First paragraph: The UK chancellor of the exchequer, Philip Hammond, has delivered a budget which offered help to first-time home buyers and the prospect of more money for workers in the National Health Service, but his speech was partly overshadowed by sharpcuts to GDP growth forecastsfrom the Office of Budget Responsibility (OBR). Our team of academics deliver their verdict on the measures introduced and opportunities missed

Bauld, Linda

Bloom, Peter

Hirsch, Donald

Jones, Chris

Kitson, Michael

Nieuwenhuis, Paul

Pryce, Gwilym

Rodgers, Geoff J

Rubery, Jill

Turner, Ed

English

Stirling Online Research Repository

30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 1/8AuthorsChris JonesReader in Economics, Aston UniversityDonald HirschProfessor of Social Policy, LoughboroughUniversityEd TurnerSenior Lecturer in Politics, Head of Politicsand International Relations, AstonUniversityGeoff J RodgersDeputy Vice Chancellor(Research&Innovation), Brunel UniversityLondonGwilym PryceProfessor of Urban Economics and SocialStatistics and Director of the SheffieldMethods Institute, University of SheffieldJill RuberyProfessor of Comparative EmploymentSystems, University of ManchesterAcademic rigour, journalistic flairBudget 2017: experts respondNovember 22, 2017 2.03pm GMT •Updated November 22, 2017 4.33pm GMTAcademics put Hammond in the spotlight. EPA-EFE/ANDY RAIN30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 2/8Linda BauldProfessor of Health Policy andCRUK/BUPA Chair in BehaviouralResearch for Cancer Prevention, Universityof StirlingMichael KitsonUniversity Senior Lecturer in InternationalMacroeconomics, Cambridge JudgeBusiness SchoolPaul NieuwenhuisSenior Lecturer and Co-Director, ElectricVehicle Centre of Excellence (EVCE),Cardiff UniversityPeter BloomSenior Lecturer in Organisation Studies,Department of People and Organisation,The Open UniversityThe UK chancellor of the exchequer, Philip Hammond, has delivered a budget which offered help tofirst-time home buyers and the prospect of more money for workers in the National Health Service,but his speech was partly overshadowed by sharp cuts to GDP growth forecasts from the Office ofBudget Responsibility (OBR).Our team of academics deliver their verdict on the measures introduced and opportunities missed.The economyMichael Kitson, senior lecturer in international macroeconomics, Cambridge JudgeBusiness SchoolThe UK economy is in desperate need of a reboot but the chancellor has delivered a “neither here northere” Budget. The two big economic issues are stagnant productivity and the uncertainty of Brexit.30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 3/8Productivity – often measured as output per hour – is the key driver of economic growth which inturn determines real wages, profits and tax revenues. But productivity is no higher now than it wasjust before the 2008 financial crisis and the OBR has today revised down its forecasts of futureproductivity growth.The chancellor pretended to be the investor that the economy needs but he reverted to type with abudget based on the narrow principles of accountancy and the constraints of fiscal rules. Hammondoutlined a hotchpotch of “action plans”, “task forces” and “reviews”. The one substantive policy wasthe much-needed investment in housing but even here the policy is a combination of “capital, loansand guarantees” with little detail of how much will be new money.The government needs to substantially reformulate its fiscal rules and develop a coherent investmentstrategy if it to ensure long-term economic transformation and the development of an economy thatcan cope with turbulence of Brexit.Source: The Conversation | Data: OBRGDP growth forecast1.8%20161.5%20171.4%20181.3%20191.3%20201.5%20211.6%2022Chris Jones, reader in economics, Aston UniversityRegardless of the size of the deficit and the economic effects of Brexit, the UK’s fundamentaleconomic problem is productivity growth. Output per worker has been stagnant and there is aconcern, as highlighted by the OBR’s forecasts, that the UK’s productive capacity has been severelydamaged.Until productivity rises, wages will remain stagnant. Although employment has been robust there isstill significant underemployment built into the labour market. The government needs to create anenvironment that encourages businesses to invest. One way of doing this would be to create a publicinvestment bank or a sovereign wealth fund to take advantage of the historically low borrowing costsavailable in the financial markets.The OBR predicts that trend growth is now around 1.5%, much lower than the historic trend ofaround 2%. This lower projection suggests that the UK’s productive capacity has been permanentlydented after the financial crisis, the impact of austerity and uncertainty related to Brexit.30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 4/8The Conservatives have done fairly well on tax avoidance in recent years. The decision to deduct UKincome tax from royalty payments by high tech companies is also a good move. However, given theimpact of the Paradise Papers there was nothing on public country-by-country reporting which wouldgenerate much