Today is the day of the Budget.
These always used to be important fixed points in the economic and political timetable when the Chancellor would, on behalf of the government, fix the future budget by announcing tax and spending decisions that would tell us with certainty what would be happening in the coming year.
But politics and government are not like that anymore. The impact of Brexit on both major political parties means nothing is certain any more. Indeed, the one thing we know for sure is that, budget or no budget, we don’t know politically what is going to happen.
And right now, not knowing about how the budget will develop into reality matters a great deal to the NHS.
In June we had an important (and usually bankable) promise from the Prime Minister that there would be a 3.4% increase in NHS funding for 5 years from next April. This used to be a matter for the Chancellor to announce but there are precedents for Prime Ministers jumping the gun with NHS announcements.
I was working in the new Labour Government in February 2002 when Prime Minister Tony Blair announced long-term increases in NHS spending. Then as now the Chancellor was not best pleased to have a cornerstone of his budget pre-announced by his senior colleague (apparently Gordon Brown complained that Tony Blair had “Stolen my effing budget”).
It’s unsurprising that Chancellors get grumpy when this happens. And allegedly Phillip Hammond is not best pleased to have been put in a corner with a spending pledge. He now has the nasty task of raising the money to meet it. Does his frame of mind matter?
Yes it does.
NHS finance has always been big politics and this year has been no exception. In 2016 once the Brexit vote was won, partially on a promise of extra money, the big politics of actually getting extra money for the NHS changed every week.
Historically the Tory right have never been big fans of raising extra money for public spending. But given that it was the right that supported Brexit, this time they supported giving the extra money to the NHS. Given that this – very vocal – political wing would have previously always been against finding extra money for the NHS had effectively silenced itself through its fixation with Brexit, Simon Stevens was able to spend much of the last year building a powerful coalition in favour of the extra funding.
For the first time, in my lifetime, he could do that with the support of the Tory right.
When the Prime Minister was won over, this became an unstoppable political force and June’s financing announcement was made.
There are however a couple of things to say about that announcement.
First the Prime Minister publicly stated that most of the money would come from the “Brexit Dividend” as leave campaigners had painted on the side of their bus. By doing so she tied herself and the Brexiteers together. But publicly the Chancellor disagreed. He has to find real money to pay for this now and whether there is a Brexit dividend in 10 years’ time is a matter of a large political row – but certainly there won’t be one before we leave the EU. (In amongst all the hype there is a strong logic here. If we can get the dividend before we leave – why leave!)
Which leads us to the second problem. If you are the Chancellor balancing the national budget in 2019/20 (the year the NHS starts to get this extra money) then you need to do that before any Brexit dividend exists – even in mythical form.
And this is where the Chancellor’s frame of mind matters. Being griumpy at having your budget stolen is one thing. Being told you can pay for it with something that doesn’t exist is something else altogether. And for some weeks after June the Chancellor let it be known that if he had to find extra money for the NHS he would have to raise taxes in some form or another (or stop tax allowances from rising) to pay for it.
He also publicly scoffs at the very idea of a “Brexit dividend”.
So we go on holiday in August with it looking likely that there will be extra taxes.
But in politics, as in physics, every action leads to a reaction.
The Brexiteers are not best pleased to be confronted by the fact that the “Brexit dividend” will NOT provide the extra money for the NHS as this undermines their one foray into increasing public expenditure.
So in September I commented that there may be a problem with getting the votes in the House of Commons that would be necessary to get the extra taxes through.
Since then three things have happened. Leading Brexiteers have started to outline the nature of the society that they would like to see emerge from leaving the EU. This includes one which has lower taxes and fewer regulations (the so called “Singapore of the North” model). This is not just a future-orientated discussion but a shot across the Chancellor’s bows that they want him to say that extra NHS money will come from the Brexit dividend (which he won’t).
Next the Democratic Unionist Party (in, let’s not forget, a loose coalition with the Government), has said that it might not only vote against the Government on any Brexit deal it doesn’t like, but might use its votes to vote down the budget and powerfully damage the Government.
Finally the emotional row about Brexit in the Government at cabinet and backbench level has overtaken any notions of loyalty. For many the row about Brexit is much more important than a little thing like a budget.
What does all this add up to in today’s budget?
The nature of the budget for next year – as in all years – is really a bit elastic. Borrow a bit more, move some sums of money around and you really don’t have to raise taxes for the NHS money next year. For next year we can fudge it – and it can be done without extra taxes. In which case the NHS gets the extra money, there are no new taxes to vote for or against and the NHS can continue to think about better outcomes.
But the Chancellor may want to make a point. A good, traditional point about accounting. More spending on the NHS needs to come from somewhere and that means more taxes. That looks to be where he was before the summer break and the political fact that some Brexiteers are saying that he mustn’t do that could just make him want to do it even more.
In which case I think all bets are off. Both for the extra money for the NHS and the budget itself.
House of Commons votes on the budget are a very strong opportunity for backbenchers to give the Government a kick. The Opposition has no reason whatsoever to vote for the Government’s budget. You could easily find a majority against it and, whilst it harms the Government a lot, it doesn’t mean an election will have to be called. That would need a separate vote that the rebels could get back on side for.
So whilst everyone is fixating on the meaningful vote on the treaty with the EU, the real row could see the budget lost and with it any extra money for the NHS.
At the moment politics is a very, very fractious world and it might just undo what all of the NHS has spent the last few months been planning for.
We’ll know later today whether this train of events will be set in motion.