UK chancellor Philip Hammond faced a grilling from MPs in parliament today, after figures showed he had missed his budget target and he announced the search for a new Bank of England governor.
Hammond came into the treasury committee hearing buoyed by the news Britain’s budget deficit had fallen to a 17-year low, but it still stood at £1.7bn in March alone.
Here is what we learnt from Hammond’s appearance before MPs today:
Brexit is holding back long-term decisions on tax and spending
Hammond told MPs it did not make sense to make crucial budget decisions until Brexit had been “resolved,” suggesting the next big spending review could be delayed.
He said there was significant headroom in his budget to respond as the Brexit process unfolded.
Brexit is consuming a lot of Treasury time
Hammond told the committee that more than a quarter of Treasury staff were focused solely on Brexit, with 400 of around 1,500 employees knee-deep in Brexit-related work.
A Labour MP on the committee pointed out that meant a huge drain away from work on countless other important national issues.
Think Chancellor just told Treasury Select Committee that of 1500 staff in Treasury, 400 currently working solely on #Brexit. Wonder how many working on child poverty? Opportunity cost does really capture the level of waste, here.
— Alison McGovern (@Alison_McGovern) April 24, 2019
Hammond also revealed emergency preparations in the weeks running up to the UK’s planned exit on 12 April had seen staff working “long hours, seven days a week.”
The team had been stood down as the work could not continue at that intensity, he said, but may re-form ahead of the new October deadline and other preparations were ongoing.
Plans for the next Bank of England governor
The session began with questions, predictably, about the next governor after the search officially began for Mark Carney’s successor.
Hammond revealed his hopes of making an appointment in October.
He also said he’d be prepared to accept someone for less than a full eight-year term if they were an outstanding candidate, but stressed that stability “has a lot of value.”
Britain ‘could balance the books in mid-2020s’
Hammond said the government was on track to meet its long-term targets for the public finances, and could balance the books by the middle of the 2020s.
But he said the government had options, which was a “good place to be” given Brexit uncertainty, so it would be a choice to make about achieving a surplus.
His comments strike a rather different tone to his Conservative predecessor George Osborne, who initiated years of deep and divisive spending cuts in the hope of eradicating the gap between public spending and income entirely by 2015.
Osborne failed to hit the target and while the government’s spending cuts have continued and brought the deficit down, Hammond appears far less committed to urgently balancing the books.
Hammond tight-lipped on Huawei
Hammond declined to comment on reports Chinese firm Huawei will play a role in rolling out the UK’s 5G network.
But he said: “It’s essential that we get the balance right, ensuring that our networks are built in a way that is secure against interference from whatever source, but also are competitive.”