Frances Ryan: A budget from a parallel universe
Twenty-four hours before Jeremy Hunt took to the dispatch box, Birmingham city council approved what are thought to be the biggest cuts in local authority history – and it is only the latest community to reel from effective bankruptcy. Today at lunchtime, Hunt announced billions of pounds of tax cuts as a pre-election giveaway. It was akin to watching a budget from a parallel universe, in which the chancellor responded to broken public services and creaking councils by offering struggling families a slightly lower tax bill.
A costly national insurance cut worth £10bn a year will do nothing to help people get a GP appointment. Retaining the fuel duty cut – another £5bn – may get applause from the rightwing press but we know it largely hands money to the rich. Reducing the higher rate of property capital gains tax was another bung to the wealthy.
Abolishing non-dom status was not about fairness, but a move designed purely to give Keir Starmer a headache. There was small relief – contrary to reports, planned growth in day-to-day spending will be kept at 1% – but no real injection of cash. Instead, desperate public services were given a public sector productivity plan – in effect telling exhausted NHS staff to be more efficient.
Not that Hunt cares. Forget feeding hungry children or funding social care for older people: this was a budget whose purpose was to give an incoming Labour government “a poison pill” by racking up the bills now and paying for it with more austerity later, all while throwing a few quid to the blue faithful. This was politics as a game, in which the chancellor made calculations in terms of the damage to the Labour party rather than damage to the country.
Turn on the TV and most pundits will be debating what this means for the election. And yet the real fallout of all this is altogether more human – not which minister will be out of a cushy job next year, but how many patients die as they wait for an ambulance.
Frances Ryan is a Guardian columnist and the author of Crippled: Austerity and the Demonisation of Disabled People
Katy Balls: Tax cuts, but hardly what the Tory right wanted
The last expected budget before an election is always high stakes. But with the Tories languishing in the polls, Jeremy Hunt’s outing has long been viewed as a make-or-break moment. Hunt attempted to give his party some measures they could sell on the doorstep – the headline announcement of a 2p cut on national insurance did not come easily, with Hunt having to announce revenue-raising measures (such as the abolishment of non-dom statuses) that could irk the right of the party to make it possible.
The hope in Downing Street is they have done enough to put a dividing line on tax between themselves and Labour, while also laying some traps for the opposition. In a sign of how they plan to fight the next election, Hunt argued that the Labour party would never care or prioritise low tax in the way the Conservatives had – even if the tax burden is currently at a postwar high.
But this was not the tax-slashing bonanza many MPs had dreamed for. As several told me ahead of the event, income tax was top of their wishlist. And many were still holding out hope for this as late as this morning. “We didn’t get a bounce the last time we cut NI, why would we now?” said one of them. As for the decision to abolish non-dom status, this will not be welcomed by those on the right of the party. While Hunt’s decision to adopt the Labour policy could help blunt opposition attacks on Sunak’s wife, the concern on the right is that it concedes a more important principle.
The problem for the Tories is that there are now very few levers to pull between now and polling day – even if the Tories, as is expected, go late.
Katy Balls is the Spectator’s political editor
Sahil Dutta: Plenty of words about the cost of living, but nothing to help tackle it
Jeremy Hunt’s budget highlights a crucial issue facing our economy: the high costs of everyday living. Yet it does little to tackle the underlying problem.
Since 2008, wages and economic growth in Britain have stagnated while the prices that we pay for electricity, gas and travel have significantly increased. Add in rising food, mortgage and rent bills, and about 40% of household spending is absorbed by basic necessities. These high costs are driven partly by an economic model that redistributes cashflow from households and small businesses upwards – to the private giants that control the provision of many of these essential assets.
Smaller national insurance bills and property sale taxes won’t change that. They benefit richer households more than poor ones and will be accompanied by longer-term austerity. This will mean more of the cuts that have already bankrupted councils and led to decayed youth centres, parks, libraries and community arts provision. These have left us a sicker and sadder nation than even a decade ago, with millions of people on long-term sick leave. Rather than confront these challenges, the budget retreats to the Conservative safe space.
It’s unlikely that any of this will save the Tories in the forthcoming general election, but it has left the opposition reinforcing many of the same messages. It, too, propagates false myths about the “country’s credit card”, supports an incoherent fiscal rule that prioritises debt reduction over necessary investment, and distances itself from any suggestion that public infrastructure could be expanded and predatory businesses stopped.
Expel the major reforms the British economy needs from view, and cutting taxes seems like the only thing a government can actually do. But, coupled with the deep austerity to come, it really won’t help.
Sahil Jai Dutta is a lecturer in political economy and co-author of Unprecedented: How Covid-19 Revealed the Politics of Our Economy
Aurora: This is a budget for higher earners – not people like me
I work an average of 28 hours a week as a carer. At £11 an hour, I earn just above the minimum wage. As a solo parent of two children, I am reliant on universal credit to afford the property I rent privately and to top up my wages. I am also in receipt of child benefit and eligible for the 25% single person’s discount on council tax. In the past, I have also been subject to the benefit cap – a policy that continues post-budget but leaves people with less than they need to get by.
This budget is focused on middle- to high-income earners. The high-income child benefit charge threshold being raised from £50,000 to £60,000 is welcome, but it is a policy for relatively wealthy families. The offers for lower earners are minimal – the Household Support Fund being extended for six months does not provide stability for the rest of the year. A cut of 2p in national insurance contributions will not help those on a low income who pay less due to tax thresholds.
The chancellor said last autumn that benefits would rise this spring by 6.7% and that still falls woefully short of covering the increased cost of living. Remember, most benefits were frozen for some time, and more than a decade of cuts leaves people struggling to make ends meet.
Instead of a cut in taxes, I would much rather see more support provided for public services, on which many people like me and my children are dependent. There needs to be more money to bridge the gap and alleviate poverty.
Aurora works in the health and social care sector and is a Changing Realities participant. Aurora is a pseudonym
Mariana Mazzucato: The Tories are out of ideas – now it’s over to Labour
Today’s budget shows the Conservatives are out of ideas. But Keir Starmer’s response must be more ambitious than riding on Tory failures. It must put forward a true mission-oriented plan for investment-led growth, directed at solving problems in health, climate, water, the digital divide and much more. Only this can help Labour shake off old economic thinking and respond with a different vision for the economy.
First, tax cuts have not historically led to growth, opportunity and prosperity, as Hunt says they will. They will decrease government fiscal space without driving growth opportunities. The fiscal conservatism of the past 15 years has been self-defeating.
Second, it is through strategic public and private sector investment that we can expand the productive capacity of the UK economy. At about 10% of GDP, business investment is lower in the UK than any other country in the G7. Although public investment may increase the deficit in the short run, it will ultimately reduce the debt-to-GDP ratio if it is designed to crowd in business investment and have a multiplying effect in strategic areas such as greening the economy.
Third, our economic and societal objectives are not trade-offs. Labour’s recently watered-down £28bn for its green prosperity plan could have tapped into the global economy’s massive green industry potential, which could be worth $10.3tn by 2050. When public investment is guided by a clear mission, it can create new markets and increase long-term competitiveness.
Labour already has five missions, but that is not enough. Now is the time to gather ambitious finance and develop a vision for an economy-wide transformation. If not now, then when?
Mariana Mazzucato is a writer and a professor of economics at UCL, and director of the Institute for Innovation and Public Purpose
