Budget 2017 liveblog: Responses to Philip Hammond’s statement

Green Politics

The Chancellor is delivering his first Spring Budget

 

Welcome to our liveblog. At 12.30 today, Chancellor of the Exchequer Philip Hammond delivered his first (and apparently last) spring budget. We’ll be updating this page with rapid responses from politicians, NGOs, think tanks and others.

Any tips or contributions? Feel free to email editor@leftfootforward.org, or you get in touch @niamhsquared.

17.00: And that’s it from our Budget liveblog. We’ll have plenty more analysis on Left Foot Forward over the next few days, so do check in. Thanks for reading.

16.50: Although I don’t think accusations of a broken manifesto promise will hurt the Tories all that much, for now we can enjoy their sensationalist tweets from 2015, attacking ‘red Ed’ and his national insurance-raising plans.

16.20: David Hillman, spokesperson for the Robin Hood Tax Campaign, told Left Foot Forward:

“Nearly a decade on from the financial crisis caused by the banks, millions of people are still struggling to make ends meet and this budget does precious little to ease the pain. The increase to the social care budget over the next three years will barely touch the sides of the vast funding gap or the immediate crisis felt by families every day. Real term cuts continue to hit public services and leave the NHS on its knees.

But the Chancellor has solutions at his disposal to create a much needed, fairer post Brexit economy. Taxing the banks more would help ensure we do not leave the poorest and most vulnerable communities behind. A report launched last month by City think tank, Intelligence Capital, shows that by modernising the UK’s existing Financial Transactions Tax (FTT) – the stamp duty on shares – the Exchequer would bring in £8bn each year.

This much needed revenue could go a long way – just two months of an FTT could train enough nurses to fill every vacancy in NHS England, three months could pay for home care for the almost half a million older people denied vital support by the cuts and just one week could build 5,000 affordable houses.

It is only fair that a sector that continues to richly rewards its bosses with vast pay packets is made to give back to those cast aside by this budget.”

16.10: Andrew Harrop, Fabian Society general secretary has an interesting take on the idea of a ‘do nothing budget’. 

“This was a ‘do nothing’ budget which means it was a budget that locked in the regressive policy choices this government has already made. Taxes will still be cut for higher earners and social security will fall sharply for low and middle income households.

Indeed with higher inflation forecast and most benefits frozen, the OBR now says that real spending on non-pension social security will fall 6 per cent by 2021, which will translate into lower living standards and less spending power for families. As a share of GDP welfare spending will fall to the lowest level since 1991, excluding the state pension and support for the unemployed, undoing all the good work new Labour did to tackle child poverty.

Of the policy announcements the chancellor did make, his move to equalise National Insurance Contributions for employed and self-employed workers was sensible and progressive. Labour and the Liberal Democrats should have thought harder before opposing it.

But the social care announcement was a pitiful sticking-plaster. The chancellor promised the princely sum of £400 million extra for care services in 2019, when costs in the sector and demand are rising far faster. Once again on social care, a government said nice things but kicked the can down the road.”

15.55: Before we wrap up, let’s take a look at a major newsline many outlets have taken from the budget: that the decision to increase the National Insurance Contribution of self-employed workers breaks a Conservative manifesto promise from 2015.

This is becoming a major attack line for opposition members, but I’m not convinced it’s going anywhere. The Tory economic team had obviously predicted this avenue of attack and have come up with a perfectly solid response — presenting the increase not as an increase but as an equalisation, intended to create a fairer, more progressive tax system.

 

Ultimately, today’s budget was dull and contained very little either good or bad. Attacking the ‘broken manifesto promise’ is attractive in that context, but the Tories will neatly sidestep the charge.

 

15.50: On social care, any additional funding from government is obviously welcome, but voices from the sector have made clear that the investment is nowhere close to enough.

UNISON general secretary Dave Prentis commented:

“The government is finally waking up to the social care crisis. Extra money is welcome, but it doesn’t even come close to making up the funding cut since 2010 and won’t stop extreme rationing of care.

“The government is treading water while it waits for a plan to emerge. Ministers are sidestepping the shameful crisis in social care. A crisis robbing the most vulnerable of their dignity, and keeping care workers in poverty.”

15.40: Prem Sikka has written for Left Foot Forward, arguing that ‘the most glaring omissions from the Chancellor was his lack of any economic policies to address issues arising from Brexit or investment in social infrastructure.’

15.35: A mere two hours after Philip Hammond concluded his statement, the shadow chancellor John McDonnell has issued a response.

