The Beyond the Budget Series

The “Long-Grass” Budget: the Decisions Still to Come

The Budget left plenty unresolved. Over the next six weeks, we’ll look at six policy areas where the detail is still being worked through.

“Nothing burger”, “long grass”, “tumbleweed”, whatever your metaphor of choice, this Government’s first Budget seems to have landed with a bit of a thud. With plenty of the big decisions deferred, there is truth to the criticism.

But the Budget was far from insignificant. We now have a clearer sense of direction, a better understanding of what fiscal discipline means to this Labour Government, and some breathing space for households and businesses while the wider policy agenda develops. That ranges from the £100 energy payment for around 20 million households to raising the small business rates threshold from £12,000 to £18,000.

The breathing space may be modest, but it’s important. After all, the Budget lands against a turbulent geopolitical backdrop, with the Government pointing to conflict in the Middle East as a key driver of higher energy prices and borrowing costs, adding renewed pressure on households and businesses.

However, creating that breathing space has left the Government with less of its own. Tax rises on gambling and banks will offset some of the cost, but fiscal headroom has still fallen to £15bn from £23.6bn in March. That leaves little room to absorb another shock but offers a useful indication of where this Government stands when forced to choose between preserving its buffer and easing pressures.

This is just one component of the economic model starting to take shape. With devolution at the heart of the agenda, Government wants growth to come from more of the country and ultimately reach every postcode. Places are being given greater financial autonomy, from a £1.5bn borrowing facility to a share of locally generated income tax, alongside more responsibility for delivering that growth. At the same time, Government and public financial institutions are being used to take some of the early risk and fill viability gaps. That includes the £700m Strategic Sites Accelerator to unlock development and £1bn of UKRI funding to back innovation clusters across the country, with the expectation that private investment will follow.

But that model rests on some pretty big assumptions. Can Government spread growth across the country without spreading investment too thinly? Is the economy resilient enough to weather another shock? Can it back the strongest opportunities without reinforcing existing disparities? Will private capital follow public money?

A “long-grass Budget” may therefore be the fairest description. The direction is increasingly clear, but much of the detail will have to wait for the 2027 Spending Review, the Rewiring the State White Paper and Burnham’s ten-year plan. But that does not mean policymaking pauses in the meantime. With much of the detail still to be designed, the next few months will see evidence gathered and options tested as Government works through the trade-offs of delivery. That creates a real window for places, organisations and businesses to make sure the detail works for them, rather than waiting to see where Government lands.

In the run up to the festive period, we at Henham Strategy will look at six policy areas brought into focus by the Budget, examining what has been decided, what remains unresolved and, importantly, where there is still room to influence the detail.

First up, devolution: where the money is going, whether the powers match the ambition, what LGR means for the emerging map and, importantly, what happens to the places currently left behind. Stay tuned!

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Image: Kirsty O'Connor / No 10 Downing Street, HMT Flickr