‘A Huge Disappointment’: Our Panel Reacts to the Budget 2017
Following Philip Hammond's Budget announcement today, we asked our panel for their reactions.
Prem Sikka, Professor of Accounting and Finance at the University of Sheffield and Emeritus Professor of Accounting at the University of Essex
The Budget is a huge disappointment. We desperately needs investment in the economy and an increase in people's spending power, but neither have been forthcoming.
The Chancellor told us about the perilous state of the economy. Productivity is stagnant and declining. GDP growth rate for every year of the current parliament has been cut to below 2% - a new low for the UK economy. The March 2017 forecast was that for 2021-22 the annual pubic borrowing will be £16.8bn and now it is revised up to £30.1bn.
Yet he didn't change government policies. Some additional investment in housing and northern transport will be welcome, but it's not enough. The abolition of stamp duty for first time purchase of property of up to £300,000 is welcome but with low wages, how many people will be able to buy a house? And there’s nothing to stop construction companies from raising house prices, with the net result that buyers won’t benefit from the reduction in stamp duty.
People’s ability to build a sustainable economy depends on their purchasing power, but the public sector pay can has not been lifted. The living wage is to rise by 4.4% to £7.83 next year and will give someone working 40 hours a week an annual wage of £16,286. After paying income tax, National Insurance Contributions and ravages on inflation, there will be little uplift in people's purchasing power. Overall, the government expects wages to rise by 2.3% next year (including for fat cats), down from 2.7% previously forecast. For ordinary workers, there will be virtually no growth.
The Health Secretary had publicly asked for a £4bn injection into the NHS. The Chancellor has agreed to provide £2.8bn though we await the details. It is worth noting that £3bn has been set aside for Brexit negotiations.
Any clampdown on tax avoidance is welcome and the government has announced the possibility of a withholding tax on dubious royalty payments by companies to related entities in low/no tax jurisdictions. The Chancellor claimed this would raise £200m and various other measures would raise additional £4.8bn by 2022-23. This is not good enough because there is no programme of any fundamental reforms of the tax system. No new investment in HMRC has been announced. Overall, it is a disappointing Budget that fails to address the country’s needs.
Victoria Bettany, Senior Researcher at the Centre for Local Economic Strategies
This budget has failed to make any real commitment to the people missing out in the places that are missing out. National government needs to work in equal partnership with our regions to shape fair budgets that work towards social justice for everyone everywhere.
While any steps taken to make getting on the housing ladder a little easier are welcome, the abolition of Stamp Duty on homes up to £300k (and a discount on those up to £500k) by the Chancellor looks set to have very little impact outside London. The average cost of a home purchased by a first time buyer outside the capital and the south east is £153k. The average Stamp Duty paid is £568, and whilst I’m sure this saving would be welcome, it is unlikely to cause a significant delay to a purchase.
Meanwhile, those buying in London typically pay around £10,500 in Stamp Duty on a property costing £410k. According to figures released by the Halifax, the average deposit on these homes is over £100k. The question we need to be asking here is if London’s £400k private homes is where the real housing need is in the UK. This discounting comes as the country has 120,540 children in temporary accommodation.
There are other clear signs in the budget that money is not being used to support those most in need. The Chief Executive of NHS England called for a £4bn emergency injection of funding to tackle long waiting lists for operations that will affect millions of people. In response, the Chancellor has allocated just £2.8bn extra funding to NHS England - £1.2bn short of the amount required. This is all while the Chancellor commits £2.3bn to bring forward reductions in business rates for businesses operating in wealthy areas (the majority of which are somewhat unsurprisingly in London).
If you’re a wealthy healthy Londoner, own your own business and are looking to purchase your first home, this budget is the one for you. If you’re anybody else, or genuinely in need, this budget doesn’t have much to offer.
Mary Bousted, Co-General Secretary at the National Education Union (NEU)
The Chancellor’s words simply don’t match his actions. It's astounding that as Britain faces the challenge of building a new economy for Brexit our education system and a generation of pupils are being so terribly short-changed. There was little in this Budget that will make a dent in the severe underfunding of education and little to suggest government is prioritising the broad skills development that young people and their country will need.
Sure, colleges can see the benefit of £20m to aid T Level implementation, and some teachers, and their pupils, will benefit from a £42m boost in spending on training. But these are drops in the ocean when FE budgets are on a knife edge and schools require £2bn each year just to maintain funding in real terms in the face of inflation, cost increases and rising pupil numbers. The OBR has reduced forecasts for pay growth and the Chancellor was silent on restoring teachers’ pay to 2010 levels. This is hitting the recruitment and retention of teachers hard.
Ultimately the government had a big political choice to make in today’s Budget – to invest in education, or to continue with its damaging policy of real terms cuts. The government is ignoring the anger of parents as well as the frustrations of teachers. The National Education Union calls upon pupils, parents, grandparents, campaign and community groups to join our campaign to properly fund education for our country’s future.