Written by Mark Kirby –
Philip Dunne claims the budget was good news. He must be one of the very few people who believe this. Instead the facts show that this budget further exposes the falsity of the claim by the PM that austerity is over. Despite changes to Universal Credit, even Iain Duncan Smith admitted these had not fully reversed “George Osborne’s malicious cuts to Universal Credit”. And don’t forget there are still billions of welfare cuts planned to occur in the next few years.
The IFS make clear that for some of those in the poorest 20% of households these cuts mean that compared to 2015, their income will be over £1000 less, a cut of between 10% and 15% of net income and still ongoing. In the same period some of those in the richest 20% have seen their income rise by over £500 a year, a rise of about 4% of net income. Equally it is clear that despite the headline rise for the NHS, for many govt departments there will still be cuts to budgets, almost £3.5bn of cuts after 2020 including massive cuts to prisons and public health. Even the Resolution Foundation made it clear they do not believe the claim that austerity is over. Instead we see a Budget that treats the rich leniently while continuing the attacks on the poor. In the long tradition of Conservatism this Budget reinforces and deepens inequality. The IFS point out that looking at overall changes since 2015 show that the poorest 20% of households lose on average £300 a year, while the richest 20% of household gain on average £390. Even after 8 years of austerity making the poor poorer and the rich richer, Philip Hammond cannot resist adding to this. Calculations by accountants BDO show that the Income Tax and NI changes in this budget mean that someone on £10,000 a year will gain by £25 a year while someone on £100,000 a year will gain £520, more than 20X as much.
The reason they need to falsely claim austerity is over is because it failed. It failed to help the economy grow and therefore far from reducing the national debt it almost doubled it to £1.7 trillion. We still have flat-lining productivity, persistently weak investment, wages lower than a decade ago leaving over 8m working adults in poverty; and lower growth prospects than many European countries and the USA, with the UK experiencing the slowest recovery since Napoleonic times. Not surprising then that the Tories wish to ditch this failure, but they cannot because they still need to fund their patrons’ rich appetite for tax cuts. By 2023 more than £110bn will have been given away in corporate tax cuts for the rich. As a result, cuts to public spending continue, falling from 38.3% of GDP to 37.9% by 2023. Thus, austerity and the attacks on the poor will continue if this lot remain in power, because they need to continually cut taxes for their rich friends.
Tax cuts for the rich, poverty and austerity for the rest of us no longer convinces many. At the last General Election, in Ludlow, Labour more than doubled its vote on a radical manifesto which contains clear economic policies that work. Preston in Lancashire is running an entrepreneurial economic policy based on Corbynomics and research by accountants PWC and Demos show it is the most rapidly improving urban area in Britain. Hopefully we can soon have an election which will elect a radical Labour government who will be able to roll out the benefits of this entrepreneurial state model to all. Economic Prosperity for the many, not the few.