Pre-Budget 2017: No Direction Home

Another Budget: another opportunity to criticise government. Inevitably some will pay more to, or get less from, government. The Press have predetermined that this is a “make or break” Budget for Mr Hammond who must try to fit a large square peg into an impossibly small, round hole. 

He has to meet the popular expectation of entitlement and an even stronger belief that someone else should pick up the tab. Yet, this same population has also set a course into unchartered waters known as Brexit.

Last year HMRC included spending statistics for 2015-16 with the annual tax statements which was broadly:

Public Spending Pie CHart
Public Spending 2015-16

Adding up the big slices, 70% of government expenditure (approximately) is on some form of benefits; let’s not pretend we don’t have redistribution of wealth. Apart from interest on borrowing, 25% pays for “running the country”.

Chancellors are tasked with demands from all quarters to increase spending on each of these areas, and are criticised for cutting expenditure on any of them. Usually they have some sort of policy framework within which to work. This government’s strategy seems to be to minimise public dissent, without any purpose. It’s going to be tough to find a path through the oxymoron that is balancing a budget.

Increasing public spending will inevitably mean more borrowing or more tax, or cuts elsewhere. Someone will be unhappy. If the policy is to reduce dissent, we are likely to see something designed to attract younger voters – I wonder if extending the young person’s rail card to 30 year-olds is such a policy. There may be more nibbles to come.

The Chancellor needs to boost the economy, but every business person knows that takes three ingredients: vision, investment and time. He seems to have none of these. Instead, he has a currency that has reduced in value hugely, and an ocean of uncertainty in Brexit. At the helm, we have a government engaged in constant in-fighting, with no parliamentary majority.

This minority government started with few plans of its own, and its policies are set by whatever events befall the world. “Like a rolling stone, with no direction home,” said Bob Dylan. Columbus had a better idea of where he was going, and he wasn’t on board the Titanic heading towards an iceberg, in the middle of mutiny, with no compass or stars to guide him.

So on this rare occasion, I do feel for the Chancellor. The ability for every lobbyist to amplify their voice and complaints in the media (both traditional and social), an Opposition which can smell blood and could not care less what it promises to get into power, negotiating with the EU for a Brexit he does not believe in, and a Press which seems solely interested in the humiliation of everyone in power.

I recall an old story about a driver who stopped to ask directions from a local pedestrian. “Can you tell me how to get to Dublin?” he asked. The kindly pedestrian replied, “well, I would not start from here.”

Turning back to our little pie chart, we do have a significant housing problem, a massive education funding problem, a creaking monolithic NHS, increasing reliance on welfare and a massive hole in our ability to pay even basic pensions. These cannot be fixed by tinkering around the edges, but they need a dramatic re-think. Housing needs money, but it also needs us to adjust our expectation that we should all own our own house – an unrealistic Thatcherite objective. Education issues might be helped not by lowering the bar for university entry and charging more, but by raising the bar but not charging. Perhaps the problem with the NHS is that it tries to do too much and should be more limited in the services it provides, so it can help those who really need help better and quicker. Just a few radical thoughts to invite argument!

Our GDP, which pays for spending, might be increased by going against the current tide, and by making it easier for people to be in business. How about reducing the tax reporting, and not increasing it as is currently planned; simplify the tax system; reduce the number of rules, but increase the penalties for the important ones; reform inheritance tax to provide for the elderly to have long term care; open the doors to investment in business by making anti-money laundering rules relevant rather than making impossible to move honest money around; and yes, maybe also restore higher education to a meritocracy which is free at the point of delivery. These are all long term strategies.

But he would need a strong and stable parliamentary majority behind him, and that, Mr Hammond is lacking.

So I am guessing we will not see much that is constructive, there will be a whole load of criticism, and I fear that this in turn could lead to an even more fearsome prospect. We need to stop baying for blood, despite the idiocratic government we have, because the alternative could get so much worse.

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Jonathan Franks

A man of limited intellect spurred on by a belief that if you say enough, some of it might be right. Also a specialist in self-deprecation.

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