that have collapsed or had to undertake massive reforms because of their central planning. No we’re different because at the start of the 20th century we were the richest country on earth bar none. Since then we have fought numerous unnecessary wars which have greatly reduced our wealth for the benefit of our banker overlords but worse than that our economy is controlled and distorted by those very same overlords. Once upon a time a man could support a family and buy a decent house on one income. Not any more. Now we are wage slaves who are reliant on benefits and measly tax breaks just to survive. If you really want to make us better off and freer abolish the Bank of England and make fractional reserve banking illegal as it is fraud in every respect. Central planning only works for those that do the planning.
October 31, 2018
A very good assessment of the past century.Russia and China had shock bolshevism,we’ve had the slowmotion version.The Blair-Cameron era resembles the Brezhnev era in the Soviet Union when strong economic growth appeared to be achieved(even the CIA’s analysts thought so)but they were effectively consuming their national capital to give the appearance of income.
One of the reasons we have national liabilities of £5trn against national assets of £3trn as the IMF “helpfully” pointed out a couple of weeks ago.
October 30, 2018
Not really easing the squeeze at all they are spending more and will therefore have to tax or borrow more. The squeeze on the productive sector continues.
I noted ministers claiming:- “We are repaying the debt as a proportion of GDP”. No the huge debt state sector dept (much of it hidden) is still increasing and you are not repaying it at all. It may be declining very slightly as a proportion of GDP but that is not “repaying” it at all. Just more blatant lies.
I just listened to Start the Week Yesterday (It’s not fair), with Helena Kennedy, Paul Collier, David Willetts and Tiffany Watt Smith with Andrew Marr. All that is wrong with the BBC displayed in full glory. Five dire lefties with totally idiotic economic solutions and no one sensible in the middle or right to point out the total stupidity of them.
Even the alleged Tory calling for huge wealth taxes and confiscation of people’s capital gains on houses. (We do have CGT tax at 28% without indexation, absurd stamp duty taxes and double taxation of landlord interest Mr Two Brains!).
October 31, 2018
And GDP is not national wealth,paticularly in the modern era given the garbage thrown in to bolster the headline figure to make the debt look less fearsome.
October 30, 2018
The income and expenditure structure is never addressed – basically it remains the lipstick on a pig approach.
Osborne in opposition flirted with two changes: £1m IHT relief and combining income tax/NatIns. Neither happened, he increased the tax code pages by 50% and made an even worse mess of stamp duty.
Our whole tax system is a complete pig’s ear and Hammond certainly has made no effort to start any change, nor will he.
October 30, 2018
Completely off topic, I notice that you stick to GMT. BST for England and Wales should be scrapped.
October 30, 2018
Mr Chore, head of OBR, appeared on the BBCs programme chaired by Andrew Neill. He admitted they remain clueless about the reasons their forecast for the deficit was so wide of the mark. I concluded that Mr Hammond hopes that the error continues to work in his favour in the coming years and that the forecast annual deficit of c£20bn will actually equate to a rough balance. The government’s finances will be in big trouble if the error swings against it instead of in its favour. In my view May and Hammond have made a reckless assumption given the enormity of the debt pile and the prospect of higher interest rates.
October 30, 2018
For Chore read Chote! Auto correction strikes again.
October 30, 2018
The script disappears at the top and I caught my smart changing words while I was occupied finding bits of traffic lights for capchas who need to go to specsavers.
October 30, 2018
A “give away” budget with the threat that it will all be taken away from us if we do not accept the Chequers proposal for re-joining the EU’s SM/CU/ECJ without representation and thus totally exposing us to disadvantageous future EU trade deals.
October 30, 2018
The IR35 changes are as clear as mud. Who are the 1.5m small companies and how do the self employed know who they will work for will qualify?
And what if they work for more than one company? If they get nothing in return for working as self employed, what’s the point. The State does not like Independence. Big business wins again.
October 30, 2018
Well, how right we were to regard your ‘What a Brexit budget would look like’ post of 27 October as a supreme piece of wishful thinking! I suppose you have some extra money for roads, but, as you say, just peanuts for schools; much of the extra spending is for the NHS where history indicates it will be wasted.
We have none of the personal tax cutting you were calling for; just tinkering with the thresholds.
The things that really depressed me about the bits of the Chancellor’s speech that I was able to watch were the glorification of extra Government spending for its own sake, and the total lack of any strategic thinking about the great benefits that would come from lower personal taxation and a simplified tax regime.
We badly need a Conservative Chancellor.
October 30, 2018
Mr Redwood,
I had expected the GBP 39 bn to get a mention, but that is apparently part of the contingency budget we did not get to see, because Mr Hammond is very confident a deal will be struck. Consequently this budget must be based on the UK being in a transition (ie effectively still in the EU) with a glimpse of post transition – but under a benign international trading regime- UK economy.
Very hard to make anything from this, but still a few takeaways:
– the little autumn presents for many interest groups are contingent upon the contingency plan not being activated. Very useful in and when the final stages of the negotiations (of course by negotiations I mean within the Consrevative Party, the deal with the EU is probably finished and waiting for the nod from England) threaten to become destructive after all.
