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Best in Show
The Chancellor of the Exchequer, Philip Hammond, today delivered the inaugural Spring Statement to the House of Commons. After moving to a single Budget in the Autumn containing major tax or spending changes, this was an opportunity for the government to distract from spy-related Russian intrigue and the fatigue of Brexit. With this more limited mandate, he provided an update on the health of the British economy and announced a raft of new policy consultations.
In true Parliamentary style, the Chancellor immediately cast aside the ‘Eeyores of Labour’ (also known as Labour Leader Jeremy Corbyn and Shadow Chancellor John McDonnell) who he said were talking down Britain, before announcing that he was feeling “positively Tigger-like”. Thankfully, the Winnie-the-Pooh comparisons ended there, but the Chancellor channelled his upbeat energy to say that the forecast for economic growth had increased and the budget deficit would be lower than expected. While the government likes to exceed expectations, it’s worth remembering that only a few months earlier during the Autumn Budget in November, the UK’s growth forecast was cut sharply, which makes the marginal growth of 0.1% announced today look somewhat less impressive.
The much anticipated consultation on single-use plastics was finally announced, heralding the beginning of the end of coffee cups, plastic cutlery and foam trays. The consultation will look holistically at the whole supply chain, recycling opportunities, reusable options, and specifically how the tax system can drive behavioural change. The Chancellor added that some of the money raised from tax changes would be used to encourage the creation of new, greener products and services, while £20 million from existing budgets would go to businesses and universities to research ways to reduce the impact of plastics on the environment.
The statement also acknowledged the increasingly important role of digital businesses in the British economy, as Philip Hammond unveiled a series of consultations on a new VAT collection mechanism for online sales to ensure that the VAT that consumers pay “actually reaches the Treasury”, how online platforms can help their users to pay the right amount of tax, and the future of cash and digital payments.
In his response, Shadow Chancellor John McDonnell called the Chancellor’s complacency “astounding”. He said public services are in a dire state and public sector workers are telling the government that they can’t wait until the next budget, not least because wages are lower in real terms than they were in 2010.
While it was by no means the usual barnstorming raft of measures seen on Budget Day, the government took the opportunity to demonstrate interest in policies outside of Brexit, even if it is by asking more questions than it answers. And with the positive ‘Tiggerish’ economic outlook, it’s likely that the Chancellor has just upped the pressure on himself to announce significant spending measures in the upcoming Autumn Budget. We’ll just have to wait and see which A.A. Milne character steps forward in eight months’ time.