On 9 November last year, in the opening chapter of my book Square Deal I called for the Chancellor Philip Hammond to use his forthcoming Autumn Statement to declare that the age of austerity was over. One year later, I am glad to say he has used this week’s Budget to do what I recommended. Although we still have a small budget deficit, after 8 years of spending restraint it has fallen to a level that is totally sustainable for an economy as large as ours. And the need for higher spending in some of our key public services has become urgent and acute.
Like generals, Chancellors of the Exchequer need to be lucky as well as skilful. This year, Philip Hammond has been both. He has artfully deployed surprisingly buoyant tax revenues to fund the PM’s massive pledge of an additional £20 billion a year for the NHS and to put an additional £2 billion a year in Universal Credit so that those who receive it can now earn £1,000 more a year before the benefit starts being withdrawn. He also found the resources to bring forward by one year the increase in personal allowances to £12,500 for the basic rate of income tax and £50,000 for the higher rate so all those who work hard and pay income tax will benefit too.
Brexit remains a big source of uncertainty in our immediate future. Crashing out of the EU without a deal would be likely to reduce the rate of growth in our economy, and put pressure on the public finances again. But for now, the British people can look forward to Christmas with cautious optimism. Our economy is growing - if not as fast as we would like - and the number of people out of work is, at 4 % of the workforce, as low as anyone can remember. We could be doing a lot worse!