Rishi’s big fork out | Alex Brown
“Good Conservatives always pay their bills, and on time. Unlike the socialists who run up other people’s bills.”
Margaret Thatcher
For sound and sensible conservatives, a balanced economy is not only of paramount importance, but it is a fundamental guiding principle. Yet this afternoon’s Budget from Chancellor of the Exchequer, Rishi Sunak failed on that account. For social conservatives, who are ill at ease with either unlimited spending or excessive cuts, we are pleased to see a Budget that delivers for communities and small businesses; though many are sorely disappointed and let down by the continuation of the Jobs Retention Scheme well after lockdown will have ended, and the tax hikes for corporations. This is a budget that does not fulfil the necessary commitments to help restore economic balance and stability.
It is alarming to hear that ordinary working families will potentially be paying more tax each year. The freeze on personal income tax thresholds will see ordinary families shoved into higher tax brackets as wages continue to rise while thresholds do not. This is an unfortunate and bitter pill for resilient Britons to take after they have endured a tedious winter of prolonged lockdowns. Mr Sunak would do well to remember the communities who elected his party into government. There are many families across the United Kingdom who voted Tory at the last election for more than just Brexit. The promise of “levelling up” was not predicated by a caution about tax increases. The freeze on thresholds will invariably result in reduced spending and choke off personal household recovery. This is a measure that seriously ought to be reconsidered before itsimplementation in 2026.
The dramatic increase in Corporation Tax to 25% is the largest increase in living memory for most people. It is only 1% lower than proposed by socialist former leader of the Labour Party Jeremy Corbyn.
It is true that part of the government’s humongous £407 billion bill for Covid-19- that has included the furlough scheme- has been a lifeline to many working and middle class people throughout the pandemic. We owe a huge debt of gratitude for its once necessary implementation. But as we look towards the future, the almost never-ending furlough scheme is grossly ballooning into an uncontrollable and costly thorn in the side of the public purse. The continuation of the furlough scheme until the end of September not only fails to provide the necessary confidence in the government’s own vaccine program but it also continues to cost a staggering £100bn that must be paid back.
In addition to this, the announcement of an increase of £20 to Universal Credit is beginning to undermine the principles that this flagship scheme was designed upon. Universal Credit was formulated to make the welfare system fairer; and allow families to become more responsible with their own money, as well as more disciplined in money management should they need it. The increase of this benefit- even by smaller increments- may begin the process of economic mismanagement by families across Britain.
After a difficult year of economic downturn, this a time when the Treasury needs to seek ways to fill their coffers rather than emptying them. The government’s commitment to ‘level up’ is a positive one- and spending that supports local communities and towns across England is an appropriate place to invest. However, it is deplorable that borrowing is to reach £355bn this year and is set to be at £234bn in the 2021-22 year. The former is the largest amount in peacetime. Not since this country was at War have we seen such high spending. Some of the Treasury’s spending plans appear to be something more out of the pocketbook of Tony Blair or Gordon Brown than Margaret Thatcher or David Cameron.
All is not lost with the Mr Sunak’s second budget. It is extremely pleasing to see the £5bn commitment to reopening our highstreets as well as a further £150 million for communities to take over pubs that are at risk of closing. For so many communities, the high streets and their pubs are very much the lifeblood of their towns and villages, and we are very pleased the government recognizes it and we hope such funding commitments will continue past the pandemic.
Further to this, it is commendable that the government is making a commitment of £408 million towards the arts industry which is so integral to our nation’s proud cultural heritage. The impact of the pandemic has been particularly hard-hitting for those involved in arts and media; and it is a positive and appropriate sign that they are included a bountiful pledge to allow Britain to return to some sort of normalcy.
The government have taken a surprisingly positive step forward in providing bigger incentives for businesses to fund apprenticeships. This will contribute to an even more diverse and accommodating education system that will benefit ordinary British citizens. In addition, the new low deposit mortgage policy will build on the ‘first time buyer’ scheme, and reinforce the principle that the Conservative Party are concerned with individual home ownership. The housing crisis is a real problem facing many young professionals today; as well as young families in poorer regions of the country. These Union-wide commitments are helpful to stimulate a much needed economic recovery.
The 2021 Budget is a mixed bag of policies that do not have our long-term economic recovery at the fore. The Chancellor is using his ‘fiscal firepower’ to keep on spending- resulting in a further £65bil to support the economy- which translates into borrowing 17% of the national income. To some extent, the reality that some spending is not being cut is an indictment- especially as the Prime Minister has outlined our road to recovery and the gradual Great Unlocking. It is welcome news that the government’s economic intervention has prevented peaks in unemployment. Can we be sure of this after the money taps are turned off and handouts cease?
The reality is that however much we may enjoy these short term spending commitments, a time will come soon enough when they have to be paid for. There was no mention of a magic money tree from Mr Sunak; and eventually his economic bubble will burst.
Painful times are looming ahead, but we shall be distracted from them for now. The British people are keen to get out and enjoy themselves come summer. The worst is still yet to come.
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