Technically the most Left-leaning budget in decades - so why is no-one happy?
The UK Budget yesterday was a strange one. This was not the budget of a confident government still glowing in its record majority win and now settling down to implement all of the campaign promises it announced last year. It felt more like an exhausted government being battered by external forces and just trying to struggle through to the next election. Unfortunately for them, barring a catastrophic collapse, they are still several years away from that election and things are unlikely to improve for them without a radical turnaround.
There were, objectively, several positive areas in the budget. It was, in a very real sense, the most left-leaning budget in decades. It’s just that it still came with some glaring holes, more persecution of minorities and the vulnerable and has set the country up for pitfalls in the future. The sheer lack of trust in Government as well as the rightwards radicalisation of so many in Britain means that the sops the Government has thrown to the Right (in terms of increased militarism and attacks on migrants) has angered the Left more than the good in the budget has pleased them and, of course, those sops thrown to the Right has only angered them by not going far Right enough. The result is that no-one is happy with this week’s budget. Still, there are a few policy announcements worth looking at.
On the good:-
The Two Child Cap on benefits is being withdrawn (much to the relief of the Scottish Government which will no longer have to spend millions out of its own pocket to mitigate it here as they promised to do). This policy has been a major cause of child poverty and has caused suffering to those who did absolutely nothing other than inconveniently exist.
We finally have a step towards a wealth tax. England will see extra surcharges added to the Council Tax starting at £2,500 for a £2 million home and up to £7,500 for a £5 million+ home. Rather perniciously though, this extra cash will flow not to Local Authorities in England but straight to Westminster thus while welcome, it represents yet another centralisation of government and a power grab from local democracy. The Scottish Government should at the very least copy this move but absolutely must promise to let Councils keep the money. This said, an extra £2,500 on a £2 million house is still a small amount for a wealth tax. While the Scottish Government’s own proposals for Council Tax reform are mostly even more modest - with a £2 million home seeing a surcharge of between £200 and £2,800 depending on the option chosen - Common Weal’s own proposal for a fair Property Tax would see the owners of a £2 million home paying around £9,000 more than they currently do while 90% of home owners would get a tax cut.
Gambling taxes are being reformed, with a particular focus on additional taxes on remote gambling - via a PC or a mobile phone - which are hyperaccelerated routes to addiction and financial problems. However, in a weirdly British move, taxes on in-person gambling and gambling on horse races are remaining fixed and gambling duties on Bingo being scrapped altogether. Make of this what you will.
On the bad:-
While the pre-budget leaks and kite-flying exercises were promising substantial changes to income tax and national insurance that would have bent their self-imposed “no tax rises on working people” rule while hammering pensioners and the self-employed, they ended up merely increasing taxes on everyone who expects a pay rise this year by freezing the income tax wage thresholds. This is undoubtedly the laziest way to breach their own rules but a breach it does remain.
Vulnerable poor and disabled people are again on the hock for a equally lazy propaganda-driven policies like cuts to Motabiliity and other accessibility aids, as well as cuts to benefits for younger people in moves to force the sick to work (while also maintaining the policy that teenagers should work for less than the minimum wage that older adults must be paid).
Energy prices are now guaranteed to go up to pay for the Sizewell C nuclear power plant. This plant is being funded using a risky PFI-like mechanism (known as RAB, because all of the best financial scams have an obscure three letter abbreviation in their name) implemented by Boris Johnson that will put the costs of construction onto all of our energy bills. This will start from the moment of construction, meaning we’ll be paying for it even though we aren’t receiving the electricity. It also means that we bear the risk that the project will fail and will never produce any of the electricity that we’ve started paying for. We explained the dangers of the RAB model when it was first announced here.
Those are just six of the polices that caught our eye in the budget yesterday. There will undoubtedly be more analysis to come, especially as we see how the implications of the budget (both its policies and its Barnett consequentials) filter through to the Scottish budget likely to be early next year. That one will be the real test for the Scottish Government, because unlike the UK Government, their own election isn’t years away, but will be upon us in just a couple of months.