No one is expecting any fireworks from Spreadsheet Phil, our supremely unspectacular Chancellor, when he delivers his first Budget on Wednesday. True, he has found some £60 billion down the back of the Treasury sofa, or expects to do by 2020, but he has no intention of blowing the cash on either a radical shake-up of the UK economy or on lavish sweeteners for Mrs May’s ‘Just About Managing’ brigade.
He said as much yesterday just in case any of us were so deluded as to think Phil had decided to take up alcopops for Lent. “If your bank increases your credit card limit, I don’t think you would expect to go out and spend every penny of it immediately,” he said explaining his fiscal stance on the Marr Show on BBC TV.
Actually, some of us do, but the Chancellor is clearly not one of the instant gratification squad.
Of course, the Budget being as much a political event as an economic one, there will be a few sticking plasters for those who have shrieking the loudest in the past few weeks. There will be more than £1 billion extra to try to buy off the so-called social care crisis. There will also be some more cash doled out to firms, especially those in the south where property prices are highest, faced with swingeing increases in their business rates. But overall, sobersides is banking on a safety first Budget, putting money aside in case the two-year Brexit negotiations, starting soon, come unstuck.
He wants some money in the bank to guard against the possibility that our European friends and neighbours start cutting up rough when we get down to the nuts and bolts of forging a free trade deal, quitting the customs union and the Common Agricultural Policy, and safeguarding the City of London. And with the public finances still in a mess despite nearly a decade of “austerity” (an annual deficit of nearly £60 billion and accumulated national debt north of £1,600 billion and rising), he would seem to have a point. Prudence points to battening down the hatches as we sail into the uncharted waters of Brexit Brtain.
But there another – entirely different – way of looking at the Budget options. Much of the political class, and certainly the Treasury, are still in the mindset of Project Fear. They might grudgingly concede that their dire pre-referendum warnings of financial apocalypse have not come to pass – in fact Hammond will revise up his 2016 growth forecasts – but they remain wedded to the idea that the sky will fall in some time soon. Hence Phil’s squirelling away of his extra cash in the Treasury vaults. Rainy days will soon be here again.
Orthodoxy has it that Brexit is bad – or least a very big risk. It is bound to go wrong at some point in the near future. So far it hasn’t happened, but it almost certainly will.
The other way stands this argument on its head. It can be simply expressed. Brexit is good for Britain. Not just good in terms of re-establishing national independence, escaping the jurisdiction of a foreign court and parliament, and regaining controls over immigration – but good for the British economy.
Some people, thankfully, are taking that view. John Longworth, now co-chairman of the campaign group Leave Means Leave and the man who resigned from his job as director-general of the British Chambers of Commerce to campaign for Brexit, has written a paper reminding ministers that Brexit will bring economic benefits and could bring even more if handled imaginatively and boldly.
To cite just some of them: an extra £10 billion a year for the Exchequer once we no longer have to pay our annual sub to Brussels; a 4 per cent boost to GDP from quitting the customs union and no longer applying tariffs to goods imported into the UK; a boost of up to 2 per cent of GDP from slashing EU-inspired red tape on business; and an average saving to every household in the country of £300 a year from cheaper food after quitting the CAP.
This list is not exhaustive and the details can be argued over. But the point is clear. Forget about Project Fear. The UK will be a richer, more dynamic, faster-growing and generally more prosperous country when it is no longer shackled to the lumbering European carthorse.
Spreadsheet Phil, who after all voted Remain, along with most of the rest of the Cabinet (and the PM herself), has yet to grasp this simple point. What he should be doing in the Budget is getting the country ready for 2019 and the year we say good bye to Dobbin. He should be bringing home to the country at large that Brexit is a great opportunity for Britain in all kinds of respects, not least economic. If you want to raise the living standards of Mrs May’s “Jams”, Brexit offers a way of transforming their prospects (which is why they voted Leave in the first place).
To be fair to Phil, he has shown some signs of grasping this point. He has warned the Europeans that Britain will have to consider seriously switching to a Singapore-style of free market economy (small state and smaller taxes and plenty of self reliance) if they are particularly bloody-minded in the negotiations. Sadly, this is said as a defensive threat rather than as a free-standing statement of intent. And his idea of a £500 million boost for technical training to put it on a par with academic study (T-levels to go with A-levels) is a step in the right direction, although there needs to be a vast cultural shift in schools, universities and colleges to make real headway and persuade the British establishment that engineers can be as fashionable as film producers.
But these are timid moves and only scratch the surface of what is required to crystallise the economic benefits of Brexit and turn the UK into an industrial and commercial world-beater.
He could make a start on Wednesday. It would cost a little over £40 billion a year to scrap corporation tax and have the world’s biggest and richest companies flocking to our shores to head-quarter their operations. That would give the EU something to think about.
(Image: Christian Reimer)