– a very clever budget that will disarm much of the non-brexit attacks Labour could hope for, which will be good for domestic stability
– Mr Hammond keeps a close eye on the UK’s credit rating (the external justification for “rules” and his GBP 40 bn “headroom” is within boundaries clearly designed to maintain an AA or better rating, even in the case of a large Brexit shock. That means a that a smooth brexit would yield an (annual!) 40bn vs the 39 of the Red Bus No Deal people. An easy choice, onless one believes that a well designed trade treaty equals vassalage.
Not too bad then.
October 30, 2018
Well, a lot of what I was hoping for was delivered in Hammond’s budget. He’s eased the UC roll-out burden by replacing the £2b Osbourne clawed back (over which IDS resigned) and another billion on top. He’s given £1b of new money for defence (targeted at anti-submarine warfare & offensive cyberdefence) in addition to the £800m announced earlier this year. He’s found £400m for education – but £480m for last winter’s potholes – and reduced the income tax burden. He’s kept the pensioners onside by making no changes to the triple lock or contributions tax relief. I’ll raise a glass to Hammond on friday night at my local:)
October 30, 2018
A ‘fiscal squeeze’ in when political effort in expended on cutting the deficit or increasing the budget surplus.
A cyclical fall in State spending and a cyclical increase in tax revenues is not a ‘fiscal squeeze’.
I think perhaps what John Redwood means is an ‘unintended fiscal adjustment’. But I’m not quite sure that would be right either.
The fall in the deficit we are now seeing is the consequence of policies put in place by Osborne years ago and it’s not unintended,
They were in intended to work much faster than they have.
The deficit is lower than was forecast last year, but so what? For most of the past 8 years it turned out much higher than forecast.
We were supposed to have balanced budget by 2015.
October 30, 2018
It could be the people advising or providing statistics are non-believers.
Not necessarily ideologs of Remain but convinced they should come across bad news. Darkening their thought processes, upsetting their mathematical thinking.
They will inadvertently look for the bad and hook on to any strand of statistic to prove they were and are right. We see this in politics and every scenario outside politics proper.
Scum!
October 30, 2018
It was the Brexit bribe Budget.
Borrow more money from your children to make you think the Tory angry pensioner Brexit economy is not collapsing. We see through it.
Still at least you Brexiteers are getting a 50p piece as a symbol of your Brexit. Something for you all to keep tucked inside your Union Jack underpants.
We know how much you all like these pointless nationalistic symbols. Like Spitfires, bulldogs and blue passports (made in France).
October 30, 2018
So a tax reduction budget is not to your liking.
How strange.
Childrem do not pay tax.
Unless they earn at least 12k pa
You sound so bitter.
You need to consider what your next favourite country is andy
Life is too short.
October 31, 2018
“So bitter”
Well,possibly,but with a certain amusing panache n’est ce pas?
Andy is this site’s guilty pleasure!
October 31, 2018
Andy
Not moved to the better tax regime in France then ( lol ) ?
Oh and here you go
Eurozone grew by only 0.2% in Q3, well below growth in U.K.
Maybe you ought to listen more to the older and wiser Andy
I’m just back from the USA , did a bit of frictionless trade there. Mexico next
October 31, 2018
Andy. No Spitfires would have suited you. We might now be under the jackboot of Germany.
October 30, 2018
Patrick Collinson in the Guardian says: “If you are earning £50,000 a year, the chancellor has just handed you a £860 income tax cut – or six times the £130 that will go to someone who earns £12,500 a year”
Well, that’s not strictly true, because of national insurance the tax cut is only 10% not 20%. If you have a child you get stripped of your child benefit with the High Income Child Benefit Charge did Hammond increase that by the same % or leave it between 50,000 and 60,000? £50,000 – 46,350 = 3650 saving of 10% = £365 not to be sneezed at but not the £730 the Guardian alludes to either.
October 30, 2018
On the face of it, this budget is fiscally irresponsible. Progress on the annual deficit, both present and prospective, is reasonable. However, total State debt will remain too high, being still 75% of GDP after 5 years. The annual interest payable on that debt is greater than the entire State education budget. And we should remember that, since interest rates will slowly rise over the next few years, that interest burden is likely to rise.
There is a silver lining. The OBR’s estimate of future growth is likely to be an underestimate. We can expect a 2% increase in GDP over the next few years, rather than the 1.6% forecast by the OBR.
It would be churlish to deny that the tax reductions are welcome; it is especially good to see that the threshold promises have been kept. However, any fool can cut taxes; what is difficult is to ensure that public expenditure is restricted to what is necessary, or at least desirable.
Speaking of which, the reckless overspending on the retired elderly roars on. This is investing in yesterday. There is no demand management in geriatric medicine. We can’t complain; £350 million a week extra for the NHS was written on the side of the Vote Leave buses and for now we are stuck with it. An inter-generational clash is looming, what with the extra NHS spend and the failure to get house prices down.