Reopening the property market during lockdown
Reopening the property market during lockdown
From the Queen’s Speech to the next election: what now for the government’s agenda?
From the Queen’s Speech to the next election: what now for the Government’s agenda?

Budget Debrief: Our five key takeaways

Words by:
Partner, Head of Public Affairs
October 27, 2021
  1. Hey big spender!
  • Tax and spend is back in a big way – although the Chancellor still claims to be a fiscal hawk.
  • This was an unashamedly populist Budget bursting with new spending promises. Unsurprisingly there was significantly less detail provided on where the money would be coming from.
  • The OBR forecasts show that the economy recovered faster than expected and will soon be back to pre-pandemic levels.
  • This increased growth plus high levels of taxation from the last two Budgets, and departmental spending of £150bn over the next three years, brings the size of the state to its highest level since the late 1970s with the highest tax burden since 1949.
  • Faced with the choice over whether to use the windfall of economic growth and increased tax revenue to reduce the size of the state or increase public spending, the Chancellor has taken the clear political decision to keep splashing the cash.


  1. Cost of living measures unlikely to be enough
  • Clearly sensitive to growing concerns about the impact of rising inflation on household finances, the Chancellor was keen to be seen to protect those on the lowest incomes.
  • The Universal Credit taper rate was cut from 63p to 55p – meaning those in work will keep more of what they earn. At the same time the National Minimum Wage will increase to £9.50 per hour and the public sector pay freeze will come to an end.
  • Taken together these moves are significant rebuttal to Labour’s attack lines and effectively neutralise one of the government’s most acute vulnerabilities.
  • But this strategy is fraught with risk. Many people will see only marginal improvements to their household finances and will be facing increased Council Tax and National Insurance rises.
  • With inflation likely to hit as much as 5% by the end of year, any savings will be quickly outstripped by rising costs. Voters will still feel out of pocket and expect even more support from the government, providing Labour with the political space to promise to go even further.


  1. Mixed messages on climate policy a missed opportunity
  • Despite next week’s landmark COP26 conference, and last week’s major announcements of the Net Zero Strategy, Heat and Buildings Strategy and the HMT Net Zero Costs Review, the issue of climate change was conspicuously absent from today’s statement.
  • More noticeably there were two commitments that sit awkwardly alongside the UK’s aspiration to lead the world on climate change policy.
  • The chancellor sought to boost the UK’s regional airports with a cut to Air Passenger Duty on domestic flights – directly competing with much lower emission but more costly rail services, and once again froze Fuel Duty – for the 12th consecutive year.
  • Both moves will be warmly welcomed by their respective business lobbies but seem to undermine the government’s green credentials at this most critical time.
  • The ambiguity here may even be deliberate. Some suspect the Chancellor of taking a more sceptical approach to the necessity of acting now to invest in climate transition vs the cost of doing so.


  1. Doubling down on levelling up?
  • The concept of ‘levelling up’ was heralded as the ‘golden thread’ running through the Chancellor’s statement.
  • The lack of definition attached to it conveniently means that it can be turned to almost any purpose in support of government’s objectives.
  • Today’s statement moved further away from the assumption that this is about grand projects in the north of England, and instead towards a national effort to boost productivity, investing in creating a high-skill, high wage economy.
  • Despite the lack of clarity, the aspiration will be welcomed in the areas that need the investment most. The multitude of smaller scale local projects receiving support via the Levelling Up Fund will focus on driving civic renewal in ‘left behind’ areas – providing lots of evidence in marginal ‘red wall’ seats.
  • The Levelling Up White Paper expected to be published shortly from the new Department for Levelling Up, Housing and Communities, will hopefully provide a clearer definition and objective measurements of progress. How well this works will be a defining issue at the next election.


  1. The election countdown is on
  • This was a highly political budget, full of potential pitfalls and possibly the Chancellor’s most difficult to date. On first reading he would seem to have deftly navigated these risks showing a level of political astuteness that puts him in pole position to be the Prime Minister’s eventual successor.
  • As the dust settles over the coming days, the choices on display will reveal a great deal about his thinking on the framing for the next election, expected as early as Summer 2023.
  • The Conservative Party is now firmly positioned on the centre-ground and Rishi Sunak presented as the epitome of modern, compassionate, prudent, liberal, fiscal policy.
  • Sunak is able to be both a committed small-state Thatcherite and proudly trumpet public investment as a share of GDP at the highest level for nearly half a century.
  • He has reaffirmed his position as heir apparent whilst also proclaiming his loyalty to the Johnson project and boosterishly proclaiming the arrival of a “new age of optimism”.
  • More prosaically, the renewed commitment to fiscal discipline with tax revenue paying for day-to-day spending by 2024-25 and debt falling as a share of national income in that year, provides a flexible framework that can be deployed to underpin future spending cuts, targeted tax rises or pre-election giveaways as required.
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