A spending sprinkle

This year’s Budget Statement was never going to break any new ground. The competing priorities of ending austerity, increasing public spending, cutting taxes and increasing infrastructure investment are by definition impossible to reconcile with sincerity.

The ‘public spending spree’ that some were hoping for, materialised as more of a 'spending sprinkle'. We were offered a host of upbeat, if modest, announcements - but perhaps at the cost of dealing with the wider, longer-term challenges around public finances.

Deficit, Borrowing and Growth

It’s concerning that eliminating the deficit – and ultimately the debt - continues to be pushed further down the road. Our national debt now stands at £1.75 trillion – a figure so significant, we cannot rely on it just inflating away. Returning the public finances to surplus must continue to be a priority, and should be referenced and promoted as such by the Government.

Of course, we should welcome that government borrowing has reduced further than expected. We should also be thankful that the economy continues to grow, but the rate of growth is extremely lacklustre compared with our G7 partners.

Specific Announcements

I was also struck by the Chancellor’s insistence that the Government will not enter into any new Private Finance Initiative (PFI) projects.

As a model, PFI has many merits; much of the failure of PFI projects in the UK has arisen from government’s poor contract negotiation. The PFI model is in fact being successfully adopted by many countries around the world, who have learnt from our mistakes.

There was also a failure to revise the target to create three million apprenticeships by 2020 – which it’s widely thought will now not be met. There was, however, welcome news that the contribution of small companies to the apprenticeship levy will be halved – an encouraging development for those businesses who offer ICAEW’s Level 4 and Level 7 Trailblazer apprenticeships.

It is also welcome that the extension of the IR35 rules to the private sector is delayed until 2020. A number of issues still need to be resolved.

With less than six months to go until Brexit – and an increasing possibility of ‘no deal’ - confidence and stability are paramount. To those ends, this Budget Statement was safe and sensible. Our debt, however, continues to build.