Piecemeal and Regressive: my response to the 2016 Budget

Yesterday George Osborne revealed his hand as a cynical showman, a master of smoke and mirrors, and a failure on his own terms.  The statistics the Chancellor used in his speech to claim success on debt reduction disguise the central, critical facts – public sector debt as a proportion of GDP is not reducing at the target rate the government itself has set, and he has breached his own fiscal rule.

Look behind the headlines, and this is a budget that is fraught with hidden impacts.  Overall it will benefit the most affluent, at a time when so many on low and middle incomes are struggling. The British economy clearly looks weaker than it did in November, growth forecasts have been cut every year until 2020 and borrowing is now higher than predicted.

The proposal to cut business rates for small businesses at the same time as council funding is being more closely linked to business rates needs careful scrutiny.   The support for small businesses is welcome, but it is vital that Councils, who will, by 2020, rely substantially on income from business rates to provide local services, are fully reimbursed for the loss of income that will otherwise result from the cut.  The switch to reliance on business rates already presents many issues in terms of the fairness of Council funding – it is not reasonable for the government to centralise decision making about business rates whilst devolving the impact of these decisions to Councils.

For many years I have campaigned for large businesses to pay a fair rate of tax, both based on the principle that both businesses and individuals should contribute according to their ability to pay and because our economy in Dulwich and West Norwood is dominated by small businesses. The Chancellor’s cut in corporation tax will overwhelmingly benefit larger businesses, and despite the rhetoric it will still be too easy for international firms to avoid paying tax in the UK.  Combined with the cut in capital gains tax, it is clear that George Osborne simply doesn’t understand what a fair approach to taxation should look like.

Schools in inner city boroughs such as Lambeth and Southwark have traditionally been funded at a higher level than schools in more affluent parts of the country to reflect the greater challenges faced by pupils and teachers due to deprivation, higher numbers of pupils with English as an additional language and the higher costs of wages and services in London. The Tories’ proposal to introduce a national funding formula for schools threatens to cut the funding for London schools, in order to provide additional funding to schools in the most affluent areas of the country.  I will campaign tirelessly against any proposals that impact negatively on the parents, teachers and pupils that I represent.

The chancellor had very little to say in his speech about how his giveaways will be funded, but it is clear from the Red Book that the single biggest saving in this Budget is the cut in Personal Independence Payment for disabled people – this is scandalously unfair, taking from the most vulnerable to fund a cut in capital gains tax – and it is also a measure which will cost the government more in the long term.  Personal Independence Payments do what they say on the tin – they help people to live independently – if this funding is cut disabled people will end up relying much more on social care and the NHS, less able to contribute to the economy and with a lower quality of life – it is a completely unacceptable way to run the economy.

One of the most significant measures in the Budget is the forced academisation of all primary and secondary schools. I am deeply opposed to this measure which denies parents a choice and has no proven merits.  Both Lambeth and Southwark are good Local Education Authorities which provide the right balance between support and challenge for our local schools. In this context forced academisation is both unwelcome and unneeded. It has always been my strongly held view that there must be clear democratic accountability for education decisions and the spending of public money.  I have seen first-hand some of the drawbacks of unaccountable Academy schools on too many occasions, where it has been very difficult to ensure that concerns raised by parents about poor performance or unacceptable practices are investigated and addressed.  We need an education framework which is focused on delivering the best possible education, which respects the experience and authority of teachers, but also enables swift intervention by democratically accountable Local Education Authorities to hold schools to account when things go wrong.  The academy programme does not have a strong enough accountability framework and denies parents a choice, and it is completely wrong for the government to impose it in this way.

The additional funding provided in the budget to tackle rough sleeping is a symptom of the failure to tackle the housing crisis. This is a sticking plaster on a gaping wound. Measure after measure that the Coalition government and now the Tory government have taken have worsened the housing crisis in London and the Housing and Planning Bill currently making its way through Parliament will continue to make things worse in future years. We need a Mayor of London and a government who will stand up for London, build more homes across all tenures and take bold and sustained action to deliver the truly affordable homes that we so desperately need.

This budget delivers a poor deal for the environment, by halving the supplementary charge on UK oil and gas producers and freezing fuel duty, whilst withdrawing subsidy for solar and wind power, the Chancellor has made it absolutely clear that he does not care about climate change.

Our nurses and other NHS workers on lower pay provide vital services at our hospitals and GP surgeries. There is a chronic shortage of nurses, exacerbated in London by the shortage of affordable housing.  In this context, it is entirely unjustifiable for the Chancellor to raid public sector pensions resulting in nurses having to contribute even more from their salaries towards their pensions, on top of the ever rising cost of living and renting in London. This budget was the Chancellor’s opportunity to tackle the scandalous situation facing women born in the 1950s who had expected to retire at 60 who will lose out because they were given insufficient notice by the government that their retirement age would be increased to 65 or above with no time to prepare – the Chancellor has once again chosen to ignore the plight of these women.

The Office for Budget Responsibility has clearly highlighted the financial risks to the UK of a vote to leave the European Union. This reinforces my view that we are far better off as a nation staying within a reformed European Union and have a seat at the table to lobby for fair and progressive changes on social and economic issues, than we would be if we were to leave the European Union.

I welcome the proposal in the Budget to introduce a tax on sugary drinks and for the income from this tax to be used to fund additional sport in our schools. This is a good and progressive measure that I have campaigned on for a number of years which will benefit our children.  It is very disappointing, however, that the Chancellor chose not to accept the recommendation of Cancer Research to introduce a ring-fenced levy on tobacco companies to plug the gap in funding for Stop Smoking services which has been left by the government’s cuts to public health budgets – I will continue to campaign for this.

The proposal to allow young people to save using an ISA which the government contributes to is also welcome in principle, but it sadly won’t change the fact that so many of the young people that I represent have very little money left over at the end of the month to save, and therefore without other measures to tackle the housing crisis and the cost of living, this is likely only to benefit the most affluent. 

This budget has no big story.  It is not seeking to create a better society, or fairer outcomes for the most vulnerable. It does not present an industrial strategy to grow our economy, either by investing in infrastructure or by supporting new and emerging industries and green technology.  The Chancellor made not one mention of skills or training in his speech, whilst admitting that productivity is not growing nearly as fast as it needs to.  This budget has been pieced together from a series of cynical policy headlines.  Scratch the surface of the headlines, and this is a budget founded on failure, which will compound unfairness and entrench disadvantage.