Today’s Budget was a massive missed opportunity. We’re experiencing a cost-of-living crisis in the UK with bills soaring and food prices rising at their fastest rate for more than a decade. The pandemic has exacerbated inequality, and the primary responsibility of the Chancellor in this Budget was to take the pressure off working people. The crisis requires radical solutions but unfortunately, the measures announced today are underwhelming – as the Chancellor recycles plans and redistributes money which has already been allocated.
The Chancellor kept using ‘back to 2010’ as a positive reference point for improved spending. Is he aware of who has been in power for the past 11 years? This is essentially the Government attempting to fix problems of its own making.
• Ending a Public Sector Pay Freeze it needlessly imposed just 7 months before
• Amending the Universal Credit system after public outcry that it was plunging millions of families into poverty
• Returning to 0.7% on Overseas Aid Spending in 2024/25 – which means several more years of broken election promises and turning our back on the world’s poorest before the target is reintroduced.
• Providing limited investment in public services after destroying them for a decade
• Introducing policy prioritising the first 1000 days of a child’s life…after closing 1300 Sure Start Centres since 2010
Working people are being asked to pay more for less. Whilst we’re all paying the price for past Government failure. As my colleague Rachel Reeves so succinctly put it in the House of Commons earlier – “𝘵𝘩𝘦 𝘊𝘩𝘢𝘯𝘤𝘦𝘭𝘭𝘰𝘳 𝘨𝘪𝘷𝘦𝘴 𝘸𝘪𝘵𝘩 𝘰𝘯𝘦 𝘩𝘢𝘯𝘥 𝘢𝘯𝘥 𝘵𝘢𝘬𝘦𝘴 𝘢𝘸𝘢𝘺 𝘦𝘷𝘦𝘯 𝘮𝘰𝘳𝘦 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘰𝘵𝘩𝘦𝘳”.
𝐌𝐢𝐧𝐢𝐦𝐮𝐦 𝐖𝐚𝐠𝐞 𝐑𝐢𝐬𝐞
I’m pleased to see the National Living Wage rise from £8.91 to £9.50 an hour, but the Government must go further and make the minimum £10. One third of key workers in the UK are currently earning below this level and when you consider the rise in the regressive National Insurance Tax, the £20 Universal Credit cut and the failure to fix the fuel crisis – it simply isn’t enough.
It’s also important to note that the promise of an extra £1000 a year is intentionally deceptive, relating to the gross increase rather than the net increase. The Institute for Fiscal Studies outlined yesterday how anyone on Universal Credit would lose much more than half of the £1000, as the figure is taken before tax calculation and doesn’t account for benefit losses as incomes rises.
𝐏𝐮𝐛𝐥𝐢𝐜 𝐒𝐞𝐜𝐭𝐨𝐫 𝐏𝐚𝐲 𝐅𝐫𝐞𝐞𝐳𝐞 𝐄𝐧𝐝𝐞𝐝
The public sector pay freeze announced in March (which in real terms represented a pay cut) was completely unfair. It targeted teachers, nurses, and police officers after the monumental contribution they’d made during the worst months of the pandemic. So, to see it ended is a huge victory for those of us who have campaigned for proper recognition of their efforts.
It is, however, disingenuous to dress it up as progressive, positive solution when it should never have happened in the first place, and we’re warned that it doesn’t account for the cuts to universal credit or inflation. Fair pay settlements are needed for workers with an absolute guarantee that they’ll notice a difference.
This discussion of pay begs the question – where are the protections for workers in the Budget? The Government’s continued refusal to outlaw fire and rehire encourages bad bosses to exploit their staff, Statutory Sick Pay at £96 a week in the UK is among the least generous in Europe, and workers have been restricted from taking strike action by this Government in the anti-protest Policing Bill. It’s clear which side the Government is on. The message is ‘you have to put up with it’ – however unsafe or insecure the work is.
𝐕𝐀𝐓 – 𝐄𝐧𝐞𝐫𝐠𝐲𝐁𝐢𝐥𝐥𝐂𝐫𝐢𝐬𝐢𝐬
One of the simplest things the Government could have done to ease the burden for families this Christmas would have been to cut VAT on household energy bills from 5% to 0%. Those on lower incomes are hit harder by rising energy costs. No family should have the face the choice of heating their home, having food on the table, or putting presents under the Christmas tree. The National Energy Action charity estimates that 4m people are already behind on their fuel bills with 1.2 to 1.5m households at risk of struggling to heat and power homes by next April. Labour would have cut the VAT and would insulate millions of homes – taking the pressure off those who were struggling rather than contributing toward it.
It’s encouraging to see the Government make reforms to the Business rates system with investment relief to encourage green technology, and a 50% discount for retails, hospitality, and leisure sectors. Yet the system doesn’t need tweaking, it must be scrapped. I’ve been calling for a complete freeze on business rates, after hearing from pub owners from across Bristol East contacting me in desperate need of support as business rate payments left them close to bankruptcy and local high-street shops feared they couldn’t afford to keep on staff.
All the while online companies like Amazon capitalised on the pandemic, increasing their profit by billions – the playing field is grotesquely unfair. The Chancellor should have increased the threshold for small business rates relief to benefit local companies and raised the Digital Services tax. Pubs, café’s, and clothing shops are vital community assets. These businesses deserve our support.
The Government has granted a concession to those opposed to the Universal Credit cut by lowering the taper rate. Without the weight of support this no doubt would have been swept under the carpet, so thank you to every constituent who contacted me about this. The original decision to cut the U.C uplift was a cowardly decision that consciously subjected millions of people to poverty, and whilst a lower taper rate will not fully compensate the £20 cut it should have an impact.
The taper rate is the amount taxed on money earned above your Work Allowance, so the amount you keep reduces the more work you do. By lowering it from 63% to 55%, the Chancellor promises £2bn in support to those on Universal Credit. But this is still a higher marginal tax rate than millionaires (45%) face and is a fraction of the £6bn he originally cut. Is it any wonder that the policy is so underwhelming when reducing inequality is clearly not a priority for the Chancellor?
The Government has promised an extra £5.9bn for the NHS to tackle the backlog caused by the pandemic. However, issues run deeper after a decade of Tory-imposed austerity. Waiting lists are at record lengths, costs for social care are still sky-high and few efforts have been taken to address overwhelming staff shortages– which are already taking their toll on the sector. The Government’s reforms will also take time to show results, with both funding from the Health and Social Care Levy, and the cost cap for social care (announced in September) not due to take effect until at least 2023.
In the meantime, families will continue to feel the financial strain of social care costs, particularly if they have been hit hard by changes to National Insurance and/or Universal Credit. People with urgent health needs also cannot afford to wait until 2023 access timely treatment and support. I will be calling for guarantees on behalf of Alzheimer’s Society, Terrence Higgins Trust, Young Minds and Leonard Cheshire and the many other organisations who have contacted me over recent months, to ensure that the Government adequately funds health research and treatment – as well as keeping the promises it has made today.
Rishi Sunak has offered up £2bn of new funding for schools and colleges, but this falls well short of the £13.5bn that Tories Covid catch-up tsar Sir Kevan Collins had called for. Perhaps he could have raised more by removing the £1.7bn subsidy the Government provides to private schools. We also need more clarity on plans for higher education with no mention of the student loan repayment rates issue for 16–19-year-olds.
𝐖𝐡𝐚𝐭 𝐂𝐥𝐢𝐦𝐚𝐭𝐞 𝐂𝐫𝐢𝐬𝐢𝐬?
The fact that I’ve left green policy to last is not a reflection of its importance, but rather the Government’s seeming indifference. The Chancellor barely mentioned the climate crisis during the entirety of the speech and wasn’t even able to confirm their 2035 climate reduction target. In contrast the Shadow Treasurer Rachel Reeves explained how we’d deliver £28bn every year for the rest of the decade. Money to build electric vehicles, a thriving hydrogen industry, and retrofitting to heat homes. The Chancellor failed completely in this regard.