Following Philip Hammond’s Spring Budget announcement yesterday, we asked our panel for their reactions.
Prof. Prem Sikka, Professor of Accounting at the University of Essex
What a wasted opportunity to address the country’s economic problems.
Despite perpetual austerity and wage freezes on public sector workers, the debt will next year increase to 88.8% of GDP and that is another £100bn.
The chancellor promised to clamp down on tax avoidance through foreign pensions schemes, roaming allowances and other matters and claimed that this will raise £830m. He did not explain why the previous initiatives have failed to raise the amounts forecast.
There is some extra money for social care and schools, but nowhere enough to address the damage caused by previous cuts. There is £100m to address the A&E crisis, but nothing about restoring the beds that have disappeared.
The new higher rate tax threshold of £45,000 will benefit about 15% of earners. People earning more than this will continue to pay only 2% of their income in National Insurance Contributions (NIC). The rate for incomes below that is up to 12%.
The rise in the living wage to £7.50 is less than called for. Millions of people will remain in poverty.
He announced a possible review of the system of business rates and promised to give 90% of local pubs a £1,000 discount if their rateable value is less that £100,000. The difficulty is that many are already facing a rise of more than that. Those self employed don’t get holiday pay, paternity pay or redundancy pay, but will now pay higher NIC and also their tax free dividends will decline from £5000 to £2000. I think the traditional Tory supporters are likely to be alienated.
Dr Jenny Rouse, Associate Director at the Centre for Local Economic Strategies (CLES)
During the 2000s, the budget had a specific annex focused on economic development and regeneration. This annex announced initiatives designed specifically to improve the economic and social wellbeing of UK citizens. Meaningful development funding was announced during this period, as well as important programmes to support the more economically vulnerable regions of the UK. Unfortunately, more recent budgets – this one being no exception – have been mainly focused on improving national growth figures.
While national economic growth may lead to improved social, environmental and economic wellbeing for citizens, growth is a crude measure of economic success and there is by no means a direct cause-effect relationship between economic growth and people’s quality of life. That the economy is apparently growing but there is a growing number of