We store cookies on your device to make sure we give you the best experience on this website. I'm fine with this - Turn cookies off
Switch to an accessible version of this website which is easier to read. (requires cookies)

Early budget reactions

October 28, 2021 9:55 AM

iuy7It is always said you need to go through the budget in a lot of detail over a number of days before drawing final conclusions. However it is possible to draw a number of early conclusions which are worth keeping in mind amongst the blizzard of numbers and promised spending increases

1 It is not a budget to stop climate change . After last weeks green policy announcements the budget poured cold water on the governments green agenda and the decision to freeze petrol duties for a 12th year, a £21bn spend on new roads and reduce taxes on flights inside the UK is both bizarre and risks undermining our case at the upcoming COP26 conference. It is clear the government are outsourcing climate change to the private sector

2 Education isn't a priority. After the resignation of their own advisor on recovering learning lost to covid because of lack of funding support there was some increase in funds in the budget. However this totalled only 1/3 that originally recommended as necessary. The key to a high wage high productivity economy is skills and it was sad to see the chancellor boasting he would increase spending per pupil back to 2010 levels. ie simply undo the cuts of previous Tory governments. Indeed tax cuts given to banks are twice the increase in funds to education catch-up. That cannot be the right priorities

3 You are on your own this winter. With price increases in basics and supply shortages the budget did nothing to help families cope with the squeeze in living standards. It is true they were embarrassed into reducing the impact of the recent Universal credit cuts if you are in work but if you are unable to work there was nothing for you. In all only 1/3 of the original cut has been restored

Indeed the independent Institute of Fiscal Studies warns that middle earners will see their take-home pay fall over the next year in real terms, due to rising prices and taxes. They also suggest that real wages after allowing for inflation will not have increased at all in 20 years of Conservative government

4 Total Taxes will be at the highest level as a share of national income since the post-war Labour government and yet for all except Health and the Home Office will have lower spending budgets than 2010

5 Brexit is likely to be twice as damaging to economy as Covid, forecasts the Office of Budget Responsibility "In the long run, it's about twice the effect of the pandemic. Our previous forecasts factored in a 4% loss of output from Brexit. We've now revised down our assessment of the pandemic to 2%. And so far the data we've seen on trade flows between ourselves and the EU broadly support that judgement that we are losing about 4% of GDP along the way, just based on that relationship between trade intensity and output. They also suggest the launch of freeports a supposed benefit of Brexit will have no impact on economic growth but will simply move activity from one place to another

And all this on the day the cross-party Public Accounts Committee reported on The Test and Trace programme with a budget of £37bn over two years, an initiative equivalent to nearly 20% of the entire NHS England spending for 2020-21.which concluded that it failed "to deliver on its central promise of averting another lockdown". It also complained the programme employed more professionals under that capacity, with 2,239 people employed in April 2021, a 3.3% increase on the number of consultants employed in December 2020. Many of these earn £1000 per day

And the Chancellor boasts the Conservativescan be trusted to spend our taxes wisely!