He commented:

“Philip Hammond has used his first Budget to claw £2 billion in tax on those self-employed who are on low and middle incomes. But he continued to boast about the £70 billion worth of tax giveaways at the top announced by his predecessor.

“Labour will oppose this unfair £2 billion sole traders tax on the self-employed low and middle earners.

“Rather than provide the funding that would end a social care crisis in which 1 million vulnerable people go without adequate care, or calling an end to the state of emergency in our NHS, the Tories are doing next to nothing and don’t seem to recognise the scale of the crisis they have created.

“The Tory rigged economy continues for households in our country, who face being £1,800 worse off by the end of the forecast period, and if you are on the National Living Wage by the end of this parliament you face a 25p per hour cut.

“This Budget does not address the problems created by seven years of Tory failure, and it has failed the fairness test for women who will be hit by a cuts in public services, and the national living wage.

“Instead of equipping our country for Brexit, he is building our economy on sand, and the little he has announced today will mean we are less prepared for the challenges we face outside of the EU.”

15.30: For all the government’s talk about the improvement growth forecast has improved somewhat since November, the wages forecast has been revised down.

This is terrible news for working people, but it’s also a ticking economic time bomb.

The reason for better-than-expected economic performance since the Brexit vote is that consumer spending has remained unexpectedly strong. But as prices rising and wages stagnate, spending must eventually stall.

15.05: There was a strange, Brexit-shaped hold in today’s budget. Former shadow chancellor Chris Leslie thinks there’s a reason for that — the government is failing to meet its own targets on trade and immigration.

On behalf of Open Europe, he commented:

 “The Government’s own forecasters predict they will miss their own targets on trade and immigration, and confirm trade will be lower, which would make us poorer. It’s not surprising that the Chancellor sought to airbrush Brexit out of his Budget.

“The Office for Budget Responsibility have poured cold water on the Government’s claim that they will strike a deal with the EU that delivers the exact same benefits as we enjoy now, by categorically stating that the trading regime will be less open than before.

“It also showed that the Government’s controversial migration target will be missed. The Government must now explain the rationale for keeping such an unrealistic target.

“It is not too late for the Government to change from its hard Brexit course and put the economy, trade and jobs at the heart of their negotiating strategy.”

14.55: The Guardian has unearthed an interesting bit of small print in the red book. It seems the National Living Wage forecast has been downgraded again. When Osborne introduced the NLW, he predicted that it would rise above £9/hr by 2020. In the Autumn Statement that was revised down to £8.80/hr. And now it’s fallen again to £8.75/hr.

14.45: Happy International Women’s Day!

14.40: Dr Faiza Shaheen, Director of CLASS, comments:

“The Conservatives may be bragging about balancing the books, but they are doing so on the backs of struggling families across the country. In effect, pennies have been thrown at a chronically underfunded social care system and at NHS hospitals on black alert, while educational policy is being driven by ideology rather than need.

“With the unprecedented challenges of Brexit, this budget should have made bold investments in our social and physical infrastructure to ensure we emerge a stronger and fairer Britain. Instead we got a budget set on misguided policies, utterly blind to reality.”

14:30: TUC chief Frances O’Grady says the budget fails low-income workers.

“Today the Chancellor missed the opportunity to get Britain match-fit for Brexit by investing in jobs and infrastructure.

“The government promised an economy that works for everyone. But millions of low-income workers face cuts to in-work support, while big business is handed a huge tax cut.

“Workers will be no better off at the end of the Parliament than they were set to be at the time of the last Autumn Statement.

“The acid test for the Chancellor’s self-employment tax changes is whether they crack down on employers who force low-paid workers into bogus self-employment.

“Today’s extra funding for social care is desperately needed. But at a time when waiting times are soaring, it’s astonishing that the government has left a huge hole in NHS funding.

“And there’s still no real pay rise for Britain’s dedicated nurses, teachers and public service workers.”

14.13: The NUJ makes a reasonable point. While the government boasts of increasing investment in free schools, per-pupil spending across the education system will fall significantly over the next three years. (You can read full IFS analysis on that here).

14.10: The National Union of Teachers has issued a fiery response to the budget, slamming its education provisions.

“This budget is a complete dereliction of duty to our children and young people. The Chancellor knows full well that schools and sixth form colleges up and down the country are on their knees struggling to make ends meet. School budgets have been cut to the bone, class sizes have increased, subjects have been dropped from the curriculum, materials and resources are scarce yet nothing has been done to address this very serious problem. All this comes at a time of soaring pupil numbers and a developing crisis in teacher recruitment and retention.

“Instead of tackling this crisis of their own making, we now learn that extra funding will pour into the opening of new free schools and grammar schools for which there is absolutely no need. Parents and teachers will be deeply dismayed at this flagrant and irresponsible waste of money. These are simply the wrong priorities.”

