I have no choice but think about what the Budget may, or may not bring: I will be live on Radio 2 at 1.30pm today as the Chancellor sits down, talking about what he has said, and that means I have to give the subject a little thought beforehand.
What I do know is that I will not get what I want from the budget today. I wanted effective measures against tax abuse and real increases in taxes on wealth. I seriously doubt either will happen. I also want an end to austerity and again expect to be disappointed.
I do, on the other hand, think Hammond is able to upset his own party. He may move against small business and contractors. If he does though presume that he is setting himself up to be sacked. Well, would you want to be Chancellor in this inept government?
Tax changes will be cautious, small and deferred, I suspect, today.
Most spending plans will be in the same league. When Chancellors announce projects of a few million and new railcards you know they are boxed in or out of ideas.
This Chancellor is both of those things: the Tory goal of a balanced budget makes life impossible for Hammond, but also makes no sense and leaves no scope for innovation. This is a party past its economic sell by date.
More important is the boxing in of Brexit. There is talk of the OBR downgrading forecasts because of what it sees as an entrenched decline in UK productivity. This is undoubtedly a real issue that they have had to face because they have been naively optimistic on it, continually overestimating growth as a result, and so overstating revenues and understating borrowing.. But the real issue is Brexit.
The Budget could not be worse timed for Brexit. There are, it is thought, three weeks to go before agreement is reached that there may be trade negotiation or (more likely) that the UK heads for Hard Brexit. Nothing has a bigger impact on the UK's future than this. It does not matter what forecasts are presented today (and they have to assume negotiating success for the government) they will be spectacularly wrong because a) no negotiation will work out as well as the forecasts portray and b) there may be no negotiation at all.
Either way, being realistic, what today is about is distraction activity. No forecast is going to be near right. No promise, barring inaction, can be sure to be fulfilled. The data is wrong. The impression given will be false. The charade will be a sham. Philip Hammond has no better clue what is going to happen than most people because he has no control over it. He just has to vaguely pretend otherwise.
So his only hope is to do little on tax, shrug his shoulders on borrowing, offer token gesture sums to small projects of no significant value, announce reviews into tax reforms and speak grandly of 300,000 new homes a year deliverable at a time when he knows he will be long gone. Which could be by next Tuesday, but may be a week or two later.
Rarely has a man been told to lie so profusely about a future that he knows nothing about than Philip Hammond has been asked to do today. He'll pay for it with his political career. But that may be the best bargain he will strike for a long time to come.
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Your writings are very illuminating. Can’t help being worried if Hammonds attacks small businesses, as it’s tough enough already in a highly competitive market. We smaller concerns give better service and reliability than any large Corp. but don’t get any help from gov. That’s for the ‘big boys’
History will not be kind to Hammond. He will be forgotten as soon as he walks out of No. 11.
It’s a mess.
Spreadsheet Phil should resign as a matter of principle as being a Brexit remainer and an austerity denier he is clearly at odds with the rest of the opportunistic loons currently in office. But then what is principle to your average politician ??.
Jim Craig says:
November 22 2017 at 10:05 am
“Spreadsheet Phil….[…….]……. But then what is principle to your average politician ??.”
Does this help Jim? 🙂
“Principal – Investment & Finance Definition. The amount of money that is borrowed, excluding the interest charge, that remains unpaid. Principal also may be part of a monthly payment that reduces the outstanding balance of a loan. For instance, mortgage payments consist of principal and interest payments.”
We do not need more homes (See FT Analysis yesterday). We need house prices to be lower. We can do this by reducing the cost of land and making planning simpler. So new houses act as a catalyst to bring Prices down. We have more dwellings then householders. But there are regional differences for example London.
Solving the wrong problem will always give you the wrong answer.
There is compelling evidence we need new homes too
I disagree with you
Harish
We need both to be honest – enough homes at the right price.
A recent report that I shared here showed that house building was definitely aimed at the big profit generating output for builders – executive and luxury properties etc., – rather than starter homes and homes to rent for the greater amount of people who still live in B&Bs, hostels, endure increased over crowding (new households within existing households) and people living on floorboards and the homeless.
Also look at the work of the late Alan Holmans – a statistician known in housing circles for his diligent work on housing supply who spent his working life warning successive Governments that something was wrong.
If you relax planning law I guarantee that builders will step up the building of luxury and high value properties and that you can kiss the green belt goodbye. And the prices will be eye-watering. It won’t solve the problem you mention that is for sure.
The Tories have withdrawn any grant system for cleaning up brownfield sites which still continue to blight inner city areas (and some rural ones too) instead of putting it to good use.
It is ideology that is holding things back in housing – not reason.
The best thing a Government could do now is fund more building. It could rent these out or even sell them via low cost mortgages if it wanted to (thus recouping some if not all cost). There is no imagination at work in housing provision here at present. None. Zilch.
