You would have thought that with slower growth figures and problems over productivity a Chancellor, nicknamed Eeyore, would have been full of doom and gloom. Not a bit of it. Philip Hammond was upbeat, humorous and confident throughout his budget speech last week.
There were several promises of extra funding made in his speech and by turning to the table in the budget ‘red book’, the forecast costs of these giveaways for the next five and a half years can be calculated. I make it an extra £7.6 billion for the NHS and £3 billion more for the Brexit contingency fund. The cost of freezing fuel duty is estimated at £4.25 billion and drinkers will collectively be £1.2 billion in pocket due to alcohol duties also being frozen. Changes to business rates are to benefit business by £2.3 billion but more generous Research and Development tax credits will only cost the government £755 million.
The climax of the speech was the scrapping of stamp duty for first time buyers on the first £300,000 of house purchases up to £500,000. This announcement stole all the headlines and is forecast to cost the Treasury £3.2 billion. There have been mixed responses from the housing industry to this, with some believing that it will cause house prices to increase, but more generally the gesture has been favourably received.
The overall cost of the measures announced in the budget is an amazing £25 billion, made up of £18 billion extra spending and £7 billion of net tax cuts. Spreadsheet Phil says he will be looking to balance the books by the middle of the next decade but as he eases the purse strings, that deadline seems to be slipping further and further into the future. Perhaps his fiscal rules are somewhat flexible to what he wants them to be!
So back to the cheerful Chancellor. Some of his jokes were actually quite good. He talked about ‘long economicky words’, had a Top Gear joke on the Hammond and May partnership theme and was given some cough sweets by the Prime Minister. This returned the favour from the Conservative Party conference but the Chancellor is probably pleased that no-one gave him a P45, as was suggested by one wisecracking member of the house!