How will Hammond fudge his budget to fake an end to austerity?

At the beginning of this month Thersesa May vowed to end austerity. With Philip Hammond presenting his budget on Monday, two days before Halloween, we’ll find out whether the Prime Minister’s pledge was a trick or a treat.

Budgets can seem dull, however in the most uncertain time in recent British history all eyes will be on the Chancellor next week as he plans around Brexit, ending austerity and the promise by Theresa May to increase funding for the NHS.

The Resolution Foundation think tank have proposed that the Government would need to find a considerable £31 billion by 2022/23 in order to abide by their commitment to end austerity. Add to this the £20 billion per year promised to the NHS and clear questions arise on where this money will come from.

Will it come from increasing tax for high earners? Borrowing in order to increase spending as two thirds of people agree with? Or even a 20% VAT on private school fees that an Ipsos MORI poll confirms 54% of people support. No, a large proportion of the money looks to come from cuts to the pension tax relief system.

The current tax relief system rewards people who save for their future, if a basic rate tax payer pays £100 to their pension, it will only cost them £80, as the Government contributes the £20 it would have taken in tax from £100 of their salary. Hammond is unhappy with this system, wanting to cut it in order to find the money for his Government’s ambitious promises.

Unsurprisingly, 71% of people are against this plan. It would have a major impact on the pensions of doctors, GP’s and teachers. Essentially punishing hundreds of thousands of public sector workers in order to pay for Theresa May’s £20 billion plan that is unlikely to have much of a positive impact anyway. The funding won’t aid in areas of the NHS such as public health and social care which are the responsibility of local governments, yet with no aid from the Government to these areas and local governments still struggling with cuts, the £20 billion ‘gift’ to the NHS looks like Tory misdirection, a smoke screen to hide their desire to destroy our NHS.

Of course Brexit will also be a hot topic in the final budget before the UK is set to leave the EU. As there is still no consensus from the Government on if a deal will be reached, Hammond will have no choice but to prepare for the potential economic ramifications of a no deal. This is risky, if the budget concedes the UK will suffer under a no deal scenario, the EU will know how much the UK’s negotiating team will be willing to compromise in whatever deal they come up with. If the UK has any hand to play in the negotiations, this would no doubt reduce it to a fold.

The potential money being set aside for the end of austerity is also dependent on a good deal with the EU, meaning once again, instead of a genuine plan, ending austerity has become another empty promise from the Conservatives.

If you thought things couldn’t seem any worse for Theresa May, hold on.

The Tory’s inability to produce a majority at the 2017 General Election means they are being propped up in Westminster by the DUP, after a deal costing £1 billion. The Tory-DUP relationship isn’t going smoothly, with the Northern Irish party confirming they will vote down the budget presented on Monday if they are unhappy with concessions made to the EU. This would call further into question Theresa May’s leadership and decision making.

Brexit, austerity and the NHS are some of the most important issues in the UK. With the potential that this budget could have a negative impact on all three of these, we further realise the contempt this Tory Government have for the British people.


Robbie Lennie

History and Politics student @ Northumbria University

Robbie Lennie has 12 posts and counting. See all posts by Robbie Lennie

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