08 March 2017

Commentators noted the Chancellor’s relaxed and jokey style in the Commons today. But Jill Rutter and Alice Lilly argue that it signalled a welcome changed approach to Budgets.

George Osborne’s beloved rabbits have been put out to grass by his successor. Philip Hammond found some well-trailed extra money for social care, new schools and vocational education, in particular the announcement on T-levels and a package of relief on business rates. Strangely the B-word (Brexit) didn’t rate a mention.

There were a few gimmicks: a couple of £5 million schemes to celebrate International Women’s Day. But all in all, this Chancellor appears to be able to tolerate the void that his predecessors felt obliged to fill. One of the most notable things about the Budget is just how few tax measures there are. 

There were 54 tax measures in Budget 2016, and 24 in Autumn Statement 2016, according to the Office for Budget Responsibility’s database of tax policy measures. But the Red Book for today’s Budget lists just 14 tax measures. In total, there were only 28 measures listed on today’s scorecard, compared to 77 for Budget 2016.

Tax measures by fiscal event 2010 to 2017

When she spoke at the launch of our Better Budgets report, Financial Secretary Jane Ellison mentioned the pressure from the media for Chancellor hyperactivity at fiscal events. It is clear from today that Philip Hammond has found that resistible. Business representatives have got the boring Budget they wished for – even if they may have liked to see more business rate relief.

The Chancellor seems willing to consult earlier.

In our Better Budgets report, the Institute for Government, along with the Chartered Institute of Taxation and the Institute for Fiscal Studies, argue that the Chancellor should consult on options to meet his policy objectives rather than just on how to make them work. In fact, the Chancellor seems to have moved the point of consultation even further upstream, by issuing calls for evidence, as the below excerpt from the Red Book suggests:

The Chancellor reversed – or adapted – some of his predecessor’s moves. 

Hammond has shifted back the timing for the smallest businesses to comply with Making Tax Digital requirements – an area where HM Treasury and HM Revenue and Customs have been under a lot of pressure for failing to take proper account of implementation issues upfront and for not engaging properly with those affected by the changes. The Treasury scored a lot of revenue from that change – so that delay comes at a cost and illustrates the need to think implementation before revenue is firmly put in the scorecard. He has also scaled back George Osborne’s dividend allowance of £5000 to £2000 a year.

Much more controversially, the Chancellor is starting to close the gaps between employees and the self-employed in national insurance contributions (NIC). Hammond did a good job of laying out the rationale in the Budget speech, but it is being portrayed as coming dangerously close to breaking the spirit – if not the letter – of the Government’s self-denying commitment (originally included in its manifesto, and then turned into law) not to increase rates of VAT, income tax or NICs over the lifetime of Parliament. Even David Cameron’s former strategy director, Ameet Gill, described it as “probably the dumbest economic policy that anyone could make, but we kind of cooked it up on the hoof a couple of days before, because we had a hole in the grid and we needed to fill it”.

Of all the Budget measures this looks the most vulnerable – not least because it is decoupled from the wider Taylor review of new forms of employment – and so many self-employed journalists are already griping about it. 

We are pleased that the Chancellor accepted our call to move to one principal fiscal event a year, and it would appear he has used his last Spring Budget to prepare the ground for his Autumn Budget. It looks as though he has already decided to make that the main event of 2017. 

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