Instead in his speech on Wednesday, the Tory chancellor boasted of giving bosses “the biggest business tax cut in modern British history.” He promised businesses a “super deduction” in their tax bill in return for investing in machinery—essentially a bribe to get bosses spending money.
Under the plan, businesses will be able to claim tax relief on profits by up to 130 percent of the cost of investment for the next two years. That will be worth £25 billion to bosses.
That offsets massively the meagre—and much talked about—rise in corporation tax.
Sunak said corporation tax would rise to 25 percent. But only businesses with profits of more than £250,000—just 10 percent of companies—will be taxed the full amount. And even then, the rise isn’t set to come into place until 2023. Close to an election, it could well be rescinded.
Even that’s too much for Tony Danker of the bosses’ CBI organisation. He said there would be a “sharp intake of breath” from bosses at the idea of paying any more tax. But he was soothed by the prospect of more giveaways. “The boldness of the chancellor is to be admired,” he said.
Disgracefully Labour leader Keir Starmer backed bosses saying, “It’s right that corporation tax isn’t rising this year or next.”
Hospitality and leisure businesses will also get a tax cut totalling £6 billion. Sunak has let them off paying business rates for three months—followed by a two thirds discount for the nine months after that.
And bosses will also be able to apply for government grants out of a pot of £5 billion. That means—according to Sunak—that the total amount of direct cash to businesses has reached £25 billion.
He also announced eight new “freeports”—parts of the country where businesses are given extra tax cuts and can dodge planning rules. They have rightly been dubbed “sleazeports by some, a haven for tax dodging.
Hidden in the small print, Sunak slashed an extra £4 billion a year from day-to-day spending on public services from next year.
This comes on top of cuts he made at the spending review last November, when he slashed £10 billion per year from departmental budgets from this year onwards. Local government will, again, be particularly hard hit.
Sunak has also raised taxes for the lowest paid workers by stealth. He is freezing the income tax threshold at £12,750 until 2026.
The threshold means anyone earning less than this doesn’t have to pay tax. But if wages rise above it along with inflation, fewer and fewer low paid workers will be exempt.
On top of that, many local authorities plan to raise council tax by up to 4.9 percent, blaming low funding from the government.
A report by the Wealth Tax Commission last December found that a tax of just 1 percent a year on household wealth of more than £1 million “would raise £260 billion over five years”. Sunak prefers to tax the poor.
And while bosses get tax cuts, health and public sector workers don’t get a pay rise.
Even supposed “support” for ordinary people is an insult—and designed to subsidise the bosses.
The furlough scheme is set to be extended to the end of September. And the £20 a week uplift to the Universal Credit benefit has been extended by six months.
The extensions means workers who rely on them won’t immediately lose out—but six million families still face losing money by the end of the year. The £20 should have been added permanently.
Meanwhile, people on other benefits are denied the £20 uplift.
Furlough and Universal Credit are used by bosses to get out of paying workers a living wage.
Meanwhile, trade unions’ demands for more statutory sick pay—vital to make sure sick workers stay home in the pandemic—was ignored.
Union leaders slammed the budget. General secretary of the Unison union Christina McAnea said, “The chancellor had much to say on how to revive the economy but strangely silent on public services.
“There was no extra money for a social care system on its knees. Staff are highly skilled but lowly paid and barely earn the legal minimum. No mention of cash to raise the morale of exhausted NHS workers and grant the pay rise they’ve more than earned.”
Mark Serwotka of the civil service workers’ PCS union said Sunak’s “refusal to lift the pay cap on civil servants and other public sector workers, who have kept the country going during the pandemic, is a disgrace.”
There should be no more illusions that union leaders can work in “partnership” with the government and bosses, as many of them claimed at the start of the pandemic.
In reality it’s a question of whether bosses or workers pay—and Sunak is fighting for the bosses. It’s time for union leaders to begin a fightback for our side.
Samantha receives Employment Support Allowance (ESA) as she can’t work for health reasons. But there has been no uplift to ESA or any other “legacy” benefits that predate Universal Credit.
Samantha told Socialist Worker that not getting the uplift “makes you feel like you’re not a human”.
She said the pandemic has been “really, really difficult” as her living costs have spiralled.
“I’m a single mum with a 13 year old lad who has been at home throughout the pandemic,” she said. “He’s a big lad and just wants to eat all the time. I’ve also been shielding.
“Usually I’d pop out to the shop and buy what’s on offer. But I’ve been sending him out to do the shopping, and at his age he doesn’t have a clue about buying things cheaply. The cost of our shopping has shot up.”
Samantha said she has had days where she has “gone without” food altogether so that her son can eat. She’s also been forced to use more energy. “Normally, the heating goes on first thing in the morning and when he comes home from school,” she said.
“But while he’s been here, it’s been on more. I’m dreading my next gas and electric bills.”
Samantha has used her small amount of savings to make ends meet during the pandemic. She’s been forced to use food banks, which has affected her health.
“Food banks do a brilliant job,” she said. “But a lot of it was tinned food. I’ve not been eating fresh fruit and veg, and now I’m severely anaemic.”
Samantha said the lack of extra support has affected her physically and mentally. But her MP, Royston Smith, doesn’t seem too interested.
“He said people on ESA are getting more money than those on UC so don’t need the extra £20,” explained Samantha. “When I went back to him with my budget, he didn’t even bother to reply.”
Smith last year voted against a parliamentary motion to extend the provision of free school meals throughout the holidays. He denounced the vote as a “politically motivated stunt”.
The Tories’ lack of support for benefit claimants leaves many having to choose between heating and eating. Many people have had to turn to charities or friends and family to get by, which leaves some feeling worthless.
Rishi Sunak’s budget won’t solve any of this.
“They need to keep that £20 for Universal Credit people permanently, and not take it off them in another six months,” said Samantha. “But they also need to address how the legacy benefit people are being treated.
“Tax credits need to go up as well. And the budget for free school meals should be higher.
“Charities should be there for the times when you really need them, say if there’s been a disaster. They shouldn’t have to take the shortfall from government to help people along.”
Powerful protests keep up the pressure
Bosses are obsessed with making cuts
Another year of inaction from our rulers