Budget 2018: how does this one compare to the Chancellor's previous two?

30 Oct 2018

 

This year’s budget was of great significance. With it being the last budget before Brexit and the first budget since Theresa May announced the end of austerity, the pressure was on for the Chancellor.

 

Austerity marked a significant shift in British fiscal policy ending a decade of social spending and introducing cuts to welfare and public services such as the NHS. Has this budget then brought us back to the good old days of public spending?

 

The short answer is no. The Conservative Government has introduced additional funding for schools, housing, social, and a higher rate of personal income tax allowance. But is this enough? For critics comparing this budget to Philip Hammond’s previous two, the jury is still out.

 

For my MA Dissertation I analysed the way in which the Daily Mail, the Times, the Mirror, and the Guardian portrayed the Conservative Government’s fiscal policies. Using this data-set, this article will compare the policies introduced in previous budgets to the policies introduced in this one.

 

2017 was undoubtedly a strange year in politics, with Hammond tested with two budgets in March and November respectively. This makes this his third budget since becoming Chancellor. In previous budgets he has been accused of neglecting Brexit, the self-employed, and the NHS. It’s difficult to see whether much has changed.

 

Last March’s budget was a difficult time for Mr Hammond. The Chancellor was berated by both the left-wing and right-wing press, lambasted as betraying of the strivers and the entrepreneurial class with an increase in national insurance contributions on the self-employed and a rise in business rates.

 

This posited the Conservative Party against, what may be seen as, its core support with Lady Thatcher herself coming from a small business background. The Guardian summarised the budget as a “repudiation of a Thatcherite myth that the self-employed were all entrepreneurs whose virtuous animal instincts should be rewarded by being taxed at a lower rate than traditional employment".

 

Furthermore, the March budget marked a continuation of Osbournomics from his predecessor. Although Theresa May has only recently announced the end of Austerity, if there was a turning point for the Conservative Government it was the last March. The policies introduced were unpopular and public opinion and press coverage on cuts to public spending were beginning to turn against the Conservative Party.

 

Despite this, the Conservative Government also introduced greater spending for social care with £2bn earmarked for the next two years, funding for free schools and grammar, and transport spending for the north of England and the Midlands.

 

Here, so-called ‘Spreadsheet Phil’ gained his reputation and nickname by introducing disjointed spending.

The November budget was much the same. However, Mr Hammond failed to disappoint the right-wing press and Tory backbenchers this time by earmarking £3 Billion to explore opportunities outside of the EU. The budget was seen as Mr Hammond’s saving grace following the rise in national insurance contributions and business rates.

 

The Conservative Government also began cracking down on multinational firms offshoring profits in tax-havens. The budget was received by the right-wing press as ‘loosening the purse strings’ and a easing off of the Austerity policy.

 

Popular policies from this budget included:

  • £2.8bn extra for the NHS

  • £1.5Bn in Welfare Packages

  • A rise in the income tax personal allowance to £11,850

  • A rise in the National Living Wage

  • Abolition of Stamp Duty

The left-wing and centrist press however portrayed this package of spending and taxation reforms as an admission of failure of the policy of Austerity. Moreover, the package for the NHS was panned as not enough and half of what experts had argued for.

 

When comparing the last two budgets with the current, there are notable trends to pinpoint.

 

The Conservatives have continued to raise the personal income tax allowance. Since the infamous budget of March 2017 the Conservatives have played to their base support by offering relief on business rates. They have also ended, for the time being, their obsession with free schools and grammar schools by announcing £400m for school equipment.

 

Notably, the Government has continued to spend on health by introducing an increase on mental health spending and additional social care. Nevertheless, this won’t heal our NHS permanently.

 

How then do we summarise this budget in the context of the last two?

 

It is evident that this isn’t quite the end to Austerity we imagined. Spreadsheet Phil has continued to spend in his piece-meal style and whilst more cash has been given away it isn’t the public spending splurge needed to heal the economy. Reassuringly however, there were no major cuts to worry about this year. This is perhaps a signal that the Conservatives are beginning to move away from the Osbournomics of the past.

 

Rather than an end to Austerity was this possibly a retreat from a doomed ideological policy which has been in the pipework for some time?

 

Mr Hammond has undoubtedly played it safe with Brexit looming. Although that’s always been his style, can we ever expect major changes from this Conservative Government?

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