‘Next generation’ and ‘infrastructure’ were mentioned eighteen times in Chancellor George Osborne’s 2016 budget, amongst other common themes such as ‘children’ and ‘Northern Powerhouse’. These buzz words were accompanied by common themes such as ‘long term’ and ‘small business’, but clearly the chancellor and his team were trying to make up some lost ground in areas they have been less than successful in to say the least.
What was the end result? In general, reductions in business and corporation taxes, more cuts to public spending and an abolishment of traditional local authority ran schools altogether. Business as usual for the Tories then? Well there were some new, even progressive policies. A sugar levee was announced for spring 2018 on the sugary drinks sector to try and combat the alarming rates of sugar consumption, particularly amongst young people, and its link to later life disease and obesity. This is something that health experts and public figures such as Jamie Oliver have been calling for a while now and is an important step in tackling the threat that over consumption poses to public health, particularly of the young. The one snag with this new legislation is that the decision as to who pays this levee will be left to the producer meaning it will likely be shifted on to the consumer. In principle this is no bad thing because the hope is that higher costs of sugary drinks will deter public consumption. What is frustrating about this is that it in many ways encompasses a classic Tory strategy: provide beneficial legislation for citizens, but often at the financial cost of individuals.
Tax is undoubtedly one of the areas that will get the most attention from this budget. As mentioned, corporation tax will be cut to 17%, with the chancellor claiming the treasury can afford to do this because of the loopholes they have closed and action they have taken to clamp down on tax avoidance and tax evasion. Personal allowances will rise again meaning that no tax will be paid from low earners until they earn over £11,500. This will come into effect in April 2017 as will the new middle income tax band that will change from £42,500 to £45,000. One of the major winners from the budget was small businesses with their start up tax rates being significantly cut, and in some cases abolished. This is good news for small British businesses and start-up’s that play an important role in the UK economy. There were also pledges regarding transport infrastructure, including the development of HS3 from Manchester to Sheffield, further upgrades of the major roads in this region, as well the upgrading of the A66 & A69. The chancellor also addressed the issue surrounding the recent questions over flood defences and pledges to increase insurance tax by 0.5% and use the surplus to raise £700 million for further flood defences.
Mr Osborne outlined five key areas in his speech that he said encompassed the ambition to provide a budget for the next generation. Part of this was to address the extremely dire situation that North Sea Oil finds itself in, given the current low price of oil. This is no easy fix as general estimates show that for the North Sea to be profitable the price of oil has to be around the $60 a barrel mark (according to Alistair Winter, chief economist at the global investment bank, Daniel Stewart & Co.). It currently lies at just below $40, so in an attempt to try and rectify the situation, particularly in the North East of Scotland, the chancellor announced that all taxation on petroleum profits will be affectively abolished. Supplementary fees for oil companies in the North Sea will also be cut in half to 10% and back dated to January 1st of this year. Whilst these attempts to resurrect the British oil industry will probably have a short term benefit, they will most likely be in vein. North Sea Oil extraction is more expensive and less conventional than much of the other major oil suppliers in the world, and it is too economically reliant on the global price of oil to attract serious investment and provide large scale job security. What might have been more constructive and ‘long term’ from the chancellor is a plan that helps areas such as Aberdeen to begin to transition to new energy infrastructure, such as offshore renewables, nuclear energy and carbon capture. This would confront the employment crisis that the North Sea, and particularly the North Eastern economy of Scotland faces more appropriately because regardless of how effective the chancellors actions are, jobs are going to be lost and people need alternative professions and career paths that have a future in the UK. That is a true long term investment.
Investment in sustainable policy and renewable, secure energy infrastructure was absent from the chancellors budget, not for the first time. He did pledge a £730 million investment in UK renewables, without specifying what in, and he also announced that bidding had been opened for new nuclear module reactors, which are much more cost efficient and safer nuclear energy solutions. Given the previous slashes to renewable infrastructure and the general disregard for effective sustainable legislation, these pledges were to a certain extent redundant. It seems incredible that the chancellor can claim to have produced a budget for future generations without once seriously mentioning climate change or renewable energy legislation in his ‘long term’ economic plan. There is nothing more long term, or important for the next generation to have a secure, renewable energy infrastructure powering a nation. This is exactly what the chancellor and his ‘greenest government ever’ have failed to provide spectacularly.
Another headline of the budget was the announcement that by 2020 all schools will be at least in the process of becoming an academy. Consequently, schools will be ran from central government, not local authorities, a decision taken despite there still being no conclusive evidence that academies perform any better than traditional local authority ran schools. It also leaves questions as to the level of involvement that local communities will have in the schools of the future. There are other issues that are yet to be fully addressed regarding the level of direction provided by the national curriculum, and the format of teachers pay. Teachers received a level of legislative abuse over the course of the last government regarding performance related pay that was not far off the levels that junior doctors have experienced recently, and to pressurise such an undervalued, crucial profession is shameful. Ultimately, this new legislation will be detrimental to struggling schools the most, increasingly the likelihood of them falling further into crisis, which is ironic considering the original motive behind the creation of academies was to help struggling schools progress.
The leader of the opposition, Jeremy Corbyn, responded to the chancellor’s budget with several key points, no more so than questioning why the government could afford to finance giveaways to certain sectors, yet could not spare the finances they are cutting from disability allowances that allow people with disabilities to live in dignity. Corbyn also claimed that the cuts to public spending fell disproportionally on women by 80% and that despite the chancellor’s claims that this budget was for the next generation, child poverty was forecast to grow in the UK from 15% to 18%.
Beneath all of the figures, this is a budget that delivers for specific professions and sectors, and whilst I’m sure many supporters of this budget would argue with me that these are the sectors that need support to better everyone’s lives in this country, not everyone wishes to run a small business or become an entrepreneur. There is nothing wrong with this and it should not be penalised, nor should crucial public sector roles like junior doctors receive the level of scrutiny and abuse they have done of late. Equally there is nothing wrong with the government encouraging small businesses, this is a very good thing for the British economy and employment levels. The point however, is that these sorts of incentives and budget adjustments should be distributed evenly and that simply is not happening.
What frustrated me most when watching the chancellor speak today is that the attitude in Westminster has not really changed. The speech itself included frequent, unnecessary jibes at opposition, which is arguably part of political debate, but more importantly there was a complete lack of acknowledgement of the magnitude of the decisions that were being taken. There was no recognition, or attempt to appreciate the extent to which the legislation they produce changes thousands of people’s lives, for better or for worse. Watching the budget announcement, the whole process comes across as being more about sticking to the party line, and moulding policy to party agenda, than providing for British people and equipping the country adequately for the years ahead.
The chancellor called this the budget for the next generation. If the next generation ever manage to see past the huge challenges they face with home ownership, student debt and climate change, to name a few, then they will see how inadequate this budget is at addressing the issues that mean the next generation of British citizens could end up being worse off than their parents generation.