Lansons Public Affairs Briefing- The Budget
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Autumn Budget 2018
Lansons brings you the lowdown
A doublespeak Budget
Michael Stott, Director & Head of Public Affairs
Yesterday the Chancellor gave a Budget speech that aimed to look past Brexit and focus on the domestic agenda the Tories know they need to win on if they are to be victorious at the next election. As a result, Philip Hammond barely mentioned Brexit even though everyone knows if things don’t go as planned he might be back at the Despatch Box in six months revising his giveaways.
Or not. The Office of Budget Responsibility managed to be out by about £60bn in its forecast of Government borrowings, and George Osborne told us we’d have had an emergency budget by now, so it’s anyone’s guess whether Brexit will have the impact some are claiming it will. While the economy isn’t exactly clattering along, it’s not doing too badly, and certainly not as badly as the Twittersphere would have us believe.
Either way the Tories are trying – bless them – to think about the future and what the people want. And as Lansons’ exclusive polling from Opinium yesterday showed, they want more money spent on the NHS. So spending on the NHS they got. As many have pointed out, the Chancellor’s overall spending splurge is a big fat zero per cent if you take out the extra cash (already announced this summer) promised for the health service, so other departments may well hear yesterday’s ‘end of austerity’ line and be forgiven for thinking “yeah, right.”
What this Budget tells us is that the Tories really want to think about something other than Brexit, but that they really don’t have the time to do so.
Some think that this is a strategic error on the part of the Conservatives, because if they’re saying austerity is over that will allow Labour to position their proposed spending increases as entirely justifiable, since the era of cuts is coming to an end. Such worthy minds hadn’t however counted on Jeremy Corbyn and John McDonnell, who have instead been putting out the line that austerity isn’t really over but, err, we still want to spend lots more money.
Despite speaking for well over an hour, there wasn’t loads for Hammond to announce. What this Budget tells us is that the Tories really want to think about something other than Brexit, but that they really don’t have the time to do so. It also tells us that Labour still haven’t learned the lessons of the General Election, which some of them would be astonished to learn they didn’t win, and instead believe that with one last heave on the same message, they can become the next Government. Both parties appear trapped in their own doublespeak, unable to break out. Whatever one’s views of Brexit, there’s surely hope that after March we might see something approaching normal politics resume…
Director & Head of Public Affairs
What's missing from the Budget?
Ed Gavaghan, Account Manager
What’s missing from the Budget?
The ‘end of austerity’ is an attractive answer to this question, but I’ll leave that to the OBR to calculate.
Despite the strong tail wind in the media, rumours of a drastic change to pension policy failed to materialise, support for housing was largely re-hashed from previous announcements, and apart from a small bump to the fiscal safety net the Treasury is building up, Brexit was largely pushed to the margins.
So, what was missing from the Budget and how might it play out in 2019 and beyond?
This was the big surprise, apart from a small announcement outlining that the lifetime allowance will rise to £1,055,000 in 2020, in line with CPI, there were no changes to the annual allowance or the higher rate of tax relief.
Both of these policies could have raised significant sums for the Treasury and were the driving force behind Hammond’s comment that pensions tax relief is “eye wateringly expensive” earlier this month.
"...the underlying issue currently facing the Government: their wafer-thin majority and the inability to get through policies which backbenchers are against."
Avoiding these changes reflect the underlying issue currently facing the Government: their wafer-thin majority and the inability to get through policies which backbenchers are against.
There were tweaks but no stand out announcement. Buy-to-let landlords have once again been the focus in order to free up housing stock by altering the stamp duty land tax. They’ve also – sneakily some might say – introduced restrictions on capital gains relief by single landlords who no longer live at a property. This hits those who try to sell a house, fail to do so in a slowing market, and then rent it out as they move in to their new home – essentially accidental landlords.
There were no changes to the LISA, which maybe should have been altered to define it as either for a house, or for a pension, not both, and an announcement that Help to Buy will come to end in 2023. But having been extended once already, don’t bet against this policy continuing in the future.
The year-long Letwin Review into land banking was also published, with the Government response due in February of 2019. This might be one to keep an eye on for any future framework.
