JOHN MASON

If you’ve ever been at an open mic night at your local pub, you’ll know you shouldn’t expect too much. Sometimes you’ll get a nice surprise, but most of the time it’s pleasingly forgettable; occasionally punctuated by polite applause.

And so it was with Philip Hammond’s Autumn Statement in December. No-one dropped their pints in astonishment, but it didn’t clear the place. In the circumstances, that was a win.

So what might we expect of the Chancellor’s first spring Budget, not yet a year into his tenure in charge of the UK’s finances? Success in this case, I expect, might be measured in ripples – and the fewer the better.

It’ll be followed by his final Autumn Statement, before we get back to one big fiscal set-piece each year from 2018, and requires a delicate touch. There’s the imminent commencement of formal Brexit negotiations, and that’s likely to accentuate any existing jitters, so now’s not the time to go smashing guitars over the fruit machine.

After all, the UK economy is growing pretty well at the moment. ONS figures reported growth of 0.6% in the third quarter of last year, a smidge ahead of forecasts. However, that’s predicted to fall back slightly in the next six months before gradually getting back on track again.

The trouble is, corporation tax is already low, and heading lower, so there’s not much he can do with that. Nor can he afford any big giveaways, and has conceded the Government will have to borrow more to fund vital public services. The NHS is screaming for additional funding, and elderly care is also in a desperate position.

He could knock a penny off the basic rate of income tax, in the hope it would stimulate spending, but it would cost the Treasury a fortune. Even if he was to increase the threshold at which the 40% tax rate comes in, there would be a sizeable – although perhaps not ruinous – reduction in the coffers. Of course, he may wish to do this as a means to widen the gap between higher-rate earners in Scotland and England, and put some pressure on the SNP – but it’s unlikely to make his life easier from a fiscal perspective.

The most significant measure could be some kind of business rates benevolence – particularly for bricks-and-mortar retailers who point out the burden they have to shoulder in comparison to their online counterparts. That’s an extremely valid point, and we could just see an evolution of the current proposals.

The lack of available housing remains a key issue, and Mr Hammond may take the opportunity to encourage more activity at the top of the market. For example, he could offer an inheritance tax break for those who sell their homes, in the hope that would-be downsizers will take the opportunity to free up equity in larger homes. By extending the IHT reliefs and the need to survive a period after gifting cash, they could then pass cash on to their beneficiaries with a reduced tax burden.

Reducing stamp duty further or providing tax incentives to housebuilders would be another, albeit more radical, option. Making new homes cheaper by cutting some tax out of the equation could help first-time buyers onto the housing ladder, stimulating more building from developers. Yorkshire Building Society this week suggested sellers should pay the levy instead of buyers – although it also admitted the measure would be unlikely to solve the housing crisis.

For businesses, I suspect the good news (or perhaps news of any kind) will be negligible. Investment in innovation via increased R&D tax relief, for example, could assist the tech sector and creative industries, but it’s already an under-utilised relief, so the real-world impact could be limited.

Ultimately the Chancellor has to play a soothing tune on Wednesday. Somewhat unfortunately, the greatest advantage he has is low expectations. Now isn’t the time for experimental prog-rock – a couple of easy listeners and we can all get back to our pints.

John Mason is director at Johnston Carmichael