Spring Budget 2024: No real rabbits from Hunt's hat

This was always going to be a Budget with both eyes on a looming General Election, so it’s no surprise Jeremy Hunt has tried to restore the Government’s economic credentials and offer a few electoral giveaways to secure more votes.

Viewers expecting a “historic” budget, with some electoral rabbits out of the hat, will have been left disappointed, as most of the budget had been pre-briefed in the media.

While the red book certainly doesn’t make for light afternoon reading, this does…

What’s hot?

Pubs, motorists, the Sun (newspaper), SMEs, Devo, spaceports, nuclear, pension fund managers, AI, Brit ISAs, Idris Elba, Kiera Knightly, Orlando Bloom, creative industries, buying/selling second homes, having kids (if you earn between £50-60k).

What’s not…

Inflation, oil and gas companies, government-owned NatWest shares, vapes, non-doms, public sector productivity, first-time buyers, second homes, taking business class flights, fat-shaming.

Now that we’ve unleashed our inner Billy Joel, let’s dig a little deeper into the Chancellor’s Spring Budget…

Trying to ensure tax ain’t too taxing

The most important aspect of any Budget, and especially so in an election year, is what the Chancellor does in relation to tax. With the UK facing the highest burden of tax since 1940, a millstone that’s been hung uncomfortably around the Conservatives’ neck in recent years, Hunt is adamant on paving the way for a lower-tax economy.

A 2p cut to national insurance, which is expected to benefit around 27 million workers to the tune of £450 a year, was Hunt’s headline tax cut. The polls seemed unstirred by his identical cuts in the Autumn, so it seems an interesting election gamble - double or nothing, why not…

The Hunt for headroom

To free up more fiscal “headroom” to pay for the Chancellor’s £10bn NI tax cut, the focus has been on ensuring public services are efficient rather than over-resourced. The NHS received the most mentions - there was talk of AI, drones, and digitisation - but there was a lack of overall strategy. The review of how public money is spent won’t be until after the election, so it seems Hunt has kicked the can down the road, to find the short-term headroom needed to make tax cuts. Committing to the next Spending Review being after the next election doesn’t, however, rule out another pre-election ‘fiscal event’.

Labour trying to avoid elephant traps

The pre-briefing and lack of rabbits made Labour’s reaction operation easier. Labour stuck firmly to the expected focus on ‘Rishi’s recession’ and seeking to dilute Hunt’s tax cuts – with the 70-year tax high at the front of their rebuttal. They have avoided a dividing line on the 2p cut in National Insurance by confirming their support for it but have had their non-dom dividing line erased by Hunt’s conversion. The far bigger challenge is taking the spending plan's reins should they win the election, as polls continue to predict.

A Conservative AND Unionist Party?

Leader of the Scottish Conservatives, Douglas Ross, was left empty-handed after his lobbying efforts on behalf of North Sea oil and gas companies went unheard and windfall tax was extended for a further year until March 2029. This puts the Scottish Conservatives in a slightly awkward position, as they have been adamant that this extension will be catastrophic for jobs in the North East. Douglas Ross has already confirmed he will be voting against the extension and Andrew Bowie, who has been on resignation watch, as well as other Scottish Conservatives could follow suit.

With half their six Scottish seats in the oil and gas dominated North East, this move may well damage the current Government’s election prospects north of the border. Has the Government given up on Scotland? Or are they confident that rattling the oil and gas sector won’t hamper their ability to retain their seats in the North East of Scotland?

Either way, it seems the Tories are confident that neither Labour nor the SNP will be able to win over enough voters to damage their election prospects in the region.

Bunny from a beanie

Many within the Conservative Party had hoped for a more ambitious, election-prospect-increasing cut to income taxes, but they were left disappointed by a mundane and somewhat pre-briefed Spring Budget. While the Chancellor didn’t make any jaw-dropping announcements, there were a few announcements that could persuade some voters. A reintroduction of Child Benefit to middle-income earners previously captured by George Osborne’s Child Benefit taper, is a further measure to reduce the cost-of-living burden. Further announcements to benefit wealthier individuals include a reduction in property capital gains tax, but with a twist – both the OBR and HMT project this to be a net positive to the Treasury coffers.

Keeping the benches onside

Jeremy Hunt will be well-aware that an effective General Election campaign can only be fought with the party united. With growing discontent in the party increasing in recent weeks, Hunt was under pressure to appease grumbling MPs. Amongst the backbench beneficiaries of Hunt’s budget are Sajid Javid and his £1m memorial for Muslim soldiers, as well as Virginia Crosbie and her Nuclear project in Anglesey. Whether these nuggets will have a wider impact remains to be seen.

Conclusion

The biggest takeaway from today’s unexciting and fairly unambitious budget is that the prospect of a May election seems to be receding. With little to over-excite voters, Hunt will hope that some of his short-term retail policies - such as the alcohol and fuel duty freezes – and an improved economic climate with lower inflation and an easing of interest rates will create a far better backdrop to a general election later in the year.