Planning is a problem, but not for the reasons supposed. It is far too reactive and should, of course, be proactive. The main problem surrounding the planning issue is Section 106 Agreements and the Community Infrastructure Levy, which try to squeeze some dosh out of the developers to pay for the necessary infrastructure. Like I say here: https://www.ft.com/content/d8de4870-c3d3-11e7-a1d2-6786f39ef675
harish says:
November 22 2017 at 8:57 am
“We do not need more homes (See FT Analysis yesterday). We need house prices to be lower……….. So new houses act as a catalyst to bring Prices down. We have more dwellings then householders.”
You say we don’t need more homes, then you say we in fact do need more houses in order to apply downward pressure on prices. You can’t be right on both those points can you? They appear contradictory to me.
“We can do this by reducing the cost of land and making planning simpler.” That one really is difficult if you are going to rely on market forces, because new land is not being created and is already subject to property rights of ‘ownership’. To bring down land prices ?…. Yes it can be done and easily, but it relies on a very different understanding of who land belongs to.
Were we to accept that land belongs to the government (on behalf of its population) then it would be natural to accept that it would be subject to taxation which would in effect be a rental payment to the government for the exclusive access to that land. This as I understand it is the underlying thinking behind Land Value Tax. It makes a great deal of sense that people holding land idle in the hope of making speculative gains should pay something for the privilege of that dog in the manger land holding.
The solution in effect is to ‘Nationalise the Land’. I can see that idea going down like a lead balloon in the current socio-political climate. It’s an idea which is so far off the political agenda it’s tantamount to unsayable. It’s a philosophical conundrum because, in reality, what defines a nation other than it’s land mass? Only intangible attributes of culture and custom. And the population of course, but that is a fluid asset. Populations relocate when they are allowed to to seek better opportunities to make an acceptable living.
“Solving the wrong problem will always give you the wrong answer.” Using the wrong solution to a problem will also generate a wrong answer.
If he repeats the lie ‘Labour’s Recession’ like he did last time, please call him out. It’s absolutely central to their whole narrative. In her Manchester speech, May went further with ‘Labour’s Great Recession’. No wonder she choked. It was no virus – our ancestors would have called that Corsned.
Still do not know how the Brexit departure bill will be funded. Some say that £20 billion of the mooted £40 billion is already covered by the net annual payments to the EC.
So £20 billion plus remains if this is correct – is he going to double his deficit predictions for one year, is he going to take £20 billion out of the economy in taxes.
This will be covered by debt
“This is a party past its economic sell by date.”
This was the case by 1971 and the abandonment of Bretton Woods.
To be fair, no UK political party has grasped the potential for general wellbeing that having an un-pegged, non-convertible, sovereign fiat currency permits.
It’s infuriating and heartbreaking in equal measure to think of the misery, lost opportunities, and compromised lives that have resulted from the lies, misunderstanding, and misuse of economic policy.
The lack of economic and monetary literacy in the country does I’m afraid mean going to hell in an Austerity and Brexit cart!
Richard, you are an economic expert, correct?
Why don’t you publish a set of numerical forecasts for the economy? GDP, CPI, unemployment rates and maybe some other indicators like BoE base rate, the deficit and maybe some forecats for the stock market and house prices?
Do you know how much time that would take to do?
And do you realise I have a day job to deal with that does not cover that?
And I also have a life (despite rumours to the contrary)?
In other words….no, I can’t do that
You seem to find time to write lots of long blogposts though, and you constantly tell us how badly the government are doing and wrong their and other people’s forecasts are, so why can’t you give us some numbers we can use to judge you and your views by?
Or does can’t actually mean won’t, because you are unwilling to open yourself up to that kind of scrutiny?
I guessed you were trolling, and you are
I provide evidenced blogs written in my spare time
And I sometimes link to work produced in the day job
But to model the whole economy in my spare time is a ridiculous request and I strongly suspect you know it
If you don’t, then you wouldn’t be able to appraise the data anyway
Gary says:
November 22 2017 at 3:45 pm
“Why don’t you publish a set of numerical forecasts for the economy? GDP, CPI, unemployment rates and maybe some other indicators like BoE base rate, the deficit and maybe some forecats for the stock market and house prices?”
Perhaps that’s what YOU should do, Gary (?). Then maybe you’d be an economic expert and able to make interesting and informed contributions to this blog or even run one of your own.
I don’t claim to be an economic expert and nor do I write shrill blogs saying that the economy is doomed under the Tories. Richard Murphy claims to be an economics expert and regularly states what the government should be doing, and what they are doing wrong.
To claim they are doing something wrong and how it could be done better, one would have to have some estimate for the change it would make to the economy. Murphy never does, he just asserts that he is right.
Dear Gary
The only thing asserted here is by you, which is that I give no evidence
Respectfully, if you’re just here to abuse, and that seems to be the case, please don’t call again
Richard