As Philip Hammond steps up to the despatch box tomorrow he has the unenviable task of navigating the complexities of the public finances while at the same time trying to traverse the volatile and complicated waters of public opinion.
Since the June General Election there has been negligible movement in the main parties’ poll ratings. As a result, many Conservatives see the Budget as a chance for notoriously cautious ‘spreadsheet Phil’ to jump-start the Party’s fortunes with some eye-catching policies – especially among young people with whom the need to reconnect is especially urgent. Current ideas in the offing are large policy announcements (or re-announcements) on housebuilding, freezing student debt, a new railcard for millennials, continuing the fuel duty freeze and tax cuts.
ComRes polling for MHP Communications, published today, reveals that - despite the apparent popularity of Labour’s policies - there is significant scepticism about Government expenditure, with only one in five people (22%) saying they think Government spends taxpayers’ money wisely. Although two-thirds (67%) say that Britain ‘should invest more in public services even if it means paying more in taxes’, this figure is lower among the young than their older counterparts. Defying the logic that Jeremy Corbyn has overseen a ‘youthquake’ in British politics, engaging them with a traditional left-wing agenda, the over-55s are significantly more likely to agree with the case for ‘more taxes please we’re British’ than those aged 18-34 (73% v 61%).
This highlights one of the many tensions within Labour’s support, that traditional left wing economic policies are often more popular among older, more traditional Labour voters than among the new phalanx of younger voters the party secured in June. For them, Brexit (or at least Remain) and social liberalism are more of a draw.
The Tories will be pinning their hopes on the fact that they continue to be seen as the safer pair of hands for managing the economy: May/Hammond have outpolled Corbyn/McDonnell consistently all year on this measure. A ‘safety-first’ Budget plays well among the eight in ten who do not think the Government spends taxpayers’ money wisely, but that is not enough to win a General Election. Nor is simple managerial competence. You need also to show that you care about the issues that affect people’s daily lives.
That taxpayers feel their money is spent recklessly has no apparent impact on the consequential logic of trying to avoid paying tax in the first place. The reaction against tax avoidance is almost unanimous. ComRes polling for Christian Aid, published yesterday, found that nine in ten adults in Britain (89%) agree that ‘tax avoidance by large companies is morally wrong even if it’s legal’. This sentiment is even higher than the last time ComRes asked the question in 2014 and doubtless reflects anger with the economy and society more widely. ‘Angry voters’ have been suggested to have played a key part in the success of both last year’s Leave campaign and June’s Labour performance, but whether Philip Hammond will be able to placate that anger remains to be seen. In any event, Budgets seldom trigger political recovery; rather they have had a knack in recent years of blowing up in the Chancellor’s face.
So Philip Hammond must tread carefully if he wants to use the Budget to take electoral ground from Labour. Remind voters that he’s a safe pair of hands and he might end up reinforcing the perception that the Tories don’t understand Ordinary Working People (about whom, incidentally, we seldom seem to hear anymore). But a more populist ‘jam today and jam tomorrow’ approach may jeopardise the Conservatives’ economic credentials with little electoral gain. Which is why, electorally at least, the line of least resistance will be to hammer multinationals on tax avoidance. ‘We may not spend your money wisely, but my goodness we’ll extract it from you as fairly as possible.