POLITICAL EXCITEMENT will reach its peak, no, this is not more Brexit debates but when Philip Hammond presents the budget. He is facing an extraordinary challenge to deliver a budget that spends big and there are even some government insiders saying that he must be revolutionary, a tough ask for a man dubbed 'spreadsheet' by his colleagues. He has difficult financial strains to contend with along with refusal to effectively tackle tax avoidance and cuts to taxes for the richest.
What could be included in the budget and what should be included? We look at several specific aspects that should be and could be included in Hammonds latest budget and what they could mean.
Housing crisis
There is expectation that Hammond will put measures in to tackle the housing crisis, with home ownership at its lowest in 30 years, house prices 7.6 times higher than the average salary and only 170k new homes started last year, significantly short of the 260k needed. There is desperate need for a budget to tackle the problems facing the country's housing market. One of the measures likely to be included is to cut stamp duty for first time buyers, unfortunately this doesn't increase supply. Furthermore, Sajid Javid, Communities Secretary, has asked the government to borrow £50 billion to fund a house building programme.
Public services
The pay cap has already been lifted for police and prison officers, albeit to a meagre 1.7% when inflation hit 3%.
But he is now facing an increase of pressure to lift the pay cap elsewhere for teachers, NHS staff, civil servants and council staff, whose pay rises have been capped at 1% since 2013 and handing an increase that matches inflation will cost approximately £4 billion with unions warning that any increase comes from additional money, not existing budgets.
There has been an increasing worry over the funding of the Public Services with NHS England warning that the NNHS is facing a real-terms cut inn 2018-19. Head teachers have warned that the new funding formula recently introduced will lead to staff cuts, increase in class sizes and a lost of extracurricular activities such as swimming and music lessons.
Finally, local authorities have expressed concerns over the increase in pressure to provide social care within their communities following the cuts made to their budgets by previous chancellor, George Osborne. Council's are having to close libraries, sport centres and sure start to afford adequate social care.
The economy and universal credit
MPs from across the party spectrum will be awaiting the response by Hammond to address the severe problems facing the Conservative flagship policy, Universal Credit. There have been warnings that a significant number of families could be homeless for Christmas, with reports surfacing that 100s of families in northeast Lincolnshire have already received eviction notices.
MPs from all sides of the Commons are calling it to be paused whilst it is fixed but that responsibility falls onto the DWP, nonetheless, Hammond could ease the burden by restoring the work allowance element of the benefit. Previously, you could earn more a month and still receive UC, but this was cut by George Osborne.
The country has a significant productivity problem, with people working longer ours for less gain than our competitors. There have been warnings that wages could stagnate and workers worse off by £25 per week by 2022, worse than before the financial crisis. This increases the pressure on the Chancellor to invest further into major infrastructure and research and development projects.
The manifesto commits Hammond to increase the start paying income tax threshold from £11,500 to £12,500 by 2020 but this will do little to alleviate the problems facing the 6 million people too poor to pay income tax. One idea being branded about is to cut National Insurance contributions for those in their 20s and 30s, but this could be seen as unfair to older workers on low incomes. For the Chancellor to be able to afford any tax cuts, he will be looking to cut tax relief on pension contributions.
My thoughts
The problem facing Hammond is that he will either have to dig deep and cut further to follow Conservative Party policy despite the negative effect that has on growth and the rising rate of inequality.
On the other hand, he could produce a budget that completely radicalises the economy and our infrastructure with an increase (and much needed) in spending, begin processes to clampdown on tax avoidances and properly fund our public services. Unfortunately, this is Philip 'spreadsheet' Hammond of the Conservative Party, a man famed of being very conservative even by Conservative standards.
