Budget omissions might be more important than what was included

Politics

So what was missing from Budget 2021? 

That is a very live question after it turned out Rishi Sunak had way more money tucked down behind the back of the sofa than most people expected.

So much of this cash – £27 billion – to splash went on just one, fiendishly complicated tax break scheme which will benefit certain types of companies. The Treasury says the Super Deductions policy will promote growth and is the largest of its type in modern British history.

But on Wednesday evening it emerged the Office for Budget Responsibility is warning this policy may not spur much new growth at all.

Mr Sunak’s policy is time limited – in place for two years from April – prompting the OBR to pass judgement that “it largely brings forward planned investment from future years”.

The OBR have applied a “very high” uncertainty rating to the overall costing, meaning it could cost more as well as less.

The OBR also comments that “not only are the rates generous, but they are not limited by value”, meaning that Super Deductions could create super winners.

More from Budget 2021

This risk might have turned out to be a brave gamble richly rewarded but it might prove not to be. It is also why some want to know if sums on that scale could have been better spent on things the chancellor did not mention.

Public services are likely to be top of the list, as Sir Keir Starmer pointed out in his Budget response. The chancellor has been warned that the current trajectory for schools, hospitals and other public services will come under strain from the enduring costs of the pandemic as well as the ageing population. This will mean future discussions about a cash injection in future spending rounds.

Subscribe to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker

Then there was not a word on social care. When the reforms to social care are eventually released and they have been promised this year like every year for the last decade, the Treasury will have to foot the bill for reforms. No sign in this budget where the cash for that comes from.

And then there’s welfare – the Universal Credit £20 a week emergency uplift remains but only for six months. This just delays a final decision, meaning the row between Mr Sunak who wants to scrap it and his backbenchers, some of whom want to keep it, was just delayed – not won – by the chancellor. Will Rishi Sunak after all have to fork out the £6 billion in perpetuity to make the temporary uplift permanent?

These are all things Mr Sunak will have to address one day. He just chose not to use the money down the back of the sofa to sort them out today.

Products You May Like