14.05: Labour MPs are highlighting the disproportionate effect of Tory policies on the lowest-income households.

14:00: Caroline Lucas has issued an official response to the budget.

“This budget should have been an emergency intervention to end the chaos in health and social care and address the air pollution emergency, but instead it’s another resounding failure from a Government that’s got no ideas beyond an obsession with scaling back the state.

“With our NHS in peril and social care in the midst of a crisis this Budget was a chance for the Government to take a stand for the public services upon which we all rely. Instead they continue to push ahead with planned Corporation tax cuts, and their handout to high earners, while unveiling woefully inadequate funding changes for the NHS and social care. . The Government’s obsessions with slimming down the state is causing misery – and their refusal to think again on this issue is inexcusable.”

Lucas also highlights that the budget statement was ‘another climate failure’, pointing out that ‘the chancellor failed to mention climate change even once in his speech.’ People will treat that as a Green box-ticking exercise, but the absence of climate change from mainstream political discourse is a serious issue.

13.50: Both Lib Dems and Greens have criticised the NICs announcement, claiming it targets vulnerable workers on zero-hours contracts.

Liberal Democrat Susan Kramer commented:

“This is a tax on builders, taxi drivers and window cleaners, some of Britain’s hardest working people. This hits the gig economy where people are already insecure and facing rising prices and job uncertainty. And on International Women’s Day it will hit over one and a half million women.

“Companies will continue to save money by using workers without giving them the security and benefits of staff jobs. Meanwhile, these workers will have to pay more. This is patently as unfair as it is a tax on entrepreneurship and hard work.”

Green leader Caroline Lucas said it was another tax aimed away from the rich.

13.40: Left Foot Forward contributor and London Assembly Member Dr Onkar Sahota says Hammond’s NHS and health investments are ‘a drop in the ocean’. He said in a statement:

“The government either has absolutely no understanding for the crisis we face in social care, or it just isn’t bothered.

“After NHS medical professionals, local authorities, and individuals up and down the country have cried out for more support, this announcement will feel almost farcical. It is a drop in the ocean in terms of the increasing need and pressure that councils are under. As for the Chancellor’s commitment to put more GPs into A&Es, he seems to be oblivious that we are already facing a severe shortage of qualified GPs, particularly in London.

“Ministers have taken money away from local authorities on an unprecedented scale, and the pressure this places on the health services is simply too much to bear. The government needs to take decisive action which will make a real impact before it’s too late.”

13.37: Hammond has now concluded his statement, and Jeremy Corbyn is delivering his response.

We’ll have responses and analysis throughout the afternoon.

13.27: Hammond has announced an additional £2bn investment in social care over three years, with one billion available in 2017-18.

He also announced a £100m investment in new A&E triage units.

13:25: In this lengthy section on education, Hammond has tried to claim that his government is increasing investment in education. But over the next three years, schools will face their biggest cuts in three decades.

13:00: As expected, Hammond has announced that an increase to the National Insurance Contributions (NICs) of self-employed people. There will be an immediate increase of one per cent (to ten per cent), with a further one per cent increase in April 2019.

Interestingly, this measure will only raise £145m. Even if you accept his argument that this is a fairness issue, he hasn’t taken a particularly bold step to address the inequality.

All the same, the Resolution Foundation points out that this is a fairly progressive tax.

12:48: Important perspective here from Resolution Foundation chief Torsten Bell.

12.42: a decade of stagnant wagesIn his report on the health of the economy, Hammond has focused heavily on jobs. While employment is high, that’s only worth so much in .

12.37: Hammond is on his feet. As ever, the statement begins with a claim that the economy is in robust good health, irrespective of the actual state of the economy.

12.20: PMQs must always play second fiddle on budget day. The biggest news from today’s session is that a meme has been born.

12.00: Today is also an important day for Shadow Chancellor John McDonnell. In an article for LabourList today, he gives an idea of how he will respond to the budget, attacking both the cuts agenda and the functioning of the economy overall.

“There is no excuse for inflicting further cuts on services that cannot bear them. Social care has been cut by £4.6bn since 2010. Today, more than one million vulnerable elderly people lack access to the care they need. The Kings Fund estimates that the deficit for social care funding comes to £1.9bn. The measures the government has so far proposed (including those seemingly leaked this weekend) do not come close to addressing the immediate crisis. The British Medical Association said the NHS needs £10bn to get it up to Western European standards. Whatever Philip Hammond offers will fall far short of this.

