What will be in Hammond’s budget?

Philip Hammond Autumn Budget 2018 UK

Philip Hammond

The weekend allows us to ponder certain things, and for Chancellor of the Exchequer Philip Hammond this weekend no doubt means mulling over parts of his budget, which he will present to the Commons on Monday.

Indeed it could be a rocky start to the chancellor’s week, as he shoulders the responsibility of finding ways to reassure the Commons and the country that ‘austerity is over’, as was promised by Theresa May at the start of the month.

So far, we already know the budget will continue to freeze fuel duty, and leaked information from the Treasury has suggested that the budget will contain ‘giveaways’ in order to keep up the austerity is over message alive. Most interestingly, Hammond has let slip a large boost in funding for mental health services, and a plan to introduce ‘zero interest loans’.

On Sunday, it was revealed that the government would explore the idea of ‘zero interest loans’, in response to the hardships caused by those who offer payday loans. This is a move that few will argue is a positive step forward, though there are already calls for more to be done – Labour MP Stella Creasy has urged the government to consider an interest cap on all loans, which she says would help prevent people from running into financial trouble in the first place.

Theresa May has already promised an extra £20bn per year for the NHS, with some of it expected to be covered with money saved post-Brexit that would have gone to the EU. However, this will not pay the whole bill, leaving Hammond’s speech on Monday to address the rest of the cost.

The Evening Standard seems to suspect that extra spending will be funded by way of a ‘tax grab’ from pensioners. The paper conducted its own poll, in which 71 percent of respondents were against the idea of a tax raid.

Though he told the BBC two weeks ago that he “may have to raise a little more tax” to give the NHS its extra funding, Hammond is less likely to use a tax hike to get his money after the OBR cut their forecast for borrowing down to £13bn for the year. In addition, the Treasury’s tax receipts have ended up 4.4 percent higher year-on-year, which the chancellor will no doubt highlight proudly.

However, the Evening Standard poll also found that two-thirds of voters say spending on public services should increase, and with an increased pressure from the public and MPs to increase spending – on the NHS in particular – a drastic measure from the chancellor could be on the cards on Monday.

Whatever the reaction to the chancellor’s budget on Monday, he has given himself a sort of safety net, by using the ultimate caveat: the outcome of the Brexit negotiations. The chancellor told the BBC on Sunday that a no-deal Brexit would mean a new budget, which means that tomorrow’s budget, no matter how sweet or bitter, could well be the first draft.

This caveat was also applied to the news yesterday that mental health services will see a £20bn boost, giving long-awaited attention to one of the NHS’ most neglected areas. A boost in mental health services funding has been requested by hospital chiefs for years, and now – as long as the government secures a Brexit deal – it seems hospitals will see their funding increase.

In addition to public services, the chancellor will have the woes of Universal Credit on his back. MPs will expect Hammond to address the troublesome rollout of the government’s flagship welfare reform, and reassurances that it won’t harm its claimants – earlier this month work and pensions secretary Esther McVey let slip that “some people will be worse off.

 

We’ll have the full rundown of the Autumn budget right here.

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