Fiscal Phil’s Budget tightrope act
Chancellor Philip Hammond set out on a Budget tightrope today. On one side lay an economy which gave him scant room to manoeuvre, while on the other there were enough political potholes to give even the sturdiest political veteran sleepless nights.
If ‘Fiscal’ Phil’s budget was too safe today, purse strings pulled too tight, he was going to be accused of missing his opportunity to reinvigorate the economy and the country. Descriptions would abound of a boring, predictable, anti-Brexit Chancellor, talking the UK economy down.
But do anything too bold and the Chancellor not only risked angry backbenchers, but the chances of an undignified policy ‘unravelling’ would rocket.
Philip Hammond was walking both a political and economic tightrope today. The party had decided, in an unappetising yet typically Tory way, that come what may, the Chancellor would get this wrong. Perhaps that’s all that can be expected from a party inherently divided, with no cohesive vision of where it’s going.
In the Commons it is fair to say that, after an hour on his feet and a solid performance, Philip Hammond exceeded expectations. There was bad news on growth. Very bad news in fact. But the Chancellor walked his personal tightrope with skill – and delivered a decent smattering of jokes.
He addressed Brexit immediately, quickly announcing an extra £3billion set aside to prepare the country for leaving the EU.
There was more money for the NHS – interestingly, less than the amount set aside for Brexit preparations over the next two years, make of that what you will. There was (finally) much needed investment in Universal Credit and investment to try and ensure Britain is front and centre of a tech revolution – with money for 5G, fibre broadband, AI, electric and driverless cars. The Chancellor seemingly managed to tread that finest of lines between maintaining a fiscal approach versus investment and spending.
And then came his, widely unexpected, rabbit – no stamp duty for first time buyers purchasing up to £300,000 and available on the first £300,000 of properties costing up to £500,000 in more expensive areas. An idea that was reportedly floated by No10 aides during the election campaign but was ditched for being unaffordable at the time.
Philip Hammond took to the dispatch box today knowing his party were sharpening their knives. But with relative positivity, set against the backdrop of some stark growth figures, he appeared to calm the audience behind him, rather than anger them. It has been a while since the party has had any vaguely positive headlines. If this Budget lands well, MPs will be relieved to have some respite from bad news. But overall, this Budget was not your typical ‘post-election’ outing for a Chancellor. It fell well short of providing that inspiring vision for the future which is needed to unite such a divided party.
The next 48 hours will be critical now, as we wait to see if cracks start appearing. But Hammond may well have done enough to silence his critics today and keep himself in No11 a little longer.
Lisa Hunter is an Associate Director at MHP and a former Special Adviser to Iain Duncan Smith and Jeremy Hunt.