The Chancellor of the Exchequer, Philip Hammond, delivered his Autumn Budget on Monday. Hammond took an upbeat tone, congratulating the public for its hard work and sacrifice which were now paying off, he said, allowing the economy to recover. Reassuring the House that austerity had always been about necessity and never ideology, ‘Spreadsheet Phil’ indulged himself at length in his introductory words in the classic but false framing of household budget economics focusing on tax windfalls, borrowing, deficit and debt narratives.
It was a budget that had no connection with the real world. Conveniently, the targets to eliminate the deficit (which have faded repeatedly into the distance and national debt has ballooned) were set aside. After eight years of punishing cuts and service closures which has caused economic and social distress to so many, the narrative is stuck in the myth where money for investment in the common wealth of the nation is still limited. It must be cautiously doled out, as gifts or rewards for good behaviour, not as the necessary spending of a government taking proper responsibility for the nation’s security and wellbeing.
Austerity is not over by any means.
Tax and Pay
Wealthy earners have benefited disproportionately from the income tax threshold increase. Hidden in the small print and left unmentioned in the Chancellor’s speech was an increase in National Insurance which diminished the income tax gains. Nonetheless, The Resolution Foundation has calculated that 84% of the gains related to the income tax cut will still flow to the top half of the income distribution and 37% to the top 10%.
There is substantial evidence that inequalities in income distribution have a direct relationship with inequalities to access essential services. There is a wealth of evidence that Universal Credit is having a seriously damaging impact on people’s lives and that people with disabilities are suffering disproportionately in cuts to their income and from cuts in services.
This budget does nothing at a time when wealth disparities are at their highest and people with low incomes and employment insecurity are already struggling to make ends meet. It would make far better economic and business sense to improve living standards of the lowest income section of society as they are the people who spend their additional income, unlike the richer sections of society who have a greater tendency to save.
Universal Credit and Social Security
The Conservative flagship policy Universal Credit has been coming under increasing pressure over recent months because of the suffering and hardship that has been caused. In 2017 The Resolution Foundation called the current design of Universal Credit ‘not fit for purpose’ in 21st century Britain. The UN rapporteur on extreme poverty and human rights is due to come to Britain in November to examine the impact of austerity, including Universal Credit.
The Chancellor has responded by allocating an additional £1bn to ‘smooth’ its roll out. He has made it clear, however, that Universal Credit won’t be slowed or stopped, and the cash injection will do little to deal with the inherent structural problems causing suffering and hardship often rendering people homeless and hungry.
The Treasury purse may have opened a crack but it will do nothing to make up or restore the losses of the last eight years of austerity. This is window dressing of the worst kind.
Environment
Three weeks on from the publication of the IPPC report the Chancellor did not mention climate change once in the budget. Caroline Lucas has challenged this inadequacy pointing out that it is in complete denial of the reality facing the country in our immediate future. Compare this to the Spanish Government’s recent announcement that they are closing coal mines and retraining the miners to develop sustainable energy.
Philip Hammond, by contrast, tinkered around the edges announcing a new tax on the manufacture of plastic packaging. For the ninth year running there is no increase in fuel duty but an allocation of £30bn for roads. This demonstrates a preference for cars over a strategic plan for developing an ecologically sound public transport system. Fossil fuel subsidies will continue. The Chancellor has allocated £60bn for tree planting, but environmentalists have questioned the value of this in the face of government support for environmentally damaging fracking over renewable energy.
Health
The NHS continues to suffer as it not only faces the continued real squeeze on its finances but also on-going privatisation. The Chancellor’s award of extra money for mental health services by 2023-24 is not extra funding and will come from the £20.5bn announced by the government in June this year. This is too little and too late. The crisis in mental health is happening now.
Furthermore, funding for public health services, training doctors and nurses, buying equipment and building new infrastructure will be cut by £1bn next year. The NHS is under increasing pressure in real terms as it tries to cope with picking up the slack after eight years of cuts to social care. The £650m increase to the budget for social care is only a sticking plaster.
There is an extraordinary piece of double-speak in the budget as the Chancellor announced he would abolish the Private Finance Initiative. However, he pledged that existing PFI contracts would continue to be honoured thus locking the hospitals into repaying their substantial debts until 2050. The future direction of who runs public services is also sealed as he indicated that he was firmly ‘committed to the [continued] use of public-private partnership.’ PFI is dead, long live PFI.
Conclusion
The Institute for Fiscal Studies has warned that as a result of the Budget the public finances could deteriorate and that an increase in spending could push the national debt higher.
The current reality in the UK is that we have both unmet need in terms of provision of services and unused resources in the number of people who are currently in low paid work which does not sustain them, or have given up looking in despair. A respectable and responsible budget should address those needs first and foremost if we are to have a successful economy.
This budget continues to frame government debt as a burden which must be dealt with. What is more it makes it the overriding concern well ahead of any real life public purpose such as addressing human suffering or the urgent need to combat the effects of climate breakdown.
A political illusion has been created that government has to finance its spending through borrowing or that it needs tax before it can spend. On the contrary it is the government’s duty as an elected body to assess the real resources that it requires to deliver its public and social purpose policy.
The Chancellor prefers to couch his budget in the narrative of fiscal discipline because it enables him to present spending as a kindly act and careful budgeting as a prudent one. This enables the continued dismantling of the NHS and the welfare state. Indeed, it reframes spending as an act of Victorian philanthropy rather than as the creation of common wealth for the benefit of people and a sustainable planet.
Brilliant!