What did we learn from this Budget? Little that Steven Swinford hadn’t already told us. Long ago are the days when Hugh Dalton resigned merely for leaking a single line. Future Chancellors would be wise to do away with the whole shebang. Simply leak your announcements to a chosen hack beforehand. Spare us all an hour of cheap gags, empty stats, and the liberal allocation of pork.
Until that glorious day, one must take our fiscal events as they are. What to make of Hunt’s second Budget? On a performative level, he was born to be Chancellor. He capably fulfills the role’s two basic requirements of being reassuringly flavourless and having a penchant for Dad jokes. His jibe at Angela Rayner about the taxman’s interest in her housing arrangements was a classic.
Even so, Hunt struggled to get his speech heard over the braying of the Opposition benches, despite Eleanor Laing’s best efforts. One always deplores an absence of decorum in public life, even if parliamentary barracking is one of the few areas Britain still excels. Having already read most of it on their Twitter feed, perhaps MPs thought they needn’t bother hearing the audiobook version.
For those who did, Hunt’s Budget was a manful attempt to stick lipstick on a pig. Absent were the income tax cuts he was hinting at in January. Instead, we had a series of hikes and cuts, a smorgasbord of tinkering. The Titanic’s deckchairs have been thoroughly rearranged. When it came, the trailed announcement of another 2p cut to national insurance arrived with a total absence of fanfare.
Nonetheless, we should give the Chancellor some credit. It is always nice to keep some more of one’s own money. Hunt suggests the reduction will benefit 27 million workers from April. When combined with the previous cut in November, he estimates that it would be worth £900 to the average earner. For the self-employed will fall from 8 per cent to 2 per cent. Every little helps.
38,000 landlords can raise a toast to the alcohol duty extension. Motorists can enjoy a fourteenth consecutive fuel duty freeze, to the Office for Budget Responsibility’s continuing chagrin. In what Hunt also flagged as the discovery by the Treasury and OBR of Arthur Laffer’s doodlings, higher rate of capital gains tax was cut by 4 per cent. Modelling suggests it will bring higher revenue.
The Budget’s most unexpected measure was also its most welcome: the rise in the cut-off rate for child benefit from £50,000 to £80,000, with a move towards a household-based system. Since it was introduced in 2013, the High Income Child Benefit Charge has helped drive 620,000 families away from claiming child benefit altogether. Targeting this headache for families is long overdue.
Collectively, these measures will have been enough to ensure Tory MPs didn’t leave the Commons chamber feeling empty-handed. But none will have been fooled into thinking this is a transformative Budget. Long-heralded as the Government’s latest opportunity to shift the electoral dial, one would be surprised if this package shifted a single vote. It was an hour of tinkering at the margins.
He giveth, he taketh away. Deprived of the fiscal headroom he had dreamed of, the Chancellor matched his flurry of tax changes with similar hikes. New taxes on vapes and a hike of tobacco duty. An end to stamp duty relief on purchasing more than one property and tax breaks for second homeowners. An extension of the North Sea oil and gas windfall levy for poor Douglas Ross.
Rather than cut planned public spending increases from 1 per cent to 0.75 per cent, Hunt changed nothing. He placed him between ardent tax-cutters on one hand, and starry-eyed spenders on the other. He did announce the expected end to the non-dom status, robbing Labour of one of their few revenue-raising measures and obvious personal attacks on the Prime Minister.
Not that Keir Starmer much minded. That Hunt has descended to stealing Labour’s policies is a sign of how exhausted this government is. With the Budget doing so little, his could repeat the critique from his usual stump speech unchanged. Nothing Hunt did today has made it easier for the Tories to refute the Reagan question. Voters do not feel better off than they did five years ago.
The Chancellor will point towards OBR forecasts suggesting the economy will grow 0.8 per cent this year, 1.9 per cent next year, and 2 per cent in 2026 – a little higher than November’s forecasts – and that inflation will fall below the 2 per cent earlier than expected. He can also point to the long shadows cast by Covid and the war in Ukraine. But he can’t ignore the general trend.
Hunt tried to defend the Conservatives’ economic record since 2010. Yet for all our efforts to stay slightly ahead of our old chums in Europe, the picture is still depressing. Growth has been anaemic and GDP per capita has fallen due to our prolonged addiction to mass migration. Real wages have shrunk. Despite Hunt’s announcement today, the tax burden is still at its highest since the 1940s.
Starmer rightly pointed towards frozen tax thresholds. Leaving them as they are means that the remorseless work of fiscal drag will have wiped out the Chancellor’s cuts by 2028/2029. The experience of the last half-decade also makes one wary of the accuracy of the OBR’s forecasts. Wars, recessions, energy crises: the geopolitical outlook remains bleak. Things can only get worse.
Neither has much interest in pointing out that in the absence of a revolution in growth rates or a fundamental reckoning with the welfare state, our high-tax, high-borrowing model of government is here to stay. Labour would have to be honest about the tax hikes they need to increase spending. Hunt would have to be honest that his tax-cutting rhetoric is a sham.
Both parties also have something else they can agree on. This was not a pre-election Budget. If Rishi Sunak has given up on re-election, then the contents of today’s package didn’t matter to him. If not, he will watch as another opportunity to shift the narrative comes and goes with Tory poll ratings only going in one direction. Going in May or November won’t change the result.
Still. Good news about the 2p!