Following Boris Johnson’s announcement of £5bn worth of infrastructure projects Rishi Sunak this week presented his latest budget to the House, unveiling what he claimed were an ‘unprecedented set of measures’ to protect jobs and stimulate the economy, worth up to £30bn.
Neither of these statements actually measure up to the size of the challenge our economy faces, nor do they seize the opportunity to rebuild we are presented with.
Boris’s £5bn equates to around £100 per person or £7m per constituency. This comes at a time when local authorities across the country are predicting multi-million pound budget deficits. Hertfordshire County Council, for example, predicts a shortfall of £25 million by this September.
Sunak’s statement was similarly detached from the reality of the challenge ahead.
Announcing that the furlough scheme will end in October, the Chancellor promised a £1,000 bonus for firms who bring staff back and keep them in work until January.
He also announced a VAT cut on food, accommodation and attractions and “discount vouchers” of £10 per head when you eat out (provided you choose a Monday - Wednesday in August) and a suspension of stamp duty on the first £500,000 of property sales.
The job retention scheme is targeted indiscriminately. Firms with the money to bring staff back regardless of the furlough scheme will be rewarded in exactly the same way as struggling businesses.
This kind of support needs to be targeted at industries and businesses where staff are more at risk of losing their jobs rather than being applied across the board.
The voucher system assumes that we can all afford to dine out - that this isn’t the case for many families across the country. It is odd that the Tories have decided to pay for this meal deal – it’s not that long ago that they were fighting to deprive 1.3 million children of free school meal vouchers over the summer.
Similarly, the suspension of stamp duty only works on the basis that you have the money to buy property in the first place. For many, particularly young people trying to get on the housing ladder, the obstacle to owning a home isn’t stamp duty - it’s finding the means to pay for a deposit.
Though the Chancellor vowed that no-one would be left “without hope,” in his statement it seems to me that he’s failed to take notice of the financial reality for many people across the country that pre-dates the Coronavirus pandemic.
Half-off vouchers and a stamp duty holiday will mostly benefit those who already have the financial means to go out for dinner or buy a house. But these measures will do nothing to help those who don’t, or address long-term issues - for those visiting food banks, in temporary accommodation or the homeless.
Who is going to pay for all this ‘generosity’? Sunak refused to rule out tax rises. A lack of support for local authorities in the statement, however, may mean that the blades are being sharpened already, as Tory councils prepare to make cuts to services.
Councillor Ralph Sangster, the Executive Member for Resources & Performance on Hertfordshire County Council, recently said that the council would have to consider “extensive” cuts. He admitted that staff are already looking to identify “cost savings” that could be made next year.
Above all, the Chancellor’s summer statement failed when it comes to rebuilding the country.
Through this economic crisis, in the wake of the Coronavirus pandemic, we have the opportunity to fundamentally reshape the country and build an economy that works for everyone.
An economic revival plan with a Green Industrial Revolution, better pay and conditions for workers (particularly those in the public sector) and better taxation of multinational corporations could build a Britain ready for the future.
But, as the Tories struggle to tackle the growing recession, it’s clear that they’re missing this opportunity. It’s folly to frame rebuilding the economy as getting “back to normal” when normal wasn’t working in the first place.
Comments