The truth is that whilst the chancellor is likely to point to some better-than-expected headline figures later today, the economy is not working for most people. Millions are being held back not only by the crises in our public services, but by an economy that means most people’s quality of life will experience an unprecedented decline. Britain is the only large, developed economy where a return to economic growth has been accompanied by falling real earnings. There can be no more damning indictment of the Tories’ rigged economy, in which those at the top do increasingly well – but the rest of us miss out.”

11.55: The BBC has tweeted its footage of Hammond and his treasury team leaving Number 11. George Osborne used to milk this moment for all it was worth, but Hammond seemed keen to get it over with.

In the next few minutes, Hammond will join Theresa May in the Commons for PMQs. As soon as that session concludes he’ll be on his feet to deliver the statement.

11.20: Hammond has left 11 Downing Street and is on his way to parliament.

Although he has served in the cabinet since 2010, relatively little is known about the chancellor (certainly relative to his media-loving predecessor George Osborne, who has been slightly tragically attempting to push his way the spotlight today).

Last year, the FT published an interesting profile of Hammond. As a politician, his reputation is for caution, but in his business career the opposite was true.

“Far from the phlegmatic safe pair of hands for which he has become known in government, an extensive review of Mr Hammond’s record as a businessman shows an eclectic — sometimes even seemingly indiscriminate — career that veered across wildly different industries. Those who worked with him in business describe a very different man from the understated minister brought in by Theresa May because of his reputation for stolid competence.”

My favourite insight is that, in his 1994 parliamentary campaign, Hammond campaigned on a ‘bring back hanging‘ platform.

So don’t believe the genial data analyst spin, Hammond has historically embraced the nastiest elements of the nasty party. Just last week in parliament, he warned Mary Creagh ‘not to be hysterical’.

 

11.00: As we flagged on Sunday, one of Philip Hammond’s key claims over the last few days has been that he’s ‘putting aside’ £60bn as a sort of safety net for the uncertain period ahead.

But, as Paul Johnson of the IFS flagged yesterday, this is little more than a Chancellor’s trick.

Since the government has neither a surplus nor reserves — and is in fact indebted to the tune of £1.7 trillion — it cannot set money aside, at least not in any commonly-accepted sense. Rather, Hammond is continuing to increase government borrowing, but at a marginally slower rate than before.

Johnson also highlights another set of ‘slippery numbers’, suggesting we take the government (and the Brexiteer’s) claims about economic performance with a pinch of salt:

“Improvements in forecasts for the economy and public finances since November will be dwelt upon at length. The fact that they remain worse than they were a year ago will be studiously ignored. That we are living through the worst decade of growth in household incomes in living memory will get nary a mention. And the demographic challenges, which will require hard choices after 2020, will be considered much too distant to contemplate just yet.”

 

10.40: Philip Hammond has tweeted a picture of his completed Budget report.

In case you missed it, Hammond announced in the autumn statement that the main Budget statement would no longer take place in the spring, but in the autumn. The autumn statement will then be transferred to the spring, and will be pared back so that it no longer counts as a ‘major fiscal event’.

The idea is that Britain’s fiscal process has become to convoluted and needs simplifying. Whether Hammond has actually achieved that is uncertain.

 

10.00: Since budget day overlaps with International Women’s Day, Labour has called on Philip Hammond to deliver a budget that seriously tackles inequality for women.

Shadow secretary for women and equalities, Sarah Champion, has released the following video.

In a nod to the day, Philip Hammond is expected to announce funding for a commemoration of the 1918 ‘Representation of the People Act’, which first extended the vote to (some) women.

Champion welcomed that announcement, but warned that:

“99 years later, women are still having to fight for economic equality under this Tory government. From cuts to universal credit and 54,000 women losing their jobs through maternity discrimination, to the treatment of thousands of women born in the 1950s who have been left with a crisis in their retirement planning, this government is systematically turning back the clock on gender economic equality.”

Tuesday

 

09.00: £320m for new free schools

The government has gone rather quiet on grammar schools, but the issue is so close to Theresa May’s heart (and the hearts of her key advisers) that there was no chance it was going away.

Today, it’s revealed that the chancellor will announce a one-off £320m payment for 140 new free schools, on top of the 500 promised by previous Conservative governments.

The PM unveiled the plan in a Telegraph op-ed. She writes:

“Wednesday’s Spring Budget will provide hundreds of millions of pounds so that free schools will continue to open well into the next Parliament. It will confirm funding for up to 140 new schools creating well over 70,000 new places.”

While this funding isn’t reserved specifically for grammars, in the op-ed May references her plans to make Britain ‘the world’s greatest meritocracy’ — a clear signal she wants much of this funding to be directed towards selective schools.

