THIS week’s budget should be judged by one key issue — whether it improves the living standards of the vast majority of people in this country. On that, it clearly failed.
Over the coming months, the poorest families will receive a £20 per week universal credit cut plunging half a million people, including 200,000 children, into poverty just as unemployment is expected to rise.
Key workers will be hit by ongoing real terms pay cuts despite their heroics throughout this crisis. While one million lower-paid workers will be forced into paying income tax as a result of stealth taxes imposed in the budget.
Living standards have faced an assault over the past decade. Following this budget, that’s set to continue as we are now seeing with the appalling pay cut offered to NHS staff in recent days.
Workers will have had almost two lost decades on pay, with Institute for Fiscal Studies figures showing average wages will be no higher in 2026 than in 2008.
Capitalism clearly isn’t working for the many, though it is for a tiny few who have massively expanded incomes during this crisis.
Through such regressive measures as outlined in the budget, it’s clear that the government expects the vast majority to pay for one of the world’s deepest economic collapses, caused by its disastrous handling of this virus.
That will also include further cuts in day-to-day spending on public services. Buried in the Budget was a massive cut of £16bn per year to core public services compared to last year’s plans. For all his claims of talking straight with the British public, this was sneaked out and not mentioned by the Chancellor in his speech.
Even the NHS budget will be cut back and there’s no funding provided into the future to deal with the long-term consequences of Covid-19 including a huge backlog of operations and Long Covid — or to fund ongoing vaccine schemes. Likewise, social care was not even mentioned by the Chancellor.
With some departmental budgets protected, ongoing cuts will mean an axe being taken to non-protected areas such as local government — which have already been cut to the bone. It’s hard to see how many councils will be able to continue providing core key services.
The government may counter that all this pain is worth it as it is kick-starting the economy and that a rising tide will lift all boats. Growth figures show that’s a lie. This Budget will see Britain continuing as a low-growth economy, with growth of just 1.7 per cent once the end-of-lockdown boost wears off.
So the economy is set to continue to have low growth, falling living standards and hollowed out public services. The truth is that the next few years are going to feel very similar to the last decade for most people.
There has been some talk in the media of the Tories stealing policies from Labour’s recent manifestos. That’s absolute rubbish. Beyond the rhetoric, what we have is the same sort of economic attacks on the working class that we have seen repeatedly over the past decade. They are simply being repackaged for the post-Covid era.
But the public wants things to be different. Millions of people have had their eyes opened to how a broken system left us with weak public services, a failing social care system, woeful workers’ rights and a hollowed out social security system — all when we needed them most.
Even before the Covid crisis, the economy wasn’t working for the many with living standards severely squeezed. We can’t hope that the same rigged economic model will deliver something better in the future.
So this should have been the Budget to invest massively in growth, in tackling inequality and the climate crisis, in rebuilding public services, ending the housing crisis and in moving us to a high-skill, high-wage economy.
Instead, public investment will remain pathetically low. In fact the Chancellor did not even change his medium-term capital spending plans in this Budget. The main stimulus is a £25bn corporate handout for business investment. That may bring business investment forward a few years but — as the government’s figures show — it won’t increase overall investment levels.
Those funds should instead have gone into helping to fund a huge state investment programme. One that could also be funded by a mixture of record-low borrowing costs and genuinely progressive taxes on the super-rich — with a 50 per cent rate on those on over £125,000 and a windfall tax on corporations that have made super-profits out of this crisis.
A huge investment programme could transform our economy and undo much of the damage of the last 40 years of neoliberalism. Other countries are embarking on such a path. Biden in the US is pushing for a much bigger stimulus in the US than we have here.
The public mood is changing and that offers a real space for Labour to fill with a much bolder vision.
A massive investment plan could spur a shift to net-zero with a Green New Deal, build modern transport and infrastructure fit for the 21st century, kick start a mass social housing construction programme and renew our public services.
All of this of course would boost growth, which in turn would be the best way to pay off the debt incurred through the Covid-19 emergency measures. But it would also create decent jobs and help to rebuild communities left behind for far too long.
That should have been the legacy coming out of this crisis. And it is what our movement needs to fight for.
Richard Burgon is MP for Leeds East.