30th October 2021
Sunak’s budget will not pay the bills for many families
The extent of Tory spin in relation to Chancellor Rishi Sunak’s budget this week would be regarded as breathtaking if coming from any government other than one led by Boris Johnson. After ten years of Tory driven austerity which has seen a financial squeeze upon local government, education, the NHS and accelerated the low skills, zero hours contract economy, we are now expected to believe that another Tory government will reverse this.
Sunak proclaimed, in true headline grabbing style, that the budget was one to herald “An economy fit for a new age of optimism”. The impact of the pandemic upon the economy was judged by the Office for Budget Responsibility (OBR) to be a long-term hit to the UK of 2 per cent, rather than the 3 per cent it forecast in March. This gave Sunak latitude to increase spending on public services and offer tax cuts in areas such as business rates.
Sunak based his budget on OBR assumptions that UK economic growth would be 6.5% this year and reach pre pandemic levels by the end of the year. Sunak failed to mention that the rate of growth only appeared greater because the British economy had tanked further and faster than other G7 economies in the first place. Still, the Tories have never been ones to allow the facts to get in the way of a good soundbite.
While Sunak made some adjustments to the tapered reduction of universal credit, the budget will still hit the poorest the hardest as they faced a serious cost of living crisis. While the Tories have been spinning the impact of changes to Universal Credit as benefitting over 2 million low income families, the Joseph Rowntree Foundation offer a different assessment.
Katie Schmuecker, the deputy director of policy at the Joseph Rowntree Foundation, said,
“The reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990.”
Even those set to benefit from the £1,000 a year increase Sunak claims his changes represent will see much of that wiped out in rising national insurance contributions, increased rent and energy bills, as well as escalating food costs. Quite how much of the “new age of optimism” families in these circumstances will see is hardly even open to debate. The reduced duty on sparkling wine and short haul domestic flights may also be of little benefit to those families struggling on the breadline.
In reality Sunak’s budget will barely go towards shoring up the damage caused to local communities, and the services upon which they depend, by the decade long Tory austerity drive.
A recent report by the Joseph Rowntree Foundation found that nearly 4 million low-income households are behind on rent, bills or debt payments, up threefold since the pandemic hit. A third of the 11.6 million working-age households in the UK earning £25,000 or less were found to be in arrears on their rent or mortgage, utility bills, council tax bills or personal debt repayments.
Even Tory Councils are warning of a surge in homelessness this winter as a result of the end to government support measures such as furlough and the eviction ban. Just under three-quarters of Councils have reported an increase in homelessness acceptances over the past four months, while nearly two-thirds said people they had housed during the pandemic had recently slipped “back in the homelessness cycle”.
No matter how Sunak or any other Chancellor chooses to spin the figures or cook the books the reality remains that the problems are systemic. Capitalism is predicated upon competition, exploitation and aggressive individualism. The problems faced by those in poverty in 21st century Britain cannot be fixed by adjustments and tinkering with the system, they are as a result of the system itself.
Once the dust and the post Budget media spin settles the realities of life under the Tories will continue to come home to people. Sustained and organised opposition is sadly lacking on the Opposition benches in Parliament. Increased extra-Parliamentary action will be key to shifting the parameters of the debate and moving the Labour leadership to action.
The Budget has made it clear that the Tories are preparing themselves for an early General Election, with 2023 being the likely date, before the economy takes another nosedive. Labour need to get themselves into shape well ahead of then.