Attempting as usual to present this skewed policy as egalitarian, May concludes:

“If we are to give our children and grandchildren a fair chance to succeed in an ever more competitive world, we have to build a future where every child can access a good school place. That means decisively shifting Britain’s education system and building a Great Meritocracy so that children from ordinary working families are given the chances their richer contemporaries take for granted. Wednesday’s Spring Budget takes the next steps in making this a reality and building a country that truly does work for everyone.”

Speaking to the BBC this morning, shadow education secretary Angela Rayner described grammar schools as a ‘vanity project’. She said the plan was going to suck money out of the state schools sector, and pouring it into a system whose supposed benefits are unsupported by the evidence.

Monday

16:00: New polling from Survation shows that 90 per cent of people believe it’s ‘very important’ or ‘somewhat important’ for Philip Hammond to plug the gap in social care funding in this week’s budget.

That would require investment of £2.6bn. Unfortunately, the chancellor is believed to be planning a bump of less than half that amount.

11.30: Both Labour and the Lib Dems have called for billions of extra funding for the NHS.

Liberal Democrat Shadow Health Secretary Norman Lamb is calling for an extra £4 billion for the NHS to be partly funded by tax rises.

This includes £2 billion for social care, £500 million for mental health, and £1.5 billion for modernisation and efficiency.

It comes after Labour’s Shadow Health Secretary Jonathan Ashworth on Friday called for an emergency £2 billion for social care to stem the current crisis.

09.00:Today’s talk is all about tax. Both Hammond and Theresa May are fiscal conservatives who will not fund any planned giveaways through increased borrowing.

Rather, the treasury has trailed a number of targeted tax increases, which will fund a social care injection of about one billion, as well as short-term relief on business rates and a likely continued fuel duty freeze.

As one would expect from the self-proclaimed party of low taxes — in 2015 the Tories promised not to increase VAT, income tax or national insurance — these increases will be fairly stealthy.

The self-employed will face increased national insurance contributions, equivalent to about three pence in the pound, bringing their contributions into line with those of employees. Alcohol duty is also set to increase.

However, if reports on social care and business rates investment are accurate, the government will need to find at least £3bn to balance out its additional spending. So we’ll be on the look out for other tax increases.

Sunday

As usual, the chancellor appeared on the Andrew Marr Show early on Sunday morning, to give his first in-person hints as to the contents of his budget, followed by an appearance on Peston.

Hammond’s key message on Sunday was one of thrift. Although economic forecasts have been more positive than expected, the chancellor is not planning a spending spree. Displaying his party’s usual fondness for household analogies, Hammond says that ‘if the bank increases your credit card limit, I don’t think you feel obliged to go out and spend every last penny of it immediately.’

He continued:

“I regard my job as Chancellor as making sure that our economy is resilient, that we’ve got reserves in the tank, so as we embark on the journey that we’ll be taking over the next couple of years we are confident that we’ve got enough gas in the tank to see us through that journey, and that seems the sensible way to approach things.”

While the government wishes to maintain that the British economy is resilient post-Brexit, Hammond is hinting that there are stormier waters ahead.

It’s also significant that the additional revenue generated from tax receipts is being used as a sort of ‘Brexit reserve’ and not for significant spending increases on buckling public services. While there may be a minor bump for social care (though not for the NHS), the chancellor is falling back on the tired Tory claim that ‘this isn’t just about money’.

In other words, the government will continue to demand ‘efficiency savings’ from health and social care services already stretched beyond their limits.

Other hints delivered on Sunday suggest that the government will invest approximately £500m in skills-based training for school-leavers, as well as £500m on the development of electric vehicles, robots and artificial intelligence.

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5 Responses to “Budget 2017 liveblog: Responses to Philip Hammond’s statement”

  1. david tandey

    The Tories despise the NHS because it is a great model of Socialism in action, that is why they have set it on a path toward destruction. In thirty years time most jobs will be done by Robots and computers. What will happen to the billions of obsolete people and where will they get their incomes from?

  2. PMQs: Corbyn quizzes May about Surrey 'sweetheart deal' on social care | Left Foot Forward

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  4. Jimmy Glesga

    The NHS is not socialist just humane and progressive. A socialist health service would be just for the Comrades.

  5. ted francis

    Oh, Jamie-laddie, you’re at it again, taking facts and puttin’ ’em through your wee wringer. The NHS was conceived and then made a reality by Socialists (like your own Keir Hardie) as a universal (that means everyone) health system free at the point of delivery. So dinna go forgettin’ yer history laddie.

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