Budget 2018: Austerity is over - but not for everyone

Balancing the books by the middle of the next decade is not a vague ambition, it was a manifesto promise.

The pledge was politically important - a point of difference that the Conservatives have repeatedly used to argue that they are handling the public finances prudently and that a Labour government would be reckless.

Before Philip Hammond delivered his Budget, the OBR estimates he was set to hit his target - eliminating borrowing by 2023 - thanks to stronger tax receipts and slightly faster economic growth forecasts.

Credit: ONS, OBR

But in the event, the chancellor decided to use his borrowing windfall to deliver an end (of sorts) to austerity, instead of raising taxes.

By 2023 the OBR now says the government will still be borrowing around £20 billion a year and achieving his Fiscal Objective "looks challenging".

  • Torsten Bell, Resolution Foundation

The chancellor's claim to have ended austerity is moot. Public spending will rise by £1.2 billion a year in real terms from next year but the lion's share goes to the NHS.

Credit: OBR

While NHS spending accelerates away in real terms over the next five years, spending for other government departments remains flat.

Unprotected departments are likely to be worse off. Local authorities should be worried.

The chancellor has made Universal Credit more generous - more generous in fact than the system it replaces - but there are still around £5 billion of welfare cuts - announced by George Osborne in 2015 - which the chancellor intends to stick with.

Hammond chose not to abandon the final year of the four year freeze to working age benefits, which begins in April. Austerity in social security is alive and well.

The chancellor chose to end his Budget speech with a big tax break. Raising the income tax thresholds will cost him £2.7 billion next year. The benefits are disproportionately felt by wealthier households.

Hammond will argue it was a manifesto pledge but he chose to bring it forward. It's likely to cause outrage.