Spring Budget 2017: What the experts say
Chancellor Philip Hammond announced his Budget today (Wednesday 8 March 2017). Academics and experts from across the University of Sheffield have given their views.
Professor Sumon Bhaumik, Chair in Finance at Sheffield University Management School:
The numbers discussed in the budget are small; hundreds of millions in a £2 trillion economy. This could be on account of both fiscal constraints perceived by the Chancellor and absorptive capacity of the sectors that will experience changes in their budgetary allocations, but the magnitude of impact on the economy and the welfare of UK residents is likely to be modest.
Details about the two most important issues mentioned in the budget speech of the Chancellor will not be available until later. The government paper on financial sustainability of social care (and hopefully NHS as well) will not be published until later this year. Further, the strategic vision about the key issue of retraining of workers over their lifetime, as technology and the structure of the economy changes around them, will not be be revealed for some time to come. Worryingly, it was not evident from the budget speech as to whether the government understands the need to protect (and hence the cost of protecting) living standards during periods of such transition in the lives of working adults.
Overall, it is a timid budget and a missed opportunity to fundamentally re-evaluate the trade offs that are inevitable when a government operates under a fiscal constraint, with or without austerity, and to kick start a discussion about ways in which expenditures that are central to the economy and the human welfare can be funded under alternative economic scenarios of trade relations, and technological and demographic change. For the moment, at least, difficult decisions have been kicked into the proverbial long grass. I hope that the omission of these issues from the budget speech is tactical, manifesting the political need to commit less and over-deliver amidst the uncertainty caused by Brexit. Time will tell whether there is a strategy that connects all relevant dots in the government's collective hat.
Dr Jonathan Perraton, Senior Lecturer in Economics:
The Chancellor presented an upbeat assessment of the British economy but effectively acknowledged that this year's relatively strong performance was something of a one-off. The shadow of Brexit hangs over this budget, even Hammond said little directly about it. Although the deficit for this year will be lower than forecast in the Autumn Statement, the UK government is still projected to borrow £100 billion more as a result of Brexit. The budget deficit is now forecast at over £16 billion half way through the next Parliament.
The Chancellor has raised National Insurance payments for the self-employed from 9 to 11 per cent, effectively breaking a manifesto commitment. One of the key reasons that tax receipts have not risen in line with earlier forecasts (and so the deficit has not fallen as predicted in previous budgets) is because the rise in self-employment has generated relatively low revenues for the exchequer.
The accompanying documents acknowledge that recent growth has been based on consumer expenditure as households have saved less and borrowed more. As higher inflation erodes living standards this is predicted to slow down, but household debts relative to their incomes are still predicted to rise. Business investment remains subdued in a climate of uncertainty. The Office for Budge Responsibility predicts disruption to Britain 's trading relations with the EU for a decade. The Chancellor acknowledged Britain 's poor productivity performance, but the forecasts predict productivity will grow slowly. Britain 's weak performance and the negative effects of Brexit on trade and business investment look set to continue.
Professor Pauline Dibben, Professor of Employment Relations at Sheffield University Management School, on the budget's impact on disabled people:
The budget calls for a stronger and fairer Britain, but will the announced changes improve the lives of disabled people? The two billion pounds of new investment in social care is welcome. And on International Women’s Day, it is good to see initiatives such as ‘Returnships’ for those who have taken career breaks. But what about those who need help to return to work following a lengthy illness, or those who cannot work? The government remains committed to ‘maintaining discipline on social spending’ and ‘delivering welfare savings’ and this has been accompanied by a decreased budget for the Department of Work and Pensions. For those who want to work but live in fear of losing benefits, there is little in this budget to make them feel better.