A Budget that changes little

Philip Hammond was full of gestures and jokes in his first Budget address. Credit: PA

This was a Budget that changed almost nothing of substance, with a few honourable exceptions - in a fairly stunning contrast with the hyperactivity of Philip Hammond's predecessor, George Osborne.

First, our long term economic prospects would improve if the proposed new "T Levels" for technical education finally succeed in getting parity of esteem between practical and academic education for 16 to 18-year-olds.

Second, the current National Insurance incentive for people to classify themselves as self-employed may well be pernicious - for the effective funding of public services and for many people's job security and standard of living.

So the Budget decision to almost equalise NI for the employed and self-employed will be seen by many as rational - even while being criticised by some Tories as an attack on entrepreneurs and a seeming breach of a manifesto promise not to raise NI.

The chancellor put in a deft performance at the despatch box. Credit: PA

Finally there was Hammond's deft performance at the despatch box - who knew that "Spreadsheet Phil" has a possible future on the comedy circuit (well I exaggerate, but he was wonderfully relaxed)?!

But as ever it's the numbers that tell the real story.

There was only one significant spending commitment: £1.2bn this year to ease the immediate crisis in social care for the elderly. This is - to coin the phrase - sticking plaster, because it shrinks to zero by the end of the Parliament.

But the chancellor also announced a strategic overhaul of social-care funding - but quite what that will involve is, as yet, unclear.

Also, there were two moderately important tax rises: £645m to be raised by 2019-20 from that increase in the Class 4 National Insurance rate for the self-employed to 11%; and £870m in the same year from reducing the tax advantages for the likes of TV presenters (not me, honest guv!) from setting up special companies to receive their income.

The 2017 investment to ease the immediate crisis in social care for the elderly.
The projected tax gain by 2019-20 from the hike in National Insurance payments by the self-employed.
The tax gain by 2019-20 from changes to rules on high earners setting up firms to receive their pay.

To be clear, in economic terms, these sums in and out are relatively small.

In the round, this year's Budget is expansionary to a fairly trivial extent for the next two years and then contractionary for the following three years.

Underlying all this is the judgement of the Treasury's Office for Budget Responsibility that a short term rise in tax revenues reflects special one-off factors and won't be sustained - and similarly that a slight increase in forecast growth this year will be followed by small slowdowns.

So across the Parliament, nothing of great importance has changed, either to the outlook for the public finances or the economy as a whole.

The chancellor didn't tackle the dire funding straits of the NHS. Credit: PA

Brexit is still treated as a negative, though not a devastating one.

Public borrowing is set to peak next year at a high 88.8% of GDP, down from a higher 90.2%.

And growth in national income is forecast at 2% this year, up from 1.4%, and 1.7% in 2019, down from 2.1%.

Swings and roundabouts, as Nobel prize-winning economists are wont to say.

And in the meantime the dire funding straits of many public services - or at least as claimed by doctors, police, teachers and prison officers - were not addressed.

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