Spring Budget 2024: Grayling Analysis

Today’s Spring Budget was expected to be a defining moment ahead of the Conservative’s election campaign. Chancellor Jeremy Hunt hoped to reveal a raft of voter-friendly announcements, thanks to a growing economy, falling interest rates and improved public finances - providing a much-needed spring bounce.

Instead, the OBR squeezed the expected headroom, and the Chancellor faced a boisterous and confident opposition bench with repeated appeals for order from the Deputy Speaker.

In a heavily pre-briefed Budget, there were no headline-grabbing surprises on the day. Instead, the Chancellor’s speech was relatively modest with fiscal tinkering at its heart and a concerted effort to create clear political dividing lines ahead of the General Election. The move to get rid of non-domicile status and extend the Energy Price Levy for another year shows a government wanting to force Labour’s hand - having pledged to use this money for NHS appointments, Breakfast clubs, NHS equipment and Dentistry appointments.

Whilst the changes to the High-Income Child Benefit Charge, a second 2p reduction in National Insurance and a freeze on fuel and alcohol duty shows a government that wants to convince working voters that they are on their side. In contrast, this Budget was designed to position Labour as the Party that would increase taxes to pay for their commitments, hurting hard-working families.

The Conservatives could still decide to push forward with a May election, but it feels that this was a Budget that is preparing the ground for an earlier Autumn Statement or campaign event with a promise of further tax cuts. If speculation is to be believed, this would also see a new Chancellor to continue the plan.

With the Chancellor’s seat looking increasingly shaky, the focus on NHS public sector reform in the Budget reflected his own personal passion projects. On the doorstep, what voters want to hear about are the number of nurses and doctors at their local hospital instead of how AI will transform public services.

And with public support weighed towards more investment in public services, rather than tax cuts, there will be growing calls to question both sides on how they will tackle the challenges facing the country’s public services. For now, Sir Keir Starmer blasted the highest tax burden in 70 years and whilst the Labour Party would support the National Insurance reductions, expect to hear a lot more of how this government is giving with one hand and taking even more with the other - a top public concern reflected in recent polling.

But the burning question on everyone's lips is when the General Election will take place. Based on today’s events, this feels like a government that is rolling the pitch ahead of a second fiscal moment later in the year, hoping that this time the economic weather blows in their favour.