It was a formidable performance from a Chancellor with a complete and confident mastery of his subject matter. Because of this, it was a small-print budget – which emphatically does not mean a small-scope one. There were two crucial changes, whose implications are far-reaching. The first was an attempt to deal with the burdens which social care imposes on the NHS. Neither Philip Hammond nor the Health Secretary, Jeremy Hunt, can be accused of burden evasion. But given the scale of the problem, a couple of questions remain. First, are the measures adequate? Second, if they were, could the country afford them?
The other crucial change relates to affordability. Mr Hammond is paying for increased expenditure by introducing a number of tax changes to raise more revenue from the self-employed, company directors and other persons who pay expensive accountants to insulate their incomes from HMRC’s rapacity. Over the years, dating from the era of high marginal rates and the resulting financial psychology, all sorts of dodges and exemptions attached themselves to the tax system, like barnacles. There is a lot to be said for scraping these off. Income tax ought to be levied with as much clarity and as few allowances as possible – and at a low rate.
That is the problem with Mr Hammond’s anti-avoidance measures; the rates are still too high. Higher taxes on businessmen to fund social care: the moral case sounds overwhelming. But there is a risk that diverting resources away from wealth creators will undermine wealth creation. Although the British economy offers many reasons for cautious optimism, everything depends on growth. Given the debt mountain, the constant pressures from the public sector and the international situation, the British economy is precariously poised on the narrow ground of a Micawberite margin. If growth fails us, the debtors’ prison awaits. So let us hope that the Chancellor’s measures have not unduly depressed the animal spirits of the growth-producers.
There was nothing depressed about Mr Hammond himself. He not only made jokes: they sounded spontaneous and they worked. One might have assumed that Philip Hammond’s humour was ideally suited to a convention of elderly actuaries: not so. Apropos the elderly, the chancellor had some good cracks at the expense of someone who urgently needs social care: the Leader of the Opposition. He was so far down a black hole that Stephen Hawking had despaired of him. His party was learning all about driverless vehicles. Poor old Corby. His response to all this relatively gentle mockery was to look genuinely pained. The Shadow Ministers on either side seemed to share his pain. Their distress on his behalf went beyond Parliamentary theatrics. They really are sorry for him.
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One wonders whether there might be a moral hazard in deriding Mr Corbyn. It might seem almost the same as kicking away a blind man’s white stick. But there it is. In an adversarial parliamentary system, there is not alternative. As long as Jeremy Corbyn leads his Party, the Tories will have to go on mocking the afflicted.
The question of moral hazard brings us to the one unquestionably dubious proposal in this Budget. The Chancellor is planning to hand over another £350 million to the Scottish Government. That is a seriously bad idea. It will merely give them more money to waste and an enlarged scope for incompetence. The objection to the scale of our current spending on foreign aid is that a lot of the cash ends up dribbling away in boondoggles, corruption, chronic inefficiency and outright embezzlement. The hard-pressed British taxpayer merely enhances the incomes of wealth-managers in Zurich. But several African counties are better-run than Nicola Sturgeon’s Scotland. Perhaps this is a necessary price to pay for the Union. Yet there is a danger. It might encourage a lot of Englishmen to wonder whether the Union is worthwhile.