(A piece I wrote for Labour List in April)
It was a Budget from a new government but, once again, the stubborn Tories have refused to accept the miserable failure of austerity.
Philip Hammond’s disastrous first Budget statement, presented to parliament a few weeks ago, showed the Tories’ utter blindness to economic reality. The chancellor’s statement was nothing short of a full-on attack on small business in this country. The newly-increased business rates will burden many small businesses to the point of collapse. This will remove that source of tax revenue. Increased national insurance contributions for the self-employed, without any extra securities, would have threatened the most dynamic workers in this country, stamping out innovation, had they not been humiliatingly dropped within days of the announcement.
By cutting housing relief to save money, the government will be placing more people in need of support, potentially cancelling out the money saved anyway. The logic of it all is hard to grasp.
We are now, according to John McDonnell, shadow chancellor, experiencing a sustained slump in living standards, which is unprecedented in modern British history. Britain is the only major developed country that has seen a return in growth since the crisis but not a rise in wages. The government would like to claim that austerity is to thank for the fact that now, seven years on from the financial crisis, we are enjoying growth, rather than simply because of the cyclical nature of the world economy. In fact, austerity and the Tories’ anti-business policies have stunted our recovery, leaving us lagging behind where we could be now. Rather than accepting these facts and taking long-overdue measures to help this country, they are just stubbornly trundling along with their eyes firmly closed.
What this country needs is support for small business, infrastructure improvements, and greater support for the self-employed innovators. This is how we will drive the economy forward. As Rebecca Long-Bailey, shadow business secretary, pointed out in The Huffington Post, in areas from infrastructure to research and development our country “languishes well below OECD averages for the amount of GDP reinvested in our economy”.
The last thing we need right now, when so many are just scraping by, is a continuation of the catastrophic policies of the last years, but that is what we are getting. As Jeremy Corbyn pointed out in his response to the Budget, one million working households are claiming housing benefit and three million working families rely on tax credits to make ends meet. This is not an image of success.
And so now, rather than carefully assess the situation in modern Britain, the government has stuck stubbornly to its failing strategy and dealt yet another blow to innovative small business. In fact, the move was so blatant that even Tory backbenchers threatened to revolt. These policies have been described as neo-liberal extremism. I do not think is overly harsh. The government continues, in the face of all evidence, to pursue policy after policy that damages the economy and reduces living standards for the majority.
While over the last 15 years, living standards have declined for most, there are some who have flourished. McDonnell has pointed out that chief executive officers earned 150 times average pay in 2010 and now receive awards some 186 times greater than the average worker. At least the Tories’ Britain works for some.
To add insult to injury, not only did the Budget attack business, it did not even address the big issue on the lips of so many entrepreneurs, employers and small business owners, like myself, across the country: Brexit.
The financial uncertainty around Britain’s departure from the EU is only compounding the Tories’ counter-factual approach to managing the economy. It is common knowledge that Hammond is against the way the government is pursuing the Brexit negotiations. He knows that people across the country are worried. And yet he made not a single mention of Brexit during his Budget speech. This was the icing on the cake. This government acts as if it is blissfully unaware of the struggles in this country faced by millions every day.