In 2017, Hammond set up a ‘Brexit buffer’ to hold in reserve in case of any systemic shocks to the economy, or if there was a no-deal in March 2019. He expanded this by £500m, bringing the total to £4.2bn and promised that as long as there is a deal, this, alongside the expected uptick to the economy a deal will bring, will deliver a “Brexit Boost” in 2019-20.
This was a thinly veiled, but well disguised, warning to those thinking of voting against any potential Brexit deal the Prime Minister manages to secure. As long as there is a deal, this spending can be released. If there is no deal, he reserved the right to turn the Spring Statement into “a full fiscal event” – essentially an emergency Budget – and alter spending plans accordingly
This was very much a holding Budget. Holding off before Brexit; holding off before the 2019 Spending Review; and holding off any major decisions in case an election in 2019.
Despite the handouts on income tax thresholds, the giveaways to the MOD and NHS. and many subtle tweaks to economic policy to drive greater tax efficiency, the big leavers which would help rebalance the economy remain untouched.
The Budget on Twitter
Emma Henderson, Account Executive
Fiscal Phil gets his day in the Sun #Budget2018
Being the last budget before Brexit, the Autumn Budget, as expected was a hot topic on Twitter for all yesterday, and the conversation is continuing to roll as we begin to unpick what the Chancellor has set out. We look at what the world of Twitter has to say about the budget, and how they have reacted. Our analysis considers activity on Twitter from 9am on the 29th October to 9am on the 30th October.
As expected from Twitter, especially as Twitter is very much Labour’s territory, the sentiment towards the Budget with negative with the sentiment analysis for IBM Watson showing an overwhelming feeling of disgust (35%). However, it is not all doom and gloom, with joy appearing in 24% of the posts.
Austerity and universal credit came out on top as the most discussed topics on Twitter during the Budget, this was closely followed by schools and the NHS. However, as the conversation has continued to develop over the past 24 hours, climate change has become a hot topic with many expressing anger that more money is being spent on the roads and fuel duty being frozen for another year. Caroline Lucas, MP for Brighton Pavilion and former leader and co-leader of the Green Party, has been the most vocal on this topic.
Please see here a selection of the top tweets surrounding the Budget.
As the below chart shows, and as expected Labour MPs had the biggest voice on Twitter regarding the Budget, picking apart Hammond’s plans and statements. Therefore, it should come as no surprise that Jeremy Corbyn had the largest influence online out of all MPs, alongside Labour MP and Shadow Communities Secretary Andrew Gwynne. As we have seen in the past, Labour uses Twitter as a platform to reach its audience and get their message across quickly.
On a more light-hearted note, Hammond naming himself ‘fiscal Phil’ of course didn’t go unnoticed on Twitter, and combining this with his jokes sent Twitter into a small frenzy. However, the Brexit 50p took the crown this year, being the biggest and most unexpected joke of the budget. Twitter went wild creating their own versions of the coin.
Reaction to the Budget
Joe Greaney, Account Executive
Reaction to the Budget
It’s fair to say that higher-than-expected investments in the Budget have given the Government a fairly favourable reception in today’s aftermath reporting.
Both the press and UK industry commentators took the opportunity to celebrate details of increased funding, even if not all believed Hammond’s rhetoric that austerity was “coming to an end”.
Papers cast approving eye on Hammond
Following heavy pressure to deliver a satisfactory Autumn Budget, reaction to Hammond’s budget among the UK media has generally been positive.
The Sun called the announcement “the biggest giveaway by any chancellor in a generation”, celebrating income tax cuts a “boost for Brit workers” and the Universal Credit “rescue package”, while the Financial Times stated the Budget was “an old-fashioned giveaway budget” that was “as much about politics as economics”.
The Daily Mail also welcomed Hammond’s spending plans, commenting “this was the day Eeyore transformed himself into Feelgood Phil”.
Industry welcomes investment
The UK’s most senior industry representatives took a rare chance to comment on some good news in the UK economy, as Adam Marshall of the British Chambers of Commerce labelled the announcements a “shot in the arm for business investment and growth” and highlighted his attention to the plight of small businesses through the reduction of business rates for many SMEs.
