Budget 2020: The Insurance Perspective
Coronavirus dominates the headlines but a Chancellor who had only been in place a matter of weeks still placed his stamp on proceedings
It’s one of the biggest days in the Parliamentary calendar, but as a political exercise this week’s Budget seemed strangely muted, with outside events looming large over not only the context of the speech, but also the content.
Before it had even begun this was being called the Coronavirus Budget, and with 15 minutes at the beginning of the speech given over specifically to emergency funding of some £30bn to tackle the virus, it seemed to have lived up to its name.
That said, after this fiscal giveaway to tackle Coronavirus, the Chancellor didn’t stop, launching into infrastructure spending pledges that had long been touted as the new direction of the Conservatives. Ever since the 2019 General Election gave the Conservative Party control over seats that it had not held in a generation, speculation has been rife that it would need to invest a lot into these areas if it wanted to hold onto them. It looks like we saw the first steps in that process this week.
Indeed, although the Chancellor woke up yesterday morning to rave reviews, with his delivery confident and his Coronavirus measures delivered with a seriousness befitting the situation, he also received his fair share of mockery. A common refrain has been that this was the first Budget delivered by a Labour Chancellor in over a decade, a sarcastic suggestion that the Chancellor had moved to the left on spending and his Budget borrowed not only money, but some of the opposition’s 2019 General Election manifesto in the process.
As far as insurance goes, this was a quieter Budget than the industry is used to, and potentially more well received for it. A reference to Insurance Premium Tax reform (that the government will “shortly” publish information on a forthcoming consultation) was buried deep in the supporting documentation, whilst the government also published an analysis of its contingent liabilities and a report alongside the Budget entitled “Government as insurer of last resort”. Both will be interesting to the industry but will not have the transformative impact on it that many of the other measures outlined will in other areas.
With so many external events and bold General Election promises boxing in the Chancellor somewhat, it is perhaps unsurprising that matters related to insurance didn’t make it into his speech. What is interesting however, is what this tells us about the direction of the new government, namely that it wants to put clear blue water between itself and previous ones, even if they happened to be Conservative as well. What is more, the Budget proved that there is a real appetite to show that the government is ambitious about “levelling up” all the regions of the UK, and that it is willing to spend the money to do so.