greater transparency as to where multinational firms locate their income.HousingGwilym Pryce, professor of urban economics and social statistics, University ofSheffieldOn the face of it the 2017 budget offers an impressive attempt to address the UK housing crisis, but itmay simply be that the chancellor is running to stay still.Proposals to boost housing supply to 300,000 net additional homes a year on average by the mid-2020s, eliminate rough sleeping by 2027 and revive the homeownership dream for young people bycutting stamp duty are all welcome. However, there are questions about whether the proposals arecompatible or achievable. Setting housing supply targets is easy. Meeting them is notoriously difficult.How will the plans to boost construction industry skills have any net positive effect given the likely fallin migrant construction workers as a result of Brexit?The abolition of stamp duty for first time buyers on purchases up to £300k (£500k in London) is alsodubious. Will this not simply boost demand in that sector of the housing market, further inflatingprices of “entry level” housing? And in the absence of any significant new money for social housing it’shard to imagine how rough sleeping, which has risen by over 130% in England since 2010, will besignificantly reduced any time soon.There is little to address regional inequalities which lie at the heart of the UK housing crisis. And it’shard to see how Hammond’s measures could offset what Boris Johnson called the “Kosovo-style socialcleansing of London” and other major cities as low income households are increasingly priced out ofinner city areas.Ed Turner, senior lecturer in politics, Aston UniversityThere is good consensus now about housing issues that need to be addressed. There should be moreambition on supply along with investment; there should be concrete action to tackle the rise in roughsleeping; and there should be greater diversity in house-building with less reliance on high-volumehouse builders. There is also a need to address a land market which, left to its own devices, may seeland being hoarded and used for speculation rather than being built out.On each of these points, action is promised by the chancellor. Hammond issued a “use-it-or-lose-it”threat to developers, but critics would observe that detail is sketchy (with a review and a taskforcerather than concrete policies on land and on rough sleeping). Some themes (such as the landquestion) were raised in February’s White Paper and are simply reiterated, without policy havingdeveloped in the meantime. Clearly the biggest headline will go to the stamp duty reduction for first-30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 5/8time buyers. The problem with such instruments is that they risk raising house prices rather thanhelping with supply.Universal CreditJill Rubery, professor of comparative employment systems, University of ManchesterUniversal credit is a disaster waiting to happen. It introduces quite draconian cuts to some of the mostvulnerable groups – the disabled and single parents in particular. It also provides employers with newopportunities to pass the costs of flexibility on to their workforce in the hope that the state will pick upthe pieces.It no longer provides the incentives to work promised when it was committed to. Changes in thisbudget to the implementation are welcome as they will reduce the catastrophe of the most vulnerablehaving no access to funds and at risk of losing their flats or houses even if they stop eating.But the shambles of universal credit is evident in the fact that the measures to allow for advances andcontinuity of benefits is to cost £1.5 billion. It is not clear why these basic rights were not built into theinitial plan unless it is evidence of neglect of the needs of benefit claimants. The plan seems to be toprevent the system itself attracting criticism, probably in the hope that the general public will not careso much about the cuts being introduced or the flexibility provided for employers to offer whateverhours they wish.Donald Hirsch, professor of social policy, Loughborough UniversityCrossroads? Kev Llewellyn/Shutterstock30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 6/8This budget had some fine words about “helping families cope with the cost of living”. But for millionsof families depending on benefits, tax credits and universal credit, it offered nothing to reverse thesteady decline in living standards caused by freezing state support while prices rise.All it really offered to low income families was a partial amelioration of the problems that recentpolicies have created. Some measures were designed to make the transition to universal credit lesspainful. The government also increased its “local affordability funding”, which compensates someclaimants hit by the freeze on permissible Housing Benefit levels, in areas where rents are risingfastest.The just-about-managing (and not-managing) families receiving these band aids will gain nothingfrom the removal of stamp duty on buying homes that they could not hope to afford.Fuel duty and electric vehiclesPaul Nieuwenhuis, senior lecturer and co-director of the Electric