Wednesday's announcement could be surprisingly uneventfulby Emran Mian / March 16, 2015 / Leave a comment
The Chancellor said yesterday that there would be “no gimmicks, no giveaways” in this week’s Budget. Few people believe him. Before every fiscal event, I go through the documents from the previous one and check what has already been promised for the next one. It’s a former civil servant’s instinct. Surprisingly, the documents from the Autumn Statement (in this blog I only deal with what has been conclusively promised, rather than briefed off the record to journalists) don’t suggest that much action in this Budget either.
There are some nuggets about housebuilding. In the Autumn Statement the Government announced that, rather than selling off a big parcel of public land in Northstowe, Cambridgeshire, it would take charge of developing a new town at what has formerly been the site of an airfield, then a barracks and an immigration reception centre. The ambition is to build 10,000 homes “up to twice as fast as conventional development routes.” The phrasing is handy here, “up to” twice as fast could mean half as fast. Nevertheless the Government is due at the Budget to report back on how it’s getting on and the hint is that, if the model works, then it may be used on other parcels of public land. The Autumn Statement also revealed that the Budget would include proposals for speeding up the development of brownfield land by making the Compulsory Purchase Regime “clearer, faster and fairer.”
A second area where an update was definitively promised is the sale of public assets. The Government has a target to make £20bn of sales between 2014 and 2020. The big items are the shareholding in Lloyds Banking Group and the mortgage portfolio that was taken over from institutions that collapsed during the financial crisis. The Treasury sold off another package of Lloyds shares just last week; and a deal for the Government’s stake in the Eurostar service has also been made. An outstanding item is the student loan book. The Government has plans to sell parts of it, turning a long-run source of cash repayments into a one-off return upfront. On the one hand, being able to do so might counter Labour’s claims that the student loan system is unsustainable. On the other hand, any sale is likely to take place at a discount to the book value which will illustrate once again that the Government is losing money on many of these loans.
Then there are some smaller promises. For example, the Autumn Statement documents tell us to expect a report back from a review of Gift Aid rules. This might be an opportunity for the Conservatives to restate their Big Society credentials. The Chancellor usually announces a handful of science investments at every fiscal event. There is a strong nudge in the Autumn Statement documents to suggest that this will happen again at Budget. And there are more Enterprise Zones to be announced as well. These are part of the Government’s regional economic strategy. Businesses that set up inside them can benefit from tax reliefs, simplified planning rules and superfast broadband. So close to the election there might just be a certain pattern to where the new ones are going to be.
But then that’s it. If the small number of past promises to be fulfilled at this Budget is anything to go by, then this will be a Budget that focuses perhaps on telling the story of what has happened during this Parliament and the tough choices ahead, rather than one stuffed with new announcements. However, what we might see are promises about future promises.
We’re in that stretch of time when announcing reviews can be a handy way of suggesting that policy will change without indicating yet precisely how. Already this week the Treasury has announced a review of business rates—a perennially unreformed tax much criticised by business groups. The challenge in making any changes is that there will be losers as well as winners. It’s a big risk to identify them before an election. Announcing a review, on the other hand, means that Government is open to hearing everyone’s case. By the way, it’s also the right thing to do—any changes should be thought through carefully. At Budget 2016, all will be revealed.
If Budget 2015 does turn out to be a quiet one, then it may just be because more issues, in the same way as business rates, will be stocked up for the next one.