Bonkers Budget

There has been a dramatic u-turn from the Chancellor just 7 days after the Budget announcements. The plans to increase National Insurance levels for self-employed people have been dropped, probably due to the fact that it would break a 2015 manifesto pledge that no National Insurances rises would take place if the Conservatives were elected.

 

The second most powerful position in the UK has a political antennae that has gone incredibly wonky. How could Foolish Phil not be aware of the manifesto pledge? It should be tattooed on his forearm……it’s the go to political guide. How could his huge team of advisers not have raised the issue?

 

Simply crazy on every level.

 

As a consequence of dropping the National Insurance rise, the Chancellor needs to find around £600 million in the Autumn Budget to replace the income this would have created in 2018. In fact, Flaky Phil now has to find around £2 billion extra by 2022 to fill the void.

 

Income tax, National Insurance contributions and VAT raise 65% of the Government's tax income. If you pledge not to raise any of them, your room for manoeuvre is severely limited. It will be intriguing to see how he will find the £2 billion……but then he’ll probably change his mind anyway.   

 

Having closely followed and written about Budgets for 20 years, I am wracking my brains whether I can ever remember such a rapid u-turn on the central element of any previous budget.

 

It is a big mess and Chancellor Philip Hammond is looking significantly weaker politically. Perhaps the bigger issue is that when a Government is so overwhelmed by the burdens of exiting the EU and keeping Scotland in the UK, big accidents will happen. They have happened.

 

Such an avoidable mess.