The six most important figures from the 2017 Budget
17th September 2020
Following the Chancellor’s appearance at the Despatch Box today, Citypress Corporate Affairs Director Rory Fletcher analyses the six most important figures from the 2017 Budget.
1. 95% – the number of first-time buyers the government expects to see a reduction on stamp duty
Philip Hammond announced the immediate abolition of stamp duty for houses under £300,000 (expected to cover 80% of all first-time purchases). This will also be available on the first £300,000 on properties worth up to £500,000. In conjunction with an additional £44bn package intended to deliver 300,000 new houses a year by the middle of the next decade, the Chancellor will hope that tomorrow’s headlines position this budget as tackling the housing crisis, most keenly felt by younger voters amongst whom Tory support has eroded most rapidly. However, some of the luster has already begun to wear off the big announcement as the Office of Budget Responsibility (the UK’s official independent fiscal watchdog) warned that the changes will lead to price increases which leave first time buyers worse off.
2. £1.7bn – the amount earmarked for a Transforming Cities Fund, to be shared between metro mayor areas and other cities
Following the government’s decision to scrap rail electrification plans on three routes earlier this year, this fund, which will support intra-city transport development, will aim to improve the government’s standing outside of the Conservative heartlands. The Chancellor also announced that a new devolution deal had been agreed with the West Midlands which will see over £260 million to “address local productivity barriers”.
3. £2.3bn — the amount allocated for further investment in R&D
“Building an Economy Fit for the Future” was the grand title afforded to the Budget which outlined a number of measures aimed at supporting emerging tech business and skills development. These included increasing R&D tax credits to 12%; a raft of measures to encourage electric and driverless vehicle technology; and the creation of a formal skills partnership with the TUC and the CBI, dubbed the National Retraining Scheme. With the OBR cutting its productivity growth forecasts to just 1.2% this year, and the Resolution Foundation now stating that earnings won’t return to 2007 levels until 2025, there will be pressure for this kind of investment to deliver results, and fast.
4. £3bn – the amount that the Chancellor has set aside to prepare for exiting the EU
Despite rejecting calls to do exactly this less than two weeks ago, Hammond’s about turn reflects the pressure he faces from within his own party. However, further detail on how the money will be split between different government departments is distinctly lacking. A cynic may say that the announcement was more an attempt to appease those in his party who favour a hard Brexit, rather than a genuine belief from the Chancellor that the money will actually be required.
5. 1.5% – the downwardly revised growth forecast for this year
Despite predicting growth of 2% as recently as the spring statement in March, the Chancellor has been forced to slash GDP forecasts. Growth is now expected to remain below 2% until at least 2022, and is forecast to slow further until 2020. How dearly a government, which at times in recent months has felt on the verge of imploding, would have loved to have announced a host of bold measures to shift the news agenda, but these grim figures (perhaps the most important to take from today) make it abundantly clear the extent to which the Chancellor’s hands are tied.
6. 7 – the number of Tory MPs who would have to vote against the government to bring about Parliamentary defeat
The other major limiting factor for the Chancellor is the precarious state of the government’s majority (exacerbated by his own unpopularity amongst many in his own party). The reforms to Universal Credit waiting periods will have appeased many on the Tory backbenches and taken some of the sting out of Labour attacks, whilst scrapping plans to reduce the VAT threshold for small businesses was another banana skin avoided. Delivering a gaffe-free Budget will have been a priority for Hammond, and he has likely done enough for the time being to keep a lid on those clamouring for his immediate removal.
To understand more about how Citypress can help you to navigate the political landscape in uncertain times, please contact Rory Fletcher.