With the Budget just around the corner, will Chancellor Philip Hammond loosen the purse strings, or keep a focus on reducing the deficit?

(1) Changes to Universal Credit

The issues has been at the top of Labour’s Christmas wish list since the Conservative’s unexpected General Election set-back. Hammond is half-expected to reduce the time recipients have to wait for their Universal credit payouts to six weeks – accordingly costing the Treasury up to £200million a year, arguably surprising given the expectation that Hammond intends to hold the line on reducing the deficit.

(2) Action on Housing

Has an issue ever been so ever-present in the lead up to a Budget than housing? Sajid Javid has kept the issue in the news, and despite Cabinet claims that there ‘is no silver bullet to fix the housing issue,’ the government has committed to building 300,000 houses more per year. However, after the ‘no silver bullet’ line it is unclear how the Chancellor intends to resolve the issue – particularly after noting that he will ‘use the power of the State’ – arguably suggesting he does not intend to liberalise planning laws, a move advocated by many in the Conservative Party grassroots.

(3) Public Sector Pay

It was the divisive issue in the immediate aftermath of the election – with Labour and allies calling on the government to scrap the Public Sector Pay cap after it emerged during the election that some Nurses are forced to use food banks. 

Labour won that battle, with pay rises recently moving over the previous 1% cap – but recent changes to interest rates – with the Bank of England upping them to 3%, means fresh calls for a raise have been made. 

But where would Hammond find the money from? IEA Chief Economist Julian Jessop said: “It looks inevitable that the public sector pay cap will be lifted for some workers, but this should be limited to those areas where there is unambiguous evidence of difficulties in recruiting and retaining staff.” Indeed, right-leaning think tanks such as the Taxpayers’ Alliance have instead called for decentralising pay bargaining – giving power to employers to pay as they wish but removing power from Unions.