The chancellor Philip Hammond announced his last budget before Brexit on last Monday. His key message, “the era of austerity is finally coming to the end”. His message was that the brutal and inhumane cutting of public finances by this Tory regime that started after the 2008 financial crash was coming to an end. George Osbourne became the most right-wing chancellor in British history by dramatically slashing public spending, throwing the country into harder financial hardship.
Between 2010 and 2013 alone, the coalition (Tories and Lib Dems) cut public spending by 14.9 billion and allowed mass privatization into the NHS and education system. The argument for this was that we needed to cut public finances as the country was bankrupt. However, it made the recession far worse and is seen as a massive failure by many leading economists, including the Cambridge Professor Ha Joon Chang, in his book ‘23 things they don’t tell you about Capitalism’. Where he brutally debunks the myth of austerity. Despite coming from a privileged area myself, I have seen the effects at my sixth form college.
The year that I had joined, the college had just lost 7% of its funding, and for the upper sixth students if the teacher is absent, then your lesson is canceled and you’re given work to do. Furthermore recently the headmaster sent out a petition on email to force a debate on school funding. Apparently, with this message from the chancellor, this brutal reign is coming to an end…. or is it.
Let’s look at the budget put out by the chancellor, in a brief summary of it said:
– Personal Tax Allowance raised from £11,850 to £12,500
– Higher tax bracket raised to £50,000
– Minimum Wage raised to £8.21 an hour
– Alcohol and Tobacco prices to rise.
– Economic growth to increase from 1.3% to 1.6%
– Borrowing compared to GDP to rise to 1.4% next year
– Extra £500 million for Brexit
– An extra £160 million more for counter-terrorism police.
– Extra 20.5 billion for the NHS over the next 5 years
– PFI’s to be abolished
This brief summary of the main points of the budget may look good on the surface, but it faced criticism to experts in finance. Mainly due to the tax cuts were given to higher earners, combined with increases in public spending. The Institute for Fiscal Studies, the UK’s biggest tax, and finance think tank said that the Chancellor is gambling with the UK’s public finance. This is happening by giving huge tax cuts to the richest people whilst at the same time vastly increasing public borrowing to fund the NHS and a disastrous Brexit. The idea that austerity is over is ludicrous. For the past three years, the Daily Telegraph one of the biggest pro-Tory newspapers have run a headline claiming that austerity is over.
In 2015 it was “The end of austerity”, in 2017 “Austerity is over, May tells Tories” and in 2018 it was “May moves to end austerity”. However, if you go out and talk to people throughout the country, nothing has changed, in fact, things have got worse. Austerity in the UK has seen cuts of up to £36 billion a year. This has meant that nurses have been forced to food banks, disability benefits have been severely cut, over 4.5 million children have been forced into poverty, the injustice of Universal Credit creeps on and schools are having to fund raise just to be able to run their curriculum due to the cuts.
The IFS and many other commentators and think tanks rejected Hammonds call that austerity was coming to an end. Hammond talked about tax cuts that will mean that the average person will have more money in their pocket every month. However, according to research by top economic experts half of those tax cuts will be given to the top 10% of earners. This would mean that £390 extra for the richest fifth of households and a loss of £400 for the poorest fifth of households by the year 2023–24.
On top of this three-quarter of the £12 billion in cuts is still to remain government policy and the IFS had warned that £4 billion of cuts were still to come. On top of this, the £20 billion in funds for the NHS will come too slow to save the crisis in the health service, and the UK is expected to borrow an extra £25 billion in 2018–2019. Suggesting that although the Tories say austerity is over, the poorest are going to feel the actions of this consciously cruel government for a while longer yet.
The Office for Budget Responsibility (OBR) also attacked Hammond’s budget. They said that without Hammonds tax cuts to the rich and the dramatic increase in public spending the government would have an achieved a surplus of £3.5 billion by 2023–24, instead they will achieve a deficit of £19.8 billion. The Conservatives for years a party of Fiscal responsibility who was going to wipe out the budget, have now burnt their bridges.
However, although Corbyn and the Labour party did initially attack the budget in the Commons. He said the UK economy was weak with ‘low wages, low investment, and low productivity’. Corbyn’s shadow chancellor, John McDonell refused to oppose the Tories tax cuts to wealthy earners. McDonnell on Tuesday said “ We’re not going to take money out of people’s pockets”, something odd for someone who proclaimed themselves a Marxist after the 2008 financial crash.
However, research by the Resolution Foundation that was published on Tuesday said that these tax cuts would cost the Treasury £2.8 billion and would overwhelmingly benefit the richest in society. Opposition from inside the party was also evidently clear. Alison McGovern, the chair of the group Progress said: “We can’t support spending more on tax cuts for quite wealthy people than on dealing with the universal credit mess”. McDonnell said that instead, the Labour party would impose it’s own tax policy on the top 5% as well. This surprised many in his party and on the political scene, as McDonnell was once the far-left minister who attacked Gordan Brown’s budgets for not being radical enough.
McDonell’s pragmatic approach to this may suggest a change in how Labour is acting as a party ready to govern. Pragmatism may be the key to getting the support of the masses. However, refusing to oppose these devastating tax cuts and spending plans of this failed Tory government leave many scratching their heads of how good of an opposition the Corbyn-McDonell team our after other criticism in the past.
But the bottom line is this, the Tories once again have promised something that they can’t deliver on. They say austerity is over, but the pain and hardship felt by millions across the country is set to continue.
Article submitted by Ted James (@TedJames123). Do you have something to submit? Send us an email: email@example.com