How can we have gone, in less than a month, from a plan to spray billionaires with free money to dire warnings of deep public spending cuts? It is another one of those bewildering turns of events that is the new normal in British politics. There is a simple reason why none of it makes sense: neither the old plan from Chancellor Kwarteng, nor seemingly the new plan from Chancellor Hunt, directly deals with the single-biggest issue facing the country – the cost-of-living crisis.
Before the winter has even started, millions are already living life without the basics or have cut back on them. Many have no intention of turning the heating on any time soon and anxiety levels are rising. And yet, despite this, the Government’s focus is much more on reassuring the markets rather than reassuring the voters. It was obvious to most people from the outset that the September mini-Budget was a gruesome misjudgement. But I am getting worried that Mr Hunt’s Halloween Budget could also be a horror show.
When he talks of decisions of “eye-watering” difficulty, it is clear the new Chancellor means cuts to public spending and public services rather than tax rises. Tough talk that pleases the City – but is frightening the life out of everyone else. I want to explain as clearly as I can why a chainsaw massacre Budget would be as disastrous for Britain as the mini-Budget – but in a different way. Where one had devastating economic consequences, the other would have dangerous social consequences.
Cutting public services at a time when people can’t afford to keep warm or eat is a very bad move. People will be at more risk in their homes but public service will have limited ability to respond in a crisis. I can illustrate my point through the current situation in fire services across England. Firefighters have suffered real-terms cuts to their pay since the first round of austerity in 2010. They are in no position to face double-digit inflation. I support their call for a significant pay rise and, together with other local leaders around the country, am doing my best to find a fair solution. But it’s difficult. That’s because the Home Office has said it’s unwilling to make any contribution to a settlement. They have thrown the problem over to local government – even though councils have been the biggest victims of Whitehall cuts since 2010. This is typical of the Government’s current response to public sector pay. They are refusing to get around the table with the public sector unions and sort out fair pay settlements for nurses, firefighters, rail workers and others. So the people they clapped every Thursday in the Covid crisis have been thrown to the wolves in the cost-of-living crisis.
Does anything illustrate the duplicity of modern politics more than this?
Remember – this will be a winter when people are using more candles and paraffin heaters. That means a risk of more house fires. In these circumstances, failing to take any fair and meaningful action to avert a fire strike represents a major abdication by the Government of its duty of care to people who rely on public services as well as those who provide them. So what is the alternative Budget that Mr Hunt should put forward? The only safe and fair route out of the cost-of-living crisis, that protects the public finances, is through raising revenue from those most able to pay.
We have already heard the boss of Shell asking the Government to impose a windfall tax. He can see the case for one and the reputational risks to his industry if they are seen to be left with excessive profits. What on earth is the Government waiting for?
This would be a start but, in truth, it wouldn’t raise all the money needed to close the gap. So the Government should extend the principle of taxing wealth which has accrued by default rather than by investment decisions.
The country’s failure to build homes over many decades has led to a steady rise in house prices way above inflation. During the same time, politicians have flinched from revaluing the council tax base – meaning that wealthier people with the biggest house have been significantly under-charged on local taxation for many years. This is part of the basis for the one-off wealth tax for people with assets above £2 million which was proposed two years ago by an authoritative Wealth Tax Commission and largely ignored by politicians. It is the kind of proposal that needs to be on the table if we are to avoid collapsing public services and serious human misery.
My sense of Mr Hunt is that he has more understanding of this than most of his colleagues. But he is in a Government with very right-wing instincts. For the good of us all, his Halloween Budget needs to face down the Freddie Kruegers in his Party and exorcise it of its demons.
