Listen to this article



Philip Hammond is giving away an estimated £25bn in higher spending and lower taxes over the next five years — but there were still plenty of things missing from his Budget.

1. Social care

The chancellor did not mention social care in his Budget speech, despite concerns that the local councils which provide it are financially overstretched. His decision to steer clear may be partly explained by how a Conservative proposal to reform social care funding — dubbed “the dementia tax” — marred the party’s election campaign in June. Theresa May appeared to disown the plan soon after it was unveiled because Tory parliamentary candidates reported a public backlash. But the Budget omission formed a key part of Labour’s criticism.

2. Public sector pay

There was no specific Budget commitment to increase the pay of public sector workers, who have been subject to a freeze — and then a 1 per cent cap on rises — since 2010. There was some additional money for nurses and other NHS staff, but most public workers’ pay will be decided by individual ministers, following recommendations from pay review bodies. If these bodies recommend pay rises above 1 per cent, “then the [individual] department should fund that”, said a Treasury official. Last year prison officers received a 1.7 per cent base pay rise, and police received a 1.1 per cent increase, he added.

3. University fees

Newspaper reports in September said Mr Hammond was considering cutting the maximum universities could charge in tuition fees from £9,250 to £7,500. That might have neutralised part of Labour leader Jeremy Corbyn’s appeal to young voters. But in the end Mr Hammond opted for less radical measures — freezing fees next year, costing the Treasury an initial £5m, and raising the income threshold at which graduates have to repay to £25,000, both of which were announced at the Conservative party conference in October.

4. VAT shake-up

The chancellor considered lowering the threshold at which small businesses pay value added tax, following a report from the Office for Tax Simplification that found the current level distorts competition and discourages growth. But in the end he decided to keep the turnover threshold unchanged at £85,000 for at least the next two years. “The UK’s VAT threshold is by far the highest in the OECD. By contrast, in Germany it is just £15,600,” said Mr Hammond. “But such a high threshold also has the benefit of keeping the majority of small businesses out of VAT altogether.”

5. Gig economy

Mr Hammond’s first Budget in March was a political disaster after he proposed higher national insurance contributions for self-employed workers. That move was quickly reversed. Wednesday’s Budget did not contain reforms that might have addressed the imbalance between the self-employed and the employed. “It was disappointing not to hear more about the gig economy’s workers . . . A tax regime that favours one form of engagement over another is too distortionary and needs to change,” said Jonathan Riley, head of tax at Grant Thornton, the accounting firm.

6. Agriculture

Britain’s biggest farming lobby, the National Farmers Union, had asked for a range of measures — including changes to capital allowances, and faster broadband to assist the rollout of robotic equipment. No such moves were forthcoming. The NFU said it was “disappointed to see no meaningful measure to help prepare farming businesses for life outside the EU”, although it conceded that the Budget appeared not to have “any adverse impact on our industry”.

Leave a Reply

Time limit is exhausted. Please reload the CAPTCHA.