Chancellor delivers upbeat outlook but it remains ‘jam tomorrow’

Shadow chancellor John McDonnell responds after chancellor Philip Hammond delivered his first spring statement in the House of Commons (Image: PA Wire/PA Images)

But the chancellor was only promising jam tomorrow rather than the loosening of the purse strings many people – even members of his own cabinet – are so desperate for.

This modest, slimmed-down statement had no new spending plans and no new taxation – in fact the only real new information was the announcement of a few, really rather minor consultations.

Businesses prefer a single budget each year. It makes it easier for them to plan and react to changes in policy if it is annual.

Mr Hammond claims he has listened to their pleas and acted accordingly. So instead he used this update as a chance to run through his greatest hits since moving into Number 11 and to bash the opposition.

Philip Hammond delivers his first spring statement in the House of Commons (Image: PA Wire/PA Images)

Spreadsheet Phil opened with the good news and his best gag. To roaring laughter from the Tory benches he said there would be no red book from him but he could not confirm the same for his opposite number shadow chancellor John McDonnell – he once famously handed a copy of Chairman Mao's Little Red Book across the dispatch box to George Osborne.

Then he launched into those upgraded economic figures: Encouraging projections for growth and a predicted drop in inflation, debt and borrowing. That is the 'light at the end of the tunnel' Mr Hammond has been talking about.

Gleefully Mr Hammond revealed the Office for Budget Responsibility had upgraded last year's growth to 1.7pc compared to the 1.5pc forecast. And it expects state borrowing to be £45.2 billion this year – some £4.7 billion lower than predicted in November and £108 billion lower than in 2010.

The government is set to run a 'small' surplus on day-to-day spending in 2018/19, borrowing only for capital investment, Mr Hammond added. And the government is expected to hit its borrowing target for 2020/21 with £15.4 billion headroom.

He said that debt is forecast to be 1pc lower than expected at the time of last autumn's Budget, peaking at 85.6pc of GDP in 2017/18, before falling gradually to 77.9pc in 2022/23.

In a bid to underline the success of his party's approach to Britain's financial difficulties Mr Hammond said the forecasts confirmed 'the first sustained fall in debt for 17 years, a turning point in the nation's recovery from the financial crisis of a decade ago'.

So, Mr Hammond if we are doing so much better than expected is it time to spend some money? Not quite. Instead he teased that perhaps austerity will be eased in the autumn's Budget.

He told MPs: 'If, in the autumn, the public finances continue to reflect the improvements that today's report hints at, then ... I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers' money is wasted.'

Jam tomorrow.

The chancellor enjoyed his stint at the dispatch box, he appeared relaxed and took aim at the Labour benches on numerous occasions. He had better enjoy his moment because what this statement has likely achieved is to fire the starting gun on an intensive round of lobbying for cash before the Budget.

Already the public are pig sick of austerity – that was clear from the disastrous general election suffered by the Conservatives. And the public sector has been begging for extra cash for years.

Even voices within the cabinet believe now is the time to dig a bit deeper and find some money. Defence secretary Gavin Williamson is likely to be the latest minister to push for more cash in the wake of the Russian spy scandal.

They want jam today.

But Mr Hammond is willing to take his chances until the autumn before the drip, drip of cash begins again. Don't expect a splurge.

As long as the new forecasts do not spark more cabinet in-fighting over cash, the prime minister will be happy. The good news underlines the old Tory mantra 'only we can be trusted with the economy'. But Theresa May will just have to hope the country – and public sector workers – can stomach another few months without any good news.

Mrs May and her chancellor will be not be able to rest easy just yet. The government is promising jam tomorrow, but Labour claim they could deliver jam today – and cake.

Tigger chancellor faces barrage from Labour

The chancellor dismissed Labour's 'doom and gloom' but faced a fierce response to his Spring Statement from across the dispatch box.

In a nod to his perceived pessimism Philip Hammond said: 'If there are any Eeyores in this Chamber, they are over there. I, meanwhile, am at my most positively Tigger-like.'

But shadow chancellor John McDonnell was not laughing.

He fired back that improvements to the public finances announced by the Office of Budget Responsibility were 'marginal' and denounced the decision to hold back spending until at least the autumn as 'astounding'.

'Hasn't he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?' Mr McDonnell asked. 'They are telling him they can't wait for the next Budget. They're telling him to act now.'

He added: 'It's a government setting us up to fail.'