Tory budget will not undo decade of austerity damage

Tory chancellor Rishi Sunak delivered what he described as a “people’s budget” on Wednesday.

The decaying infrastructure, stagnant economy and crumbling public services pushed him to promise borrowing in order to fund more spending.

Public sector net investment is set to rise from close to 2 percent of national income to 3 percent. But as the graph below shows, this comes after a sluggish level of investment since 2010, and disastrous cuts in the Tory 1980s and 90s.

It also matters what investment is for. Much of it will go to contractors, outsourcers and privatisers who will cream off fat profits.

FBU union general secretary Matt Wrack said, “A decade of drastic funding cuts and unfair pay restraint has resulted in the loss of a fifth of our firefighters and a quarter of our fire safety officers. It’s about time that the government recognised and reversed the damage they have done. But, frankly, the £20 million promised to fund fire safety is a pittance compared to the £141.5 million cut since 2013 in England – and it’s utterly insufficient.”

PCS leaders Mark Serwotka agreed, saying, “Rishi Sunak insists that the public finances are strong and that human capital is important for the economy. Yet he will not give the government’s own staff a pay and pensions increase.”

Pledges for funding to education also didn’t hit the mark.

The NEU union tweeted, “This budget does not support a long term plan for young people being educated in a chronically underfunded system.”

It added in a statement, “The £7.1 billion already promised for schools over the next three years should have been increased.  It is welcome, but it falls well short of the £12.6 billion needed to replace the cuts since 2015.”

The details of Sunak’s economic plans show that there is little expectation of a vibrant economy.  Even without the impact of coronavirus, the Office for Budget Responsibility has revised down its forecasts for growth. In 2020, growth is projected at 1.1 percent, down from 1.4 percent in last year’s forecast.

Many of the tax changes presented as a boon for the low paid actually favour those further up the scale. For example, the rich gain much more in cash terms than the poor from budget changes in national insurance.

The damage done by ten years of austerity will not be reversed by this budget.

John McDonnell, Labour’s shadow chancellor, tweeted, “Rishi Sunak is asking us to congratulate him for telling us he’s only partially rebuilding what the Conservatives have destroyed over the last ten years.”

Much of the budget was dominated by plans for the coronavirus.

Sunak promised a £12 billion plan to deal with the outbreak of the virus and pledged to provide statutory sick pay (SSP) to those who have been advised to self-isolate. That’s not good enough.

Tony Wilson, director of the Institute for Employment Studies, said, “The budget measures on Covid-19 are pretty thin gruel for people affected. SSP is unchanged at £94 week. For a full time worker on minimum wage, this is a loss of income of around three quarters.

Wilson added, “At same time we estimate that around 7 million people aren’t entitled to SSP—one in five workers. This just highlights how inadequate Universal Credit has become. At £73 a week, the standard allowance is one fifth of the full time min wage. Today’s budget increases it by £1.25.”

Promises on the issue of climate also fell short.  Pledges included more money to tackle air pollution and to plant more trees. But these are not nearly enough.

Labour leader Jeremy Corbyn said the “environmental measures announced by the chancellor today get nowhere near” dealing with the “climate emergency”.

As always there are apparently small measures hidden away in the plans that will have a big impact.

Inflation

Proposed changes to how inflation rates are calculated, announced alongside the budget, will hit ordinary workers and pensioners hard,

Under the changes, the methodology of the retail price index (RPI) would be “aligned” with the lower CPIH rate.

RPI is widely used to uprate pay and benefits for workers and members of many pension schemes.

It is typically around 1 percent higher than the CPIH rate.

Tim Roache, GMB union general secretary, said, “These proposals will be a hammer blow for millions of working people and pensioners.

“This might be presented as a technical issue but if this goes through it will end up costing millions of workers and pensioners their full, hard-earned compensation.

“Turning RPI into a zombified version of the flawed and controversial CPIH measure will drive down many people’s standard of living.”

Working class people have felt the effects of underfunding and cuts to the public sector.

These are the same people that will feel first the effects of climate change and will suffer the most at the hands of the coronavirus. It is clear that this Tory budget fails them.