SMUG MONEY: Why I’ve lost faith in the Budget

Written by Rebecca O'Connor on 22nd November 2016

Imagine being the Chancellor for one second. At your disposal is the entire fiscal policy of a nation. You’re a smart cookie – you’ve had ideas on how to make things better since you were at university – that’s partly why you went into politics. That and oodles of power, anyway. You are surrounded by legions of bright young things you feel slightly threatened by, all keen to make their mark and a difference.

And yet despite these many minor geniuses working together to balance the books, increase prosperity, make everyone happy and somehow reduce public debt; despite the dire need to work out a way to make Brexit happen without plunging the economy into recession, despite waning public services and a deep sense of insecurity that everything is going to go t**s up as soon as interest rates start to rise again, life is unlikely to materially improve for the majority as a result of this Budget, as it has never become meaningfully better for one individual as a result of measures introduced in any Budget ever. Unless you count all the wealthy investors taking advantage of generous tax relief schemes, of course.

Budgets remind me of when my son gets stuck on his handwriting homework and rubs it out, then writes it again, rubs it out and tries it again. Each Budget is like a handwriting attempt scrawled over many previous rubbed-out attempts. But like the handwriting, you can still see the many previous attempts underneath, so the end result is a kind of blurry mess. It would have been better to start again on a new page, but too late now.

Budgets are an exercise in appearing to change a lot but in fact, tinkering around the edges. They are theatrical performances, in which the protagonist persuades the media and public to pay attention to a whole load of stuff that hardly matters at all, like removing 1p of tax off a pint, in the hope that they will miss the sleight of hand behind the scenes, like a far more damaging increase in VAT, which will clobber most people with a massive additional cost of living that they will feel but probably not understand.

Budgets are exercises in saying things will happen that you know will not make a blind bit of difference, if they happen at all, and saying it with conviction. They are early examples of the post-truth we all now know about.

Budgets are making it up as you go along, but pretending you can see the future.

They are about making people think that in the last year, only good things have happened to the economy, when in fact you can see the end of the food bank queue down the road if you look out the front window.

They are about giving people solid financial reasons to vote for you despite hating you and despite the flimsiness of those promises.

They are a litany of missed opportunities. Ask anyone who has made well-researched and heartfelt submissions to the Treasury on a topic they care about. Industry, charities and individuals are not short of good ideas, but the will – and in some cases power – to implement them is absent. Because Budgets are really about chancellors giving people reasons to keep their parties in power for as long as possible; not actually doing the right thing, especially if it might end up costing votes.

There are a million things that chancellors can technically do to make the country a better place, bring people out of poverty, reduce emissions and provide better public services. Introducing wealth taxes in lieu of income taxes, for example; bringing in a carbon tax and introducing more tax breaks for renewable energy; setting up a government home-building programme.

But the things chancellors tend to choose to do instead achieve no laudable public aims, they merely shift tax burdens around the populus, like a grumpy uncle getting passed round the family at Christmas, justifying high accountancy fees for another year.

Budgets generally do not deserve the fanfare they get. Most people do not genuinely care about them and go about their business on Budget Day rightly oblivious to the £27 or so the Chancellor has just saved them over the course of the year and instead more concerned about whether they’ve got enough in the house account to cover the energy bill.

Genuinely impactful and interesting things do sometimes happen in Budgets – the Lifetime ISA could count as such – but they are like little chinks of light escaping between giant breeze blocks.

So when Philip Hammond stands up to make his maiden Autumn Statement speech later today, I will of course be watching, but largely passing judgment on his hair. Because that’s pretty much guaranteed to have more impact than anything he could possibly have to say.