Moore about Money: what might the budget hold?
On 22nd November the beleaguered Chancellor of the Exchequer, Philip Hammond, will present what is predicted will be a ‘bold’ budget as he battles to save his job having angered Tory Eurosceptics by refusing to fund a ‘no-deal’ Brexit scenario in the face of increasing EU intransigence.
With his party widely being seen as trumped by Jeremy Corbyn on the ‘fairness’ front, on the back of an inglorious conference and with allegations of sleaze and sexual impropriety echoing around the Palace of Westminster, Mr Hammond is expected to deliver a budget to deliver ‘intergenerational fairness’ – reducing NI contribution for those in their 20s and 30s, funded by reductions in pensions tax relief for older workers.
So what can we expect? The £24bn war chest has been blown, the MOD needs £20bn to keep afloat and the NHS will need more funding; so not much scope for largesse although Mrs May will want to continue the costly fairness for all policy.
Pensions tax relief is matched by pensions tax deductions on retirement income/benefits and because of pension reforms and George Osborne effectively ending annuities, tax takes for retirement benefits have never been higher so it could be argued the government is actually ahead on tax.
‘Mrs May will want to continue the costly fairness for all policy’
Pension lump sums could be a target, but that would break many promises; alternatively Mr Hammond could further lower the lifetime allowance to the point that pensions are meaningless.
He could restrict higher rate tax relief, though higher rate tax payers are also paying out higher rates on retirement benefits; not a fair swap but an opportunity.
Inheritance tax could be another target – exemptions on main residences could be scaled back on the premise that this would encourage scaling down, although many cherish Mrs Thatcher’s vision of people owning their own property and enriching their dependants.
I personally also believe in pension funds being passed down to beneficiaries free of IHT to help them fund their pension provision. It does not cost the exchequer anything other than the
marginal taxes on death payments, but it would add a huge amount to the feeling of security for our millennials.
At 20% VAT is punishing enough – particularly for those that are just about managing.
So if tax raising looks to be a significant issue then the Chancellor may have to look to increase borrowing; despite this week’s quarter point rise, interest rates are still low, so borrowing will not be expensive and could boost the economy through infrastructure projects and particularly house building. There is plenty of scope in increasing housing supply without unduly dropping house prices and risking mortgage redemptions.
The NHS remains a significant concern; wracked by inefficiency, still not operating 24/7 leaving the huge capital employed in equipment underutilised at weekends the NHS is unable to adequately serve an ageing and increasingly unfit population.
It requires more than more money – it needs a major overhaul of health; a crackdown on eating habits and obesity, a crackdown on alcohol….and more!
Lord Lansley had some good ideas but left the Conservatives viewed by some as a toxic force in the NHS; Jeremy Hunt is picking his battles, but he is too often on the losing side.
‘what price a ‘big, powerful and revolutionary’ budget’
I have to hold my hand up and say that I have had cause to call upon the NHS for lifestyle related problems, and have to say it is wonderful; it has saved my life from severe infections, but the reality is that it has finite resources and we all need to play a part.
In 2008 my son Archie had a horrible fall off a school pony breaking his femur; it was a major break that needed five hours of surgery.
The care was superb but there were no parent facilities; we had no hesitation in helping with Salisbury District Hospital’s new children’s facility, but it appears that no amount of money will solve the core NHS issues.
Samuel Johnson said that knowing you are to be executed in a fortnight concentrates the mind wonderfully; the knives are certainly out for Mr Hammond, so what price a ‘big, powerful and revolutionary’ budget that reunites the party behind a pledge to write off student debt and shucks off its ‘nasty’ reputation?