Will Tuesday’s Spring Statement be a non-event for HE?

Budget traditions never stand still: Gordon Brown dispensed with the Chancellor’s usual alcoholic tipple and Gladstone’s Budget Box – later brought back from retirement – but Philip Hammond changing the date of the budget to November may seem a step too far for some traditionalists.

But, the change makes eminent sense given the planning horizons of most Whitehall spending departments and after all, Autumn budgets have been the norm in the devolved administrations as well as governments abroad.

This shorter statement might be expected to slash the preparation time and effort required from civil servants, spin doctors and ministers. Yet any time in the media and parliamentary limelight for a senior politician will be taken with the utmost seriousness.

So what we will get on Tuesday is not a budget at all but a short 20-minute statement – with no red box. In theory, there will be no major decisions on tax and spending but some more detail from the Treasury is likely on critical topics, such as the implementation of the industrial strategy, and the pledge to improve the UK’s lagging R&D record.

Mixed signals in the forecasts

November’s forecast by the Office for Budget Responsibility (OBR) was a forbidding read, downgrading UK growth and highlighting flatlining productivity. The glimmer of hope was the structural deficit being on target for 2% of GDP by 2021, and a whole year of budget surplus. Wonkhe’s Louis Coiffait has looked at this in more detail here.

Although tomorrows’ OBR forecast wasn’t meant to depart from this significantly, rays of sunshine should be savoured in a chilly Spring, with analysis by the Resolution Foundation suggesting a favourable fiscal movement of £11bn since November 2017’s forecasts, due to an uptick in productivity (from 0 to 0.6%), and a boost in self-assessed tax returns. The global economy has also rebounded more quickly than expected, increasing demand for UK exports.

Policy impacts?

The other half of the statement will be the Chancellor’s chance to pitch new ideas and position the government politically, as the two main parties are currently neck-and-neck in the opinion polls. The scramble to work out what is ‘new money’ from any statement from the Chancellor usually awaits clarification from the oracle that is the Institute of Fiscal Studies (IFS), when their forensic analysis is issued a day or two later.

Insights concerning the Post-18 Education and Funding Review are not expected, with ministers and officials generally sticking to a line that nothing will be decided or announced until its conclusion in 2019. But any future relaxation of Departmental Expenditure Limits (DEL) will be seized upon by those noting the (Treasury-inserted) lines in the Review’s terms of reference, that all recommendations “must be consistent with the Government’s fiscal policies to reduce the deficit and have debt falling as a percentage of GDP”. An increased haul of tax revenues may give some flexibility for the Department for Education to argue that additional investment in flexible and part-time learning, and student maintenance, is now possible within this broadly-worded fiscal envelope.

Politics, politics, politics

Yet with all of the financial detail and data likely to be released, set-pieces such as this are always raw political events. The Chancellor will doubtless position himself as the competent steward of the public purse, attempting to contrast himself with his profligate opposite number. Hammond will likely attempt a balancing trick of ostensible prudence while continuing to relax the hard edges of austerity where money allows, perhaps addressing public concern about social care costs and public sector pay caps. Higher education watchers will be particularly observant on that last point, lest it creates unrealistic expectations of a pay award for HE staff (not affected by the 1% cap hitherto), in the midst of a pensions strike.

This political side of the Spring statement has added salience due to the Chancellor’s position as the cabinet’s foremost Brexit realist. This has made him the prime target for the Conservative Party’s hard Brexiteers. Any ‘dropping the ball’ at set-piece parliamentary events will provide an easy excuse to call for his head, yet again. Speaking in the week of the fabled Ides of March, Hammond would be wise to beware those who would usurp him – both those across the dispatch box, and the Brutus’s behind him.

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