Tory Budget – Taking from the Needy to Give to the Rich

The Chancellor, Phillip Hammond, confirmed in yesterday’s budget statement, that we shall have an eighth year of Tory government austerity measures, and with no end in sight. The forecasts for UK economic growth have been revised downwards by the independent Office of Budgetary Responsibility (OBR), and these predictions could well be worse, depending on how Brexit ends up. It is basically a budget of (un)steady as you go, and more of the same.  

The ideology that underpins the austerity agenda, that is, cut back on public sector wages and welfare benefits, privatise what is left of the public sector, and cut taxes for corporations and more wealthy individuals, is to be maintained. Never mind the lessons of capitalist history, particularly the 1930s, that you can’t cut your way out of a slump, the government persists in forcing more misery on the majority of the population.

Since 2010 when the Tory led government took power, despite all the savage cut backs to public spending, the budget deficit, what we get in from taxes less spending has still not been eliminated. Target date after target date has come and gone, but the deficit remains. Hammond did at least ditch a target date altogether yesterday, but it was becoming an embarrassment anyway with so many promises failing to materialise over the years.

Even worse the government’s debt has nearly doubled since 2010, because growth has been suppressed by these austerity policies, and we are in a downward spiral, whilst we await some mythical upturn in the world capitalist economy. All this and the gung-ho approach to Brexit that many Tories seem to want. Ironically, they think their strong suit is economic competence.

The 1% public sector pay cap remains in place for the vast majority of public sector workers, with inflation rising, this amounts to a further pay cut, on top of the seven years of impoverishment these workers have already had to put up with. There will be no let up in the introduction of Universal Benefit either, which means further cuts for those on welfare benefits, whilst no attempt is to be made to make the rich pay their fair share in tax.   

The politics behind this budget was meant to somehow appeal to younger voters, with gimmicks like the discount railcard for people aged 26 to 30, as though they are not fully grown-ups by this age. But there was also the emphasis on housing that was at heart of this budget’s attempt to woe younger voters. Affordable housing is of course a massive problem, especially in London, but it is not clear to me this has been addressed by changes to policy announced yesterday.

The £44 billion announced for house building is really only about £15 billion of new money over five years, and it appears that this will be used to pay building firms to build homes, in cities mainly, but will these be affordable to most people? Construction companies want to maximise their profits, so are that not really interested in building low cost social housing. Presumably most of these houses will be for sale, which doesn’t solve the problem of housing affordability. There was no mention yesterday of social housing, so we have to conclude that the thrust of policy will be building homes for sale.   

Hammond has allowed local authorities ‘wth the most demand’ to borrow more against their Housing Revenue Account, which may lead to more social housing being provided, but the sums involved will not make a huge difference, (£1 billion for the whole of England) given the scale of the crisis.

The rabbit out of the hat policy, traditionally at the end of the Chancellor’s speech, was to exempt first time buyers from stamp duty tax on properties worth up to £300,000. For properties costing up to £500,000, no stamp duty will be paid on the first £300,000. This highlights the Tory obsession with home ownership over social renting, and will make little or no difference to the housing crisis. In fact the OBR have said it is likely to lead to prices rising for ‘starter homes’.

Some people will benefit, but only those who can afford to pay a deposit, running into tens of thousands of pounds in most cases. How the government will know that people are ‘first time buyers’ and qualify for the exemption is difficult see too. It could well be that this tax break will be abused by wealthy parents, as another tax saving perk.

Typical of the Tories, what is being dressed up as helping young people to get on the housing ladder, is in fact a direct tax take from the less wealthy and given to those from more wealthy backgrounds.      

Tory austerity does work for some, and this budget is another example of the few gaining at the expense of the many.