23 Mar 2023

Post Budget Analysis webinar round-up

On Thursday 16th March, MHP Group held a webinar to explore Chancellor Jeremy Hunt’s Spring Budget 2023 and the implications it would have for the business community.

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The webinar was moderated by Tim Snowball – Head of Public Affairs at MHP Group, with panellists:

  • Paul Scully MP – Minister for Tech and Digital Economy & Minister for London at the Department for Science, Innovation and Technology
  • Lord Tom Watson – Former Deputy Leader of the Labour Party
  • Lucy Fisher – Chief Political Commentator of Times Radio
  • Steven Fine – Chief Executive of Peel Hunt

Proceedings began with polling provided by Emma Levin, Associate Director at MHP Group’s sister agency Savanta, who revealed that 49% of respondents supported the measures announced in the budget to some degree, with just 20% opposed.

The most popular measure was the extension of the Energy Bill support scheme, with 79% of respondents in support, followed by the freezing of the 5p-a-litre fuel duty cut (71%) and the 30 hours per week free childcare for one and two-year-olds (68%).

However, more than two-thirds of respondents (67%) stated that they did not believe the measures contained in the Spring Budget would be enough to help people with the rising cost of living.

Fisher began by referring to the Chancellor’s approach as “safety first”, and noted that though he wanted to frame this as a budget for growth, the growth outlook for 2025, 2026 & 2027 was worse than the Office for Budget Responsibility (OBR) forecast in the Autumn. The other theme identified was getting people back to work, reflected by announcements on childcare, pensions reform, and disability support and assessment reforms.

Fisher stated the “OBR had a very low level of certainty that these measures taken together collectively would actually work” and that in her conversations with Conservative MPs, many recognised that the budget could offer the platform for a more ambitious set of economic measures to be unveiled next autumn or spring preceding a general election. Of note, the Chancellor’s decision to maintain the income tax threshold freeze resulting in six million people placed in higher tax bands had led to a feeling of unease among the parliamentary party that moves which had led to a 70-year high tax burden are “unconservative”.

Lord Watson commended Jeremy Hunt’s performance as Chancellor, stating “he has all the right instincts” before adding he faced “an almost impossible task”. He praised the Government’s childcare offer whilst suggesting Labour’s Shadow Education Secretary, Bridget Phillipson, would not be downbeat as the plans had provided a funding benchmark from which she could advance Labour’s proposals. Lord Watson welcomed the investment in quantum computing, believing it could encourage export-led growth, adding that if he led the country, he would propose a national mission to compete with China and the US on investment in the quantum industry.

Fine welcomed the supply-side reforms and the long-term nature of the budget, asserting long-term planning was essential. He was encouraged by the OBR’s forecast that the UK would avoid recession and inflation would fall to 2.9% by the end of 2023. Furthermore, he welcomed the budget as providing a solid base for the UK to make the case in the future that it was a stable environment in which to invest and do business.

Scully referred to the budget as a reflection of the Government’s propensity for solving problems, highlighting recent wins on the Northern Ireland framework and small boats. He stressed the importance of the Government using the next year to set out a vision for Britain that would resonate with voters, noting that Chancellor and Prime Minister were building the credibility for that vision via the budget. On the topic of his portfolio, Scully underlined the Government’s focus on technological advancements that would provide a new revolution in the UK economy. On the semiconductor strategy, he said its delay was due to ensuring “it actually does something” and benefits key cornerstone industries within the UK.

On whether the raising of pensions allowances was a smart way to keep doctors in the workforce or simply a giveaway to the rich, Lord Watson stated, “it was a bit of both” and that if Labour won the next election, there would have to be some form of pension reform to retain those holding senior positions in the workforce.

On how people would feel by spring 2024, Fisher said it wasn’t likely people would feel better off by then; and that would create pressure for Jeremy Hunt to take action concerning tax cuts. Lord Watson suggested the next election would likely focus on the cost of living, and the challenge for both parties would centre around rebuilding the economy, stressing the election outcome was uncertain.

Responding to criticism over the decision to allow duty on all alcoholic products produced in the UK or imported to increase in line with inflation from August, Paul Scully reiterated the Government’s commitment to helping the hospitality industry, referencing the “Brexit Pubs Guarantee”, stating the limited fiscal headroom resulted in tough decisions. Though he expressed his support for action on business rates as part of a long-term plan.

The webinar concluded with a discussion of electoral strategy. Responding to the lack of attention given to the red wall during the budget, Paul Scully stated that nothing had changed in this regard, the Government remained focused on delivering for the UK population, including both the red wall and the blue wall.

Lord Watson added that he believed the Liberal Democrats could prove to be challengers across the South-West and return to Westminster with “30 or 40 MPs”. Labour would need to think about the arrangement required to advance progressive politics, and a new devolved arrangement to the Midlands and North of England could produce the biggest gain for political parties in the red wall.

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