The Confederation of British Industry also showed willingness to cut the Government some slack, as Carolyn Fairbairn called Hammond’s Budget “rock solid”, and indulged itself in a Halloween joke, remarking it had brought “more treats than tricks”.
Polls give early boost
An early poll completed by Politico suggests Hammond has persuaded 56 percent of people to back the government’s decision to spend its unexpected tax windfall on public services, against just 12 percent who said Hammond should have used it to balance the books instead. Digging deeper, 57 percent agreed with the decision to pour all the money into the NHS — even if it means little or no extra money for services like police, schools or local authorities. Only 14 percent disagreed.
Some adverse reaction did come from The Times, which asserted that Hammond was “proving to be a lucky chancellor”, after a windfall in Government finances allowed him to fund investment in the NHS. Meanwhile, The Guardian, who had reportedly heavily on stretched public funds and flaws in Universal Credit in the weeks leading up to the budget, was rather predictably sceptical, commenting that “austerity remains this Government’s animating impulse”.
Perhaps in recognition of the media’s reaction so far, Shadow Chancellor John McDonell has opted not to completely lambast Hammond’s measures, outlining that he could potentially support his proposals on income tax. Labour’s response to the budget has seen little coverage so far, despite Jeremy Corbyn’s attempts to earmark it as the “broken promise budget”.
Measured by its ability to command support in public debate, Philip Hammond’s last pre-Brexit Budget has arguably succeeded.
What the polls say
Michael Stott, Director and Head of Public Affairs
What the polls say
The Chancellor’s Budget may have answered some concerns of the public, according to polling conducted by Lansons ahead of Monday, using pollsters Opinium. This follows much public scepticism about the Government’s ability to deliver a budget that equally balanced the need for spending and taxation, with only 26% of UK adults believing the Government would so in today’s announcement.
A third of Brits (34%) stated they would like to see taxes and borrowing increase, so more can be spent on public services. Interestingly, the figures also showed that the older you are, the more likely to were to support taxes and borrowing to rise, so we can spend more on public services. This contradicts the traditional view we have of older voters being more conservative (small c), and certainly goes along with the trend we see in politics for greater public expenditure, despite overall debt levels still around 80% and taxes among the highest they’ve been in decades.
By promising large-scale investment for the NHS, he has also answered the public’s call. Almost half of UK adults (47%) cited NHS funding as a priority – followed by Brexit (18%) and housing (9%). But will this translate into better polling figures for the Tories? This weekend’s papers will be full of polling so watch this space…
Director and Head of Public Affairs
Upcoming events at Lansons
Lansons upcoming events
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8Nov- Financial Services Forum: Gender Pay Gap
The Government’s gender pay gap transparency regulations are designed to encourage employers to take informed action to close their gender pay gap, should they have one. Join us and an expert panel to explore strategies and considerations for how companies should report ahead of the next April 2019 deadline. Find out more here.
13 Nov- Who Will Survive the Fintech Takeover?
Finance is being upended by digital disruption. This Fintech transformation will lead to widespread automation, a blur between finance and technology and, ultimately, widespread sectorial consolidation. Join us for a breakfast panel discussion. Find out more here.
16 Nov- Behavioural Economics Masterclass
Join us for a Neurocomms Masterclass on the 16th of November on how to deliver persuasive communications that shape behaviours and shift perceptions – with Behavioural Economics. Knowing how the brain works allows communicators to know how to guide thoughts, emotional responses and take certain actions. The masterclass will be run by renowned neuroscientist Dr. Helena Boschi and Director of Change and Engagement, Suzanne Ellis. Find out more here.
22 Nov- Developing The Mind Of The Leader Masterclass
Following on from success of our Mind of the Leader breakfast, Lansons is delighted to invite you to join us for ‘Developing the Mind of the Leader: How to harness the energy of change‘. Find out more here.
28 Nov- Lansons' Annual Charity Christmas Fair
Help us raise money for our chosen charity Centrepoint, get yourself into the festive spirit and pick up some fantastic presents for your loved ones by joining us for the Lansons Annual Charity Christmas Fair on Weds 28 November! Find out more here.