The highlights of today’s budget were neither high nor light, but the budget did effectively do what, politically, it should have done: as little as possible. It was merely sensible. The objectives: attract the youth, make a noise about housing, give money to the NHS. For an embattled government, Mr Hammond’s speech will be generally welcomed.
The Big Issue was in relation to housing and his amendments to Stamp Duty Land Tax (first-time buyer exemption for properties below £300,000 and the first £300,000 on properties priced up to £500,000) will attract younger voters, as will the extension of railcards up to the age of 30. Of course the fiscal impact is to focus ever more burden on those in their mid-years (31 to 65) who are expected to carry the entire weight of the economy on their shoulders. But this mid-range is not what the Chancellor sees as his target for favours.
The SDLT plan is very welcome, of course. But demonstrates the problem when governments attempt to influence markets and behaviour using tax. I have already had several calls wondering if a teenage child might buy that second property in the countryside.
Most of the announcements for business were about what won’t change rather than what will. Stability for business is more important than almost anything else, so that cannot be a bad thing. The Business Rates inflation measure change will be welcomed by most, and the R&D investment fund allocation is truly sensible. The extension of EIS is a double-edged sword as the qualifying trades may get narrowed. Hidden away in the not very long grass is a review of the taxation and status of the self-employed. We can expect problems to come with that one.
In the background is the intention to raise £4.4bn from unidentified tax avoidance. Being unidentified, it is hard to identify what this means, but it may relate to changes in the powers of HMRC to investigate offshore tax avoidance back to 12 years even where there is no evidence of intent or fraud (currently it is four years). How this will actually work, and whether the 12 years goes back to 2006 or starts on 6 April 2018 is not yet clear, but it is more than likely that HMRC have identified some juicy possibilities from the various leaked papers we have read about in the Press.
Prior to the Budget many hoped to see investment in the future. There does seem to be quite a lot of good intentions in this Budget, including the research and development fund, education and infrastructure. However, the allocations are fairly modest because the Chancellor had little to work with.
If, as I suggested yesterday, the objective was to create what American academics might call a “Budget to saticifice*”, the Chancellor probably did a rather good job. With nothing too contentious (or as might be said in Yes Minister, “nothing too precipitous, Minister”), it is likely to find its way through the Commons without too many problems, it gives out a bit here and there, and tries to get younger voters on-side, addressing modestly, many of the issues currently in the public eye.
Will it prove to be clever enough to see the Government through Brexit? Time will tell, but it does seem to be stable, if not very strong.
* a charming American term referring to something that just suffices enough to satisfy. A cynic might say it is mediocrity.