Read: Jeremy Hunt's budget continued his calming efforts on the markets

Over the years, HM Treasury has been a department fermenting the decisions that shape our country. I saw that directly with my own first Ministerial role, as Economic Secretary to the Treasury in 2010. My memories of budget days are of long, intense days that go by in a flash. In the weeks before, all Treasury Ministers are involved in developing a myriad of different measures to bring together. 

The challenge for a Chancellor is that any of these budget measures can be the one that lands badly, or is ill-judged, creating bad headlines and potential climb downs. Liz Truss’s ‘mini-budget’ in September 2022 was so thoroughly rejected by the financial markets and voters that it was, uniquely, essentially withdrawn. Cuts or increases on smaller fiscal measures such as alcohol duty on beer, whisky and wine often receive huge attention. It all underlines that for any Chancellor it is incredibly hard to get a budget right, yet very easy to get it wrong. 

It’s a mark of the political chaos of last year that the Treasury’s most consequential announcement was technically not a budget at all but a ‘mini-budget’, so this week’s was actually the first formal budget since 2021. Did it deliver?

At a time of severe cost of living pressures, having a pensions tax giveaway for the wealthiest whilst also freezing tax rate thresholds, pulling six million lower and middle income people into higher tax bands, may yet prove to be the most debated part of Jeremy Hunt's first budget.

Yet in many respects it had cause to be welcomed. For a start, as last year’s post mini-budget events demonstrated, UK economic stability isn’t a given. Chancellor Jeremy Hunt’s budget continued his calming efforts on the markets. In relation to the fiscal rules Hunt set himself on reducing UK debt in relation to national income, his numbers do add up, though the Office of Budget Responsibility has pointed out how little room for manoeuvre now remains. If budget regeneration and growth measures underdeliver then meeting the rules will be at risk. 

A significant element of it was rightly focused on the practicalities of a Government that must, as Hunt put it explicitly, deliver on the political mandate of levelling up.

During my time as Education Secretary in 2017 I introduced both the 30 hours free childcare entitlement for working parents of 3 and 4-year olds and the Apprenticeship Levy. The Budget’s expansion of childcare provision for even younger children, supporting working parents, is crucial for social mobility and particularly for women’s progression in careers. Meanwhile, apprenticeship reform aimed at helping people reskill to re-enter the workforce - the Chancellor termed them ‘Returnerships” - is a timely and sensible shift that can reduce barriers for experienced workers looking for a fresh start.

Hunt’s announcement of a continued journey on devolution is a welcome and genuinely exciting one for the Yorkshire region. More place-based partnerships for regeneration of people and places can build on the experience in recent years of both the Department for Education’s Opportunity Areas and the work of regional Mayors. Putting local government in the driving seat in shaping the local economy, being more in charge of the levers that drive it such as skills and transport, and allowing communities to reap the fiscal rewards of success through business rates devolution is a fairer, smarter approach on devolution. The centring of the 12 new “Investment Zones” around university hubs reflects the crucial impact many universities have regionally, working in partnership with business and local government. Yorkshire universities are as well placed as any to deliver the benefits of Investment Zones locally.

However, I do have two specific quibbles with the budget. Firstly, it left young people with little, if anything, to cheer about. University students are facing a largely hidden, unrecognised cost-of-living crisis, particularly when it comes to housing. It risks disproportionately driving those from more disadvantaged backgrounds to conclude they simply cannot afford to continue their studies and drop out. That would be bad for them, bad for levelling up and bad for those very regeneration projects and Investment Zones we want to see kick-started. Additionally, besides the ‘returnership’ reform for experienced workers, the apprenticeships levy should have been accompanied by broader reform to improve younger people's access to those opportunities. There’s a general agreement between employers and providers that the system needs updating. The Government must grasp that nettle.

A second problematic issue is business taxation. If the plan is to incentivise business through targeted tax breaks for investment, there is merit in the Chancellor’s argument for going ahead with Boris Johnson and Rishi Sunak’s increase in the headline rate of Corporation Tax from 19% to 25% that funds it. But the tax incentives are only for plant, machinery and capital investment. They leave out a significant part of the UK economy, such as businesses in the service sector and talent-based industries, with human capital as their main asset. For them the corporation tax rise remains a big bite out of profits but is not matched with the tax incentives on investing in staff and skills they need to grow their business. With all economies shifting to become more knowledge and talent-based over time, it’s vital there’s a more balanced approach on tax incentives for investment that can benefit all businesses facing higher corporation tax rates, not just some.

As this May’s local elections and next year’s General Election loom ever larger, there's no doubt that this week’s March budget aimed to give Conservative MPs and activists a spring in their step. It was also about giving people a sense of a Government with direction and a plan. Only time will tell whether voters feel it’s enough.

Featured in the Yorkshire Post 18th March 2023.