Yesterday was an odd day, in part because it was my last day as Policy and Campaigns Assistant at Sue Ryder. I have enjoyed my three months there immensely, and am sad to leave, but at the same time I am looking forward to the next stages. My next three months will be spent in Ghana (now in Tamale, working with the Resource Centre for Persons with Disabilities, rather than with the Ghana Society for the Physically Disabled in Bolgatanga). And I am looking forward to exploring my options after that – working out where my new experiences could take me, and with any luck securing a salary. Still, its a few weeks until I fly to Ghana, so yesterday felt a little like being left in Limbo, and the Chancellor’s Budget didn’t help matters.
I haven’t followed a budget statement in such depth before, and there was a lot of interesting things to gleam from it. The over-riding picture I got from it was that it was targeted to appeal to where I will hopefully be in a year or two. The tax breaks in particular, seemed to appeal to the aspirational middle classes. Increasing the income tax threshold for basic tax from £10,600 to £11,500 would save someone on a £22,000 salary £180 per year. The Lifetime ISA, which appears to offer in effect a 25% interest rate on the first £4000 pounds saved each year is almost too good to be true – I don’t imagine it will last for very long, but I certainly plan to make the most of it while it is available. Again, freezing fuel duty will certainly be seen positively, especially given rumours that it would rise (rumours which I would be willing to be came from within the treasury).
Looking further ahead, the higher rate income ta threshold has been raised, and a cut in capital gains tax will yet again help the aspirational middle classes. Combine this with cuts in corporation tax and increased tax relief for small businesses, and it is clear that this budget is appealing to the Tory base. You’d be forgiven that this were a pre-election budget, with the weight of giveaways included (and with the EU referendum now less than 100 days away, in a manner of speaking it is!)
Still, all these shiny announcements can’t hide the fact that the economic out-look is not all that rosy. The chancellor has been keen to highlight that Britain is not immune to the vicissitudes of global economics, and that we must ‘act now, so we don’t pay later’ (bottoms up), but there are certainly those who would argue that the giveaways in yesterday’s budget were designed to make up for the Chancellor’s own failure. Only a small number of the changes in the budget will increase government revenue, and the Chancellor has admitted that more borrowing will be needed between now and 2020 (when he will have, in theory balanced the books). This hardly looks like a ‘long-term economic plan’ (down it, honourable member).
In fact, rather than addressing systemic problems, this budget swaps between quick fixes and distractions. A ‘lifetime ISA’ which can be used to help save for a first house or put money aside for retirement is simply a way of skirting around the fact that housing costs in this country are astronomical, and that the government has no long-term plan for solving the looming pension crisis (at least, not without alienating its core voters). The Resolution Foundation estimates that, since 1997, the number of years it takes for a low to middle income family to save for a deposit has risen from 3 years to 22 years. Even if the government covers one fifth of the deposit cost through a lifetime ISA, it would still take the better part of two decades to gather together enough funding. Perhaps investing in housing projects might be a better solution.
The Sugar Rabbit (from the Exchequer’s hat) is another good example of hiding behind a good headline. While a tax on sugary drinks will likely help improve children’s health, it doesn’t address the underlying problems – a lack of green spaces for children to play in and too few families having the time to cook fresh food or get outdoors together (because parents have to work longer to save for a deposit). Again, the big education announcements (which have no place in a Budget anyway) of more academies and longer hours are certainly headline grabbing, but they are no substitute for good teaching (cf. Finland).
Underneath all of this, there is another current – what is not said. Analysis by the Resolution Foundation has found that changes to the income tax thresholds will benefit top earners far more than those on low incomes. While this in part mitigated by a freeze on fuel duty, which could have a major impact on a household living paycheque to paycheque, the budget took no steps to help the poorest most. Indeed, one cannot help but wonder where further cuts will fall if the gathering storm clouds burst. Given recent evidence, it would seem that people with disabilities are a popular target for the Chancellor. After all, they don’t make up a significant part of the electorate – especially if cutting disability benefits means that disabled voters are physically unable to get to their local polling station.
So, the overall impression is that things are going to continue to be very bad for the poorest in our society. The people who most need help appear to be receiving least support. And rather than investing in solutions to problems, the preferred methodology seems to be to conceal them behind impressive headlines, and quick fixes. Let me hear you say ‘long-term economic plan’.