SPRING STATEMENT – HAMMOND’S BALANCING ACT
Overview from Senior Account Director, Simon Darby
As expected, Philip Hammond’s first Spring Statement provided an update on the public finances and Treasury progress since the last Budget. It was also arguably the Chancellor’s most political statement from the Dispatch Box, with Hammond launching a robust defence of his approach and the importance of ‘winning the battle’ against Corbyn and McDonnell’s Labour Party.
Hammond highlighted that 2017 saw growth of 1.7% (up from the Budget forecast of 1.5%) and that the growth forecast for 2018 had also been revised upwards slightly to 1.5%. Pre-empting criticism that this is welcome, but not exactly world-beating, news the Chancellor reminded Parliament that ‘forecasts are there to be beaten’. Hammond also fell back on the economy’s success in creating jobs since 2010.
Announcements in the Spring Statement tied into the government’s wider priorities. Of note, was the announcement of a consultation on ‘tackling the plastic problem’, focusing on how the tax system can be used to address single-use plastic waste – an attempt to demonstrate the government’s ‘green’ credentials. Support to enable SMEs to engage an apprentice was set out in the form of £80m of funding being released whilst, on housing, Hammond announced agreement with the West Midlands to deliver 215,000 new homes by 2030/31.
As he has done consistently during his time as Chancellor, Hammond found himself staking out a sensible and considered middle-ground approach. His political task has been, and continues to be, to strike a balance between the Labour leadership’s calls for huge levels of public spending and accusations that his own party remains wedded to stringent austerity measures. As such, arguably the most notable aspect of Hammond’s statement came when he highlighted that if the public finances were to continue to improve between now and the Autumn, this could create space for additional spending.
With Labour having begun to make the political weather in recent months – particularly on fiscal issues, the Conservatives will be hoping the ‘light at the end of the tunnel’ alluded to by the Chancellor provides them greater scope for their own spending commitments.