Philip Hammond to set aside £60bn for 'unexpected challenges' of Brexit
Philip Hammond will use next week's Budget to build up a war chest of £60bn to ward off the “unexpected challenges” of leaving the EU.
The Chancellor has said there will be no “spending spree” in his statement next week, arguing that now is not the time to “take our foot off the pedal” by loosening fiscal policy.
At the same time he is calling for “flexibility” for the Government to be able to meet any difficulties that may emerge during negotiations with Brussels.
In the Autumn Statement Mr Hammond set out plans to set aside £27bn to give him “head room” in the event of a downturn in years to come.
But higher than expected growth forecasts, coupled with lower borrowing, mean that figure is set to more than double to almost £60bn
NO 'SPENDING SPREE'
“As we begin our negotiations with the European Union we are embarking on a new chapter in our history. We may face unexpected challenges in the months and years ahead as we forge our vision of Britain’s future in the world,” he writes in this morning's Sunday Times.
“While we are making steady progress in eliminating the deficit, there are still some voices calling for massive borrowing to fund huge spending sprees. That approach is not only confused, it’s reckless, unsustainable and unfair on our young people, who would be left to deal with the consequences.”
The same paper reports that Mr Hammond is prepared to give cash-strapped councils an extra £1.3bn for social care, paid for by savings elsewhere in public spending.
He has also reportedly tasked officials with drawing up a set of options for how the sector could be supported in the longer term.
These include a 'social care Isa', allowing people to save tax-free towards their own care costs. Another possibility is revisiting the £72,000 cap on individual costs suggested by the economist Sir Andrew Dilnot in his review of the sector.
Another of Hammond's key aims is to boost investment in technical education, with new so-called 'T Levels' to put vocational courses on a par with the academic route.
This feeds in to a broader strategy to tackle the UK's weak productivity.
“Tackling Britain’s productivity challenge can sound like a dry ambition, but it is not. It is the key to a better society,” Mr Hammond writes.
“High-productivity jobs are high-wage jobs. To build the kind of society we want for our children’s future we need an economy that competes with the world on the basis of superior talent and skills, not just lower costs.”