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It’s Budget day: the speech is over, the spin game is under way, and attention now turns to the details. George Osborne is calling it ‘the least consequential Budget that I can remember’ on tax and spend; Robert Jenrick is dubbing it the ‘mañana Budget’. This evening, after filing their ‘hot takes’ – you can read mine here – journalists are poring over Treasury documents, trying to work out how John Healey has made the sums add up. Welfare is likely to be a running theme in tomorrow’s newspapers, with total government spending set to rise by 5.7 per cent this year to some £353 billion – 11.1 per cent of GDP.
Defence, though, is going to be a running sore for this Chancellor. It was the issue that made him as a front-rank politician and now it could be the issue that breaks him too. Having quit Keir Starmer’s government over the failure to invest 3 per cent of GDP by 2030, Healey is now under fire for delivering a Budget five months later that failed to do exactly that. The Tories have released analysis suggesting that Healey is announcing £1 billion a year less than what Rachel Reeves had planned when the Defence Investment Plan was published in June. Treasury officials dispute this and the Office for Budget Responsibility argues that what departments gain in lower pension contributions, the government loses on the value of pension
schemes, meaning it all nets off. Yet it is a taste of what Healey can expect over the coming months, until he hits that magic 3 per cent target.
Then there is the issue of growth. The OBR says that the Employment Rights Act will have a ‘negative economic impact’ and hit businesses through ‘increased uncertainty, lost flexibility and higher labour related costs’ – including successive increases in the national minimum wage. The watchdog warns that these will ‘more than offset’ any potential increase in productivity, amid Healey’s boosterish talk today of outperforming growth forecasts. They add that the threshold freezes in income tax and national insurance contributions from 2022 to 2030 could decrease labour supply by 215,000 jobs. Alongside the big numbers, there are plenty of entertaining sideshows too. My colleague Tim Shipman is among those leading the charge
against Martin Lewis, the Money Saving Expert and newly anointed ornament of the constitution. Lewis announced this morning that Healey would scrap gas standing charges – some two hours before the Chancellor formally declared it at the despatch box.
Treasury insiders say that there is a game to this media feeding frenzy each Budget. Their aim is to make it to Monday when attention abates and switches elsewhere. So far Healey’s spinners will be pleased with the focus on the £100 in energy support for the 20 million households on A to D banded properties. Should that remain the top line for the next few days then they will congratulate themselves on a job well done – even if the longer-term prospects for the ailing British economy look no better than a year ago.
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