Autumn Budget 2017: What lies behind Philip Hammond's big decisions?
John Ashmore
| PoliticsHome
We take a look at the key areas to look out for in Philip Hammond's Budget tomorrow - and what will be driving his decisions.
DEFICIT
Since 2010, Tory deficit targets have looked more mirage than reality. George Osborne's (somewhat arbitrary) surplus target drifted from 2015 to 2020, and under Hammond was pushed back to 2025. A decade on from the financial crisis the UK is still running a substantial deficit and the debt pile continues to swell. And what used to be Labour calls to ease off on austerity have multiplied on the Tory benches too, as we reported here. At the same time, ITV News reports that Hammond is on course to hit his target of a deficit equivalent to 2% of GDP by 2020-21, which implies no big giveaways tomorrow. Even if he were minded to make bold measures on tax and spend, he is severely constrained by not having a clear idea what Brexit will mean for growth. Just to add to his difficulties, the most recent borrowing stats show the deficit widening in October, up 6.7% on the 2016 figure.
HOUSING
The one area everyone has been talking about. Sajid Javid produced a pretty thin white paper back in February, which was a reflection of behind-the-scenes wranglings, with Number 10 unwilling to sell Green Belt development to the Tory heartlands and the Treasury equally stubborn on stumping up more cash. Since then the political landscape has shifted and the emboldened Communities Secretary has seized the opportunity to demand the powers and money he needs.
True to form, 'fiscal Phil' hinted this weekend that the £50bn Javid has asked for will be closer to £5bn. There's also a fair bit of speculation that he'll lift stamp duty for first-time buyers to help get the housing market moving and address the Tories' major headache of getting young people to vote for them. An inquiry on developers banking land without building on it - an Ed Miliband policy par excellence - will also feature. Action here could have a big impact in London, where there are 270,000 residential planning permissions waiting for building work to being.
WELFARE
Tory rebels have for months been calling for the Government to address the six-week waiting time for Universal Credit. A concession would pacify many backbenchers but also risk laying bare May’s feeble grip on party discipline. Some kind of move from Hammond would create positive headlines without requiring a big spending commitment, so it might well appeal to the Chancellor. On the bigger picture, Hammond could ease off on the working age benefits freeze instituted by his predecessor, but he'd have to find over £3bn to do so.
HEALTH
He doesn't look like doing a great deal on health either, despite pleas from the head of NHS England Simon Stevens for an extra £4bn for 2017-18. Hammond's comments on the Andrew Marr Show this weekend suggested he wants to see a lot more from within the already-stretched NHS before he contemplates offering any more cash. There's also a question over pay, with reports this morning suggesting the Chancellor wants to see a productivity review before he considers giving nurses anything like the inflation-busting wage rises the Royal College of Nursing has been calling for.
BREXIT
Hammond has become something of a bete noire for Cabinet Brexiteers, with constant briefing wars over his apparent pessimism and "Eeyore" attitude. With Boris Johnson and Michael Gove having rekindled their alliance there is now a viable focal point for plotters. And reports that Gove has been using ‘economicky’ words in Cabinet meetings have fuelled suggestions he has his eye on Number 11. If he wants to keep his job Hammond will need to use the Budget to demonstrate he's got an optimistic vision for Britain's future outside the EU (even if he actually hasn't).
For a rundown of the key policies to expect in the Budget tomorrow, click here: 15 things to look out for in Philip Hammond's Autumn Budget
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