Vehicle Centre ofExcellence, Cardiff UniversityIt seems that, despite some dire warnings, diesel drivers have been treated relatively leniently.Although older diesel cars will be moved up one band in terms of their Vehicle Excise Duty – which insome cases could add a few hundred pounds a year to their running costs – the fuel duty on bothpetrol and diesel will not be increased.The extra income will be invested in the £22m clean air fund. Commercial vehicles will not bepenalised in any way, however. Also, no penalty is envisaged for the latest generation of “clean” dieselcars, which suggests the government has accepted the industry line on these, rather than emergingindependent testing evidence.The chancellor’s admiration for driverless cars was included as one of the “cutting edge” UKtechnologies deserving of support under the government’s new industrial strategy. This was alsolinked with further support for electric vehicles, notably an additional £400m investment in charginginfrastructure and a further extension of the plug-in car grant scheme. Also relevant in this contextmay be the £1.7 billion promised for local authorities to improve transport in their areas. Detail islacking at this point, but if this can also be used to promote electric vehicles, that could provide anadditional boost to infrastructure.30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 7/8Alcohol and tobaccoLinda Bauld, professor of health policy, University of StirlingThe chancellor’s decision to increase the duty on high strength cider looks like good news at facevalue. High strength ciders commonly contain 7.5% alcohol by volume and are available in largebottles with up to 22 units (equivalent to a bottle of vodka) for as little as £3.50.This product is consumed by heavy drinkers and young people and directly contributes to alcohol-related disease and death, violence and accidents. Increasing the duty could reduce harm, but inpractice the budget increase is tiny and duty on other alcohol products has been frozen – a missedopportunity overall.In contrast, the budget has reinstated the tobacco tax escalator. Smoking is still the leadingpreventable cause of death in the UK, and despite recent drops in prevalence, up to one third of adultsstill smoke in our poorest communities. Higher prices do deter smoking, and today’s announcementscould help us make further progress towards a tobacco free future.InnovationGeoff Rodgers, deputy vice chancellor (research and innovation), Brunel UniversityLondonThe additional £2.3 billion in research and development funding announced in today’s budget is verywelcome and much needed. It will allow universities to build new research programmes incollaboration with industry that identify, characterise and implement the disruptive technologiesFuel for the tax take? kpakook/Shutterstock30/11/2017 Budget 2017: experts respondhttps://theconversation.com/budget-2017-experts-respond-87796 8/8Tax Politics GDP Housing UK Economics Investment Innovation Technology NHS Philip HammondBrexit Public spending Fourth industrial revolution Universal credit Budget 2017necessary to drive change in the autonomous vehicle, mobile communication and artificialintelligence technology sectors, which should all now see a significant boost in funding.These are areas where both UK industry and UK academic research is strong, and therefore thecountry is well equipped to compete globally. The combination of research and development inadvanced technologies within these sectors, coupled with a good supply of talented young peopleentering these industries, will help drive improvements in productivity and promote economic growthwithin the UK.Peter Bloom, senior lecturer in organisation studies, The Open UniversityA major theme of the budget is the need for innovation. The chancellor boldly promised that the UKwill be “at the forefront of a technological revolution”. This claim is supported by an extra £500m toboost technology development around electric cars, artificial intelligence, and robotics. This, however,pales in comparison to the technological challenges facing the country.Right now, the creation of a high-tech economy is as threatening as it is exciting. The rise of artificialintelligence, robotics, and automation brings risks of higher unemployment, greater feelings of socialalienation, and widening inequality. What is absolutely crucial then is to promote a programme ofinnovation that directly addresses present and upcoming economic, political, and social challenges.This includes investment in civic technology, the use of big data to create “smart solutions” to createmore sustainable cities and communities, and the application of virtual and digital technology toimprove public services. In the long term, we must ensure that this research and development isaimed at more than just commercialisation but opening up the possibilities of creating a moreegalitarian, free, and less economically insecure tomorrow.The Conversation is a non-profit + your donation is tax deductible. Help knowledge-based,ethical journalism today.Make a donation

Budget 2017: experts respond

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