By Diane Abbott MP
It is a modern miracle how incredibly damaging Tory Budgets are given a warm welcome by the overwhelming majority of the media, the miraculous status undimmed by the fact that it happens year after year.
The consensus was that last week’s Budget was a “spend now, tax later” plan.
The opposite is true. Aside from measures to try to cope with the pandemic which a clearly reluctant Chancellor is obliged to extend, the substance of the latest Budget, like the 2020 Budget, is to cut spending and raise the taxes on working people now.
In addition, far from there “being no money left,” there is in fact an enormous tax giveaway to big business.
The talk of tax hikes in the future on corporate profits is pure conjuror’s trick, designed to distract from what is actually happening now, using a policy that may never be implemented.
But as damaging as this austerity Budget will prove to be, there is even worse to come from its serial failures to address the multiple crises of British society, including the pandemic itself, the prospect of catastrophic climate change, the huge and deepening inequalities in society, the housing crisis, the crises in public services and in our basic infrastructure.
Robin Hood in reverse
In any sober assessment of this Budget it should be clear that the austerity policy has been reintroduced with a vengeance, following on from last year’s 5.7 per cent real-terms cut in government current spending (the day-to-day spending on schools, hospitals, public services of all kinds).
At the same time the support measures the Tories announced are mainly short-term and overwhelmingly to support business.
As this government’s policy has repeatedly shown, in a negative way, and other countries in a positive direction, the economic health of any nation depends on its public health.
The best gift the government could have given to businesses (and far less expensive) would have to suppress the virus with a zero-Covid policy. It still could, if it changed policy.
These are among the austerity
measures that have not got the publicity they deserve:
• A public-sector pay freeze (except for nurses, whose 1 per cent rise is still a cut in real terms, after inflation)
• Another cut in government current spending (£4 billion)
• A rise in council tax (£2bn)
• A freeze on income tax thresholds (which means 1.3 million of the lowest-paid workers are brought into the tax net and ordinary workers lose out by paying more tax than if the thresholds had risen with inflation).
Together these amount to a huge attack on living standards of ordinary people.
At the same time, taxes for businesses are being cut massively.
Ignore all the spin about the big rise in corporation tax on profits, which is way in the future and may never happen.
Companies will soon be able to claim £13 for every £10 invested.
This “super-deduction” of tax is a huge tax giveaway amounting to around £27bn.
The Office for Budget Responsibility (OBR) says the policy will not boost business investment over the medium term, just simply bring it forward in the short term. So it is just a giveaway to business.
Together, this is the transfer of incomes from ordinary working people and the poor to big business and the rich.
It is the classic definition of austerity, and the same type of policy as George Osborne, David Cameron and the Lib Dems adopted. It is Robin Hood in reverse.
No-one should be fooled by the kerfuffle over a proposed corporation tax increase.
This is not due to be implemented until the financial year beginning in April 2023.
So any tax payments are years away and the government could scrap it at any point.
The missing elements of a Budget
This government specialises in not implementing measures it has previously announced.
One of those, dating from the general election, is that it would tackle the housing crisis that it helped to create.
But the Budget subsidies for mortgages and deposits are useless on their own.
There needs to be a huge programme of affordable homebuilding, otherwise these measures simply drive prices even higher, making homes even more unaffordable.
There was also next to nothing in the Budget about tackling catastrophic climate change, either in terms of investment to combat it or providing for a green recovery.
Two different Commons committees have said there are no plans to put government declarations on climate change into practice.
The Public Accounts Committee (PAC) says ministers have “no plan” to meet climate change targets, two years after setting them in law.
And the business committee says the vital UN climate conference scheduled will fail unless its goals are made clear.
In addition, the 110-page “Red Book” document from the Treasury, the word “inequalities” or “inequality” were mentioned just once!
And this was in the false messaging about levelling up, which we now find is only happening in Tory areas.
In addition, the government has not published an equalities impact assessment of the Budget.
Yet black and Asian people have been much more disproportionately hit by the economic fallout of the crisis, along with poorer households and young people.
They have also been disproportionately hit by the death toll in the pandemic. The Budget literally had nothing to say about any of this.
Underlying all of this is a complete failure to grasp the real relationship between the economy and the pandemic.
Notoriously, the Treasury’s Eat Out to Help Out scheme could not be sustained because cases and then deaths rose again, and the scheme itself probably contributed to that.
At every stage, “putting the economy first” has been disastrous for lives, and for livelihoods.
The OBR forecast is now that unemployment will rise to 5.9 per cent, while we know Covid-19 cases are likely to rise once more with schools and colleges reopening again on Monday.
Instead of dealing with the pandemic, the Tories are using it as backdrop for a renewed austerity policy against the bulk of the population.
Diane Abbott is Labour MP for Hackney North and Stoke Newington.
The above article was first published here by the Morning Star.