Tommy Sheppard: Austerity is alive and well after Hammond's Budget
The budget was last week. Did you notice? As squibs go, this one was pretty damp. We'll be debating the detail in the Finance Bill next week but the real story is one of indifference and missed opportunity.
Since the 2008 crash, governments across the western world have seen their revenues unable to meet spending. In the US and most European countries the response was to use the power and funds of government to stimulate the economy. More public spending led to more jobs, more earnings and more taxes. Not here. For eight long years the Tories have applied the opposite approach: use the reduced income as an excuse to slash public spending. This is austerity. And no matter what Hammond and May might like us to believe, it’s still here.
True, the Government has a bit more money than they expected. They’ve used this for two things. One, increasing funding on the NHS in England to try to cope with demand after eight years of squeeze. The actual average increase in spending over the next five years will be less than the average yearly increase since the NHS started. So don’t hold your breath.
Two, the Tories did what Tories always do – cut taxes for the rich. I support raising the level at which people start to pay tax – it should go higher. But the big increase in the level at which you start paying the higher rate of tax to fifty grand a year is a bonus only to anyone earning more than the current level of £46,351.
Thankfully, in Scotland our own government has some say on income tax these days. Last year Scottish Finance Secretary Derek Mackay decided not to pass on this higher rate tax cut and I hope he’ll take a similar approach this year.
Meanwhile the basic structure of austerity is intact. The cuts to the welfare state continue. Next year a further £3 billon will be taken out of the pockets of claimants as working age benefit rates are frozen for the fourth year. Child tax credits remain withdrawn for the third or subsequent children in large families. And disabled people will continue lose £30 a week from their allowance. The poorest in our society get hit the worst. Unjust. Immoral. Unfair.
And there’s Universal Credit. Nine times it has been delayed. It’s an avalanche of pain and misery waiting to descend upon the poorest in our community. This Budget could have been used for a major rethink, instead there was minor tinkering. The main problem remains. Millions of people will have to make a claim for Universal Credit and whilst they do so there will be a five-week interruption in their payments. Many will have no option but to rely on food banks, and anyone on housing benefit will find themselves going into rent arrears even though they have done nothing to cause it.
The general cuts to government spending continue too. In Scotland almost £2bn has been taken from the Scottish Government’s budget in real terms since 2010 – that’s about seven per cent. It means despite everything the Scottish Government does to increase income and protect services the squeeze stays on.
But the biggest feeling around Westminster at the moment is whether the Budget is worth taking seriously. After all, the plans may not make it to the end of the financial year. With Brexit coming down the track the country’s entire finances could be blown apart. The Chancellor himself says that he’ll be back with a new plan if he doesn’t get the deal he wants. Of course, if by some miracle they do get a deal on Brexit – the fudge of the century I expect – then Mr Hammond has a tidy £4bn in his back pocket to offer as inducements to vote Tory in the run-up to another election.
Tommy Sheppard is the SNP MP for Edinburgh East