As we approach Christmas, many of us will be regularly checking our bank balances and making sure we have enough to see us through the festive season. The Chancellor is no different, although he has far more on his mind than Christmas presents.
His Autumn Budget Statement is fast approaching, and his attention will be focussed on balancing the books and working out how to address domestic concerns, as well as the impending sizable divorce bill with the European Union – whilst also trying to convey optimism to the country.
The task at hand
“Spreadsheet Phil” as he is commonly referred to by his colleagues in Parliament, is fully aware that his job is on the line. He has been battling through the political storm of post conference demands for his resignation. Arguably he is now backed into a corner, with a successful Budget being the only solution left to reaffirming his position. Additionally, he has the unenviable task of providing a glimmer of hope for a divided Conservative Government and to remedy the falling polling rating that the Conservative Party has experienced since before the General Election.
What is being asked of the Chancellor?
• Public sector workers want the 1% pay rise scrapped
• Students are demanding a reduction in interest rates on tuition loans and for a portion of debt to be written off
• The elderly want protection for their retirement securities
• Businesses are seeking reassurances that they will be able to thrive in a post-Brexit economy
There have also been a number of calls in relation to reforming housing policy. The recent events of Grenfell Tower have resulted in appeals from councils, politicians and the public for more funds to be deployed for affordable housing projects. In addition to this, the Secretary of State for Communities and Local Government, Sajid Javid has spoken out on this issue and publicly called for the Chancellor to borrow £50 million in this Budget Statement to increase the supply of houses in the UK. We would therefore expect this to feature in the Budget Statement on 22nd November 2017.
Yet the Chancellor’s hands are very much tied. New forecasts from the Office for Budget Responsibility are expected to show that the Government needs to borrow roughly £20 billion more in 2021 than had been originally thought. This calls into question whether the Conservative Party’s long-term aim of cutting the budget deficit is now attainable. Some tough fiscal decisions will undoubtedly have to be made.
What policies could we see in the Budget Statement?
With so many calls and competing interests it is very hard to predict who the winners and losers of this Budget Statement will be. One thing that is certain is that there will be a significant focus on housing with further details expected on the £10 million commitment to fund Help to Buy mortgages, as well as the £2 billion pledge made by Theresa May in her Conference speech.
Other policies to look out for include incentives to win back the young vote, possible cuts to stamp duty, potential NHS spending increases, or increases in sin taxes. However, I would not expect any blockbuster policies as there is no scope for this with the elephants in the room, a divorce bill that currently has no figure and a potential no deal scenario. These will ensure that Spreadsheet Phil stops short of a Christmas splurge, even if it may potentially cost him his job.