The budget big spend offers nothing to working people argues Chris Nineham
All the talk is that the new government's first budget is ending austerity and stealing Labour’s clothes. One thing is true. This relatively big-spending budget is an unspoken admission that the years of cutbacks have been a disaster. Sunak has promised to increase spending by £30bn this fiscal year, including the funds to tackle Coronavirus, and plans to spend £175bn more than previously over the next four years.
Leaving aside the misery inflicted, austerity has failed in its own terms. Even if Rishi Sunak’s measures don’t have an impact on the stats (which they will), by 2022, the public sector debt ratio will be double where it was even before the Great Recession in 2008. Economic growth is at pitiful levels. The Office of Budget Responsibility (OBR) predicts an average growth of just 1.5% over the next 4 years, and that is without factoring in the potential impacts of the Coronavirus.
So, as predicted, in a stroke the Tories have accepted that their whole economic programme of the last ten years has been completely wrong-headed. This is an extraordinary moment that needs to be marked.
Does this mean they have taken over Labour’s mantel and want to unravel the impact of austerity on the lives of working people? Not at all.
Some in Labour seem wrong-footed by the Tories ramping up state expenditure. But it is important to understand there is nothing inherently progressive about state spending. There is a long history of 'pump-priming'; using the state to try and kick start the capitalist economy. This doesn't necessarily benefit working people. The amount the Tories are spending is relatively high. But ‘how much’ is one question, ‘who on’ is the much more important one.
Incredibly there is nothing in this budget to deal with the scandalous state of social care for the elderly. This is particularly shocking at a time when Coronavirus represents a mortal threat to millions of older people who will be much more vulnerable because they are not properly looked after.
There is no attempt in the budget to deal with the ongoing disaster caused by Universal Credit, despite the fact that its unrolling is widely recognised to be one of the main drivers of extreme poverty and the rise in the use of foodbanks. Such is his commitment to ending austerity, Sunak didn’t even think to raise the overall cap on welfare spending.
Although it is widely accepted that for millions, particularly younger people, the lack of decent affordable housing is making life almost impossible, there is nothing to help the street homeless or tackle the housing crisis in general for people on lower incomes.
The minimum wage, rebranded as the living wage, is to be raised to two-thirds of median earnings by 2024. That will take it to a miserly £10.50 an hour in four years’ time – still way below what people can actually live on in any acceptable sense.
Coronavirus has forced the government’s hand on statutory sick pay. But not very far. The sum of £94.24 sick pay per week will not be enough to survive for many, and the budget did not make it accessible to the many workers on zero-hours contracts.
Meanwhile there will be no let-up for devastated local services which got no direct extra money and there is very little change to the tax regime. For all the talk of leveling up, apart from a 'windfall' of £104 per year for some employees due to a rise in the national insurance threshold, there is zero redistribution to be found in Sunak's package. Despite runaway inequality, The Treasury’s own estimates are clear this will be a budget that puts more cash into the pockets of high earners.
So Sunak wasn’t intervening to address the desperate social and economic problems faced by millions in this country. What was he doing? Not surprisingly, this was a budget shamelessly backing business. The big-ticket investments were on infrastructure projects – money that will go straight into the coffers of big business. £27 billion will go into road building, immediately negating the half-hearted green measures contained in the budget. Other engineering and building projects get huge cash injections in the hope that first of all this will be enough to stop a recession and second that some of the money will trickle down to benefit some of the Tories new working-class voters.
Both of these look unlikely. The OBR calculates Sunak’s spending plans will add half a percentage point to GDP growth. But all that does is compensate for the reduction in growth forecasts that the OBR has already made for the next few years. If all goes according to plan, government investment as a share of GDP will rise from under 2% to 3%. Business investment is about 15% of GDP, so raising government investment from 2% to 3% is unlikely to make much impact if in a slump, capitalists start significantly slashing investment faced with more economic panic.
On the two other key questions of the day, the climate crisis and Coronavirus, this budget too looks woefully lacking. Fuel duty is to stay frozen. As oil prices continue to drop, this means there is every incentive for increased fossil fuel spending. No change then to the reality of freeze and fast-rising public transport fares that have caused an extra 5 million tonnes of greenhouse gas emissions by encouraging people to abandon public transport in favour of cars.
On the Coronavirus, the fear must be that the increase in NHS spending is too little too late. As health workers complain of a drastic shortage of acute beds and users complain of even now not being able to get through on the 111 emergency line, let alone actually get a test, it seems clear the NHS will be unable to cope as the virus spreads. Shockingly, most of the emergency budget measures, like the government's overall response to the virus, are focussed on keeping business ticking over rather than saving lives.
But then this was a big-spending budget that was all about big business.
Chris Nineham is a founder member of Stop the War and Counterfire, speaking regularly around the country on behalf of both. He is author of The People Versus Tony Blair and Capitalism and Class Consciousness: the ideas of Georg Lukacs.
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