How The Budget Really Gets Put Together, By The PropTech Guy Who’s Been On The Inside
William Newton, president and EMEA managing director of WiredScore, spent two years working in the Cabinet Office and two years working as an advisor to prime minister David Cameron.
So he is better positioned than most in property to understand how the Budget gets put together — how much attention is paid to the zeitgeist, the tensions between 10 and 11 Downing St., what factors are taken into account when formulating a policy big parts of the voting public will assuredly hate.
He talked Bisnow through the factors that likely influenced chancellor Philip Hammond before yesterday’s announcement.
Bisnow: In the run-up to the big day people were saying Hammond would deliver a “housing Budget”. How much does the chancellor listen to public opinion vs. doing what he thinks is good for the country?
Newton: I think the public zeitgeist influences the Budget enormously. Politicians want to feel like they are in touch with the electorate, particularly now when they are looking to respond to the last election. There will have been pressure on Hammond from his cabinet colleagues to do something for young people, and not only those who are just about managing, and that is why there has been that focus on housing.
The other part of policymaking for the budget is making sure there is a big announcement that people can grab on to. George Osbourne called it pulling the rabbit out of the hat, and he was obsessed by the idea that you had to have something that got people excited and showed that you are an active rather than passive chancellor.
Bisnow: That sounds like focusing on the cosmetic rather than trying to solve underlying issues?
Newton: It is more than just doing something cosmetic. It is understanding that there are things you can do and can influence, and those that you can’t, and you need to make sure you are doing what you can so no one can accuse you of being passive. He'll be aware that people call him Box Office Phil and see him as being just a Brexit block so he'll want to appear proactive.
But a good chancellor is also concerned with economic rationality, and will listen to officials at the Treasury, the Office of Budget Responsibility and respected think tanks and try to weigh the benefits of any political decision. You are trying to work out what will be popular and make sound economic sense.
Bisnow: So was the reduction of stamp duty for first-time buyers just cosmetic?
Newton: The chancellor is clearly trying to appeal to young people, but I’m not sure it’s the right way to go about it. It’s a really simple, easy to understand policy, and it makes people say, yeah, OK, I get that. But in terms of the target of building 300,000 homes a year, it is very hard to use policy to influence that. There are serious deeper issues and frustration with housing that you can’t do anything about as a politician, short of doing something with the Greenbelt, which no one seems willing to countenance.
Bisnow: How much influence does the prime minister have over the Budget?
Newton: There is always a funny relationship between 10 and 11 Downing St. around Budget time, as it is the only time when the Treasury is really in the ascendancy and holding the pen. That was particularly true during the Blair and Brown years, when both sides would be trying to find out what policies the other were working on and maybe trying to steal them from each other. Of course it was a lot more cordial between Cameron and Osbourne, they were much closer allies.
Bisnow: Why does everything in the Budget always get leaked?
Newton: The government is normally pretty good at keeping what will be in the Budget from leaking. But the traditional way of doing it is to leak something on the Saturday or Sunday talk shows and then other things through the week. It is so you can get an announcement out there that might get lost in the wash on Budget day. So the announcement that it is going to invest £500M on rolling out 5G technology and artificial intelligence or the partnership between the government, the Trade Union Congress and the Confederation of British Industry to give people digital skills wouldn’t get a mention alongside the stamp duty cut.
Bisnow: What other policies in there grabbed your attention?
Newton: I was really interested in the investment in driverless and electric vehicles and increasing the amount of public charging stations for the latter. Hammond seems really keen to show that Britain is investing in making sure we are fit for the future and that this is a place where new technology will be adopted. On electric vehicles he is trying to make sure that uptake isn’t slowed by “range anxiety” and in that sense he is aligned with Elon Musk, who is a good ally to have.
From our point of view the focus on digital connectivity and 5G is a big plus, as we think that will be a big part of boosting the economy and productivity.
Bisnow: What’s the atmosphere like in Downing Street on Budget day?
Newton: It’s one of the most enjoyable days of the year to work in Whitehall and Westminster — it’s the moment when big stuff gets talked about. Everyone gathers round TVs to watch, so I guess public sector productivity must drop dramatically. There is plenty of booing and hurrahing at policies people do or don’t like, and plenty of people claiming credit for policies. A few months later if they don’t work out no one wants to be associated with them. Success has many fathers and failure is an orphan.