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‘Not levelling-up’: Our Panel Reacts to the Budget 2020

Following Rishi Sunak's Budget today, we asked our panel for their reactions.

'The Chancellor lacks vision'

The budget today shows the case for investment in the economy has been won by the Left, and that austerity had fundamentally failed as an economic approach. Far from meeting debt and deficit targets – the Conservatives are now turning on the spending taps in some areas in an admission that you just can’t do society on the cheap and that austerity was always an ideological project.

However, once you take out spending commitment that were already made, investment is not happening on anything like the scale to prepare this country for the climate crisis and while the budget figures may seem big the reality is it barely gets public spending up to 2010 levels. We have experienced a lost decade.

Beyond the emergency measures to mitigate the impacts of the coronavirus, the choices Rishi Sunak made today are revealing: nothing for social care or creating new green jobs – all crises that need to be prioritised.

The Chancellor has failed to invest in the kind of infrastructure that will create good jobs, like renewable energy and boosting manufacturing. This is because he lacks an industrial strategy and real vision for this country. As a result all the debt he’s amassing is unlikely to truly ‘level up’ the regions and address deep-seated inequality.

Dr Faiza Shaheen – Director of CLASS

'Nothing about workers' rights'

It appears that in respect of the economic effects of coronavirus there is more inoculation for business than there is for workers. Those who do not earn enough for statutory sick pay will not benefit from the Chancellor’s emergency measures, but will be forced to rely on a discredited and damaged benefit system. What’s needed is decent sick pay for all including better rates of UK SSP which pales when compared to other European countries. In addition, government must bring together unions and employers to explore how best to support jobs during the crisis.

The National Living Wage target of two-thirds of median earnings by 2024 is not a new announcement and it must be remembered that it has to be put in the context of a decade of stagnant wages growth and recent figures showing that incomes for the poorest fifth of households has fallen by more than 4% over the past two financial years.

Not mentioned today’s coverage, but the Government also announced a consultation on reforming the Retail Prices Index which, whilst sounding a bit dry, will have implications for workers (and pensioners) in respect of measuring the cost of living, pay bargaining and pensions.

Investment in carbon capture technology, electric vehicles and public transport (albeit limited) is welcome, but it falls short of industry demands and includes no ‘just transition’ plans for workers in affected sectors.

Finally, there was little or no mention of workers’ rights and the sort of things that are needed to address the imbalance in bargaining power and fix the wages crises including banning zero hours contracts and giving trade unions access to workplaces. These are things that must be addressed in the forthcoming Employment Bill.

John Earls – Director of Research at Unite the Union

'A budget of indifference'

Rishi Sunak has delivered his first budget, which is also the first by a Johnson government. Anyone who had hoped that this might deliver against the three priorities that we now, very clearly have will be sorely disappointed.

Those three priorities are the need for:

  1. -Short term measures to really tackle the coronavirus epidemic;
  2. -Long term measures to tackle the climate crisis;
  3. -Social measures that ensure that these crises are tackled in ways that tackle the social legacies of ten years of austerity, including low pay, high personal indebtedness, limited prospects most especially for the young, rising wealth inequality and in eat rising housing poverty.

To deal with these issues Sunak had to:

  • Announce bank mortgage and loan repayment holidays;
  • Announce rent payment holidays;
  • Ensure that the state pays for the entire cost if enhanced sick pay, because employers cannot bear this cost as they are currently expected to do;
  • Ensure that sick pay would cover people’s real costs when ill;
  • Provide automatic tax payment holidays for smaller businesses;
  • Reduce business rates for six months, and pick up the cost;
  • Reduce VAT to 15% for the rest of the year;
  • Underpin all the costs of the NHS so that financing does not ration coronavirus care;
  • Support local authorities with social care to keep the elderly out of hospital.

Sunak has not delivered. The only one of these that he fully supplied was business rates relief - without saying whether or not local authorities would suffer as a result, which means that the knock on effect of this could be dire on local government services. 

For the Green New Deal he had to promise £100 billion of spending a year, because that is what is required. He did not do that. The green measures announced were paltry, and he took 40 minutes to get to them. Roads get £27 billion instead - to encourage greater burning of carbon based fuels. On the programmes needed for retrofitting houses, creating hydrogen energy and new renewables not a word was said. 

And how did he do on social issues? Tax changes may leave most people £104 a week better off, if they still have a job.The Tory corporation tax cut that was planned has been cancelled without any admission that it was always a mistake. And he did not even have the courage to cancel the scandal that is entrepreneur’s relief in its entirety. This was a government standing back and ignoring the crisis it has made.

But worse, it was still claimed that the government could balance its books despite the measures announced and this was still suggested to be a virtue. This is economics straight out of the world of fiction, because that’s now as far removed from reality as it is possible to get. 

This was a budget for a planet that I do not live on, an economy I do not live in, and for a world that cannot afford the indifference this government has revealed it has on climate, inequality, housing poverty and so much else. Sunak said that this was a budget for a new decade -  but if it is then it is another where most will be blighted by the indifference of a government that has simply chosen not to care. 

Richard Murphy – tax justice campaigner

'It will impact on the poorest women'

Today’s budget was a story of splashing the cash, but with no real change for many women across the UK. While we were pleased to see the government’s decision to borrow to invest in sorely-needed infrastructure, we were disappointed that roads, rail and telecoms came top of the list. Social infrastructure such as health, education and social care urgently need the same levels of investment.

We welcomed the removal of VAT from menstrual products, but were concerned that the Chancellor did not indicate what would replace it as a source of funding for Violence Against Women and Girls services, which need £393 million per year in England alone.

We welcomed the additional funds pledged to manage coronavirus, but were concerned by the lack of joined up measures between health and social care. People who receive care (older people, younger disabled people, and people with long term health problems) are all at greater risk from coronavirus – and these are more likely to be women. Care workers are also more likely to be women, and yet the impact of coronavirus on both providers and recipients of care seems not to have been considered.

Maintaining the freeze on fuel duty disproportionately benefits men, who are more likely to own a car than women, are more likely to take trips by car, and who drive longer distances than women. Further, tax cuts and freezes, such as cuts to business rates and frozen alcohol duty, erode our tax base to fund vitally needed public services, which women disproportionately rely on. And women are less likely to benefit from the increased National Insurance threshold, because they make up the majority of low earners.

On top of this, the lack of attention paid to the impacts of Universal Credit, and slashed local government funding, both of which have huge impacts on the lives of the poorest women, is extremely worrying. The government’s own analysis (Chart 2.C) shows that the tax and benefits changes (excluding public service spending) announced today make richer households better off, and cut earnings for the poorest. We may have more roads and fewer potholes as a result of this budget, but the prospects for investing in social care and tackling child poverty remain bleak.

Marion Sharples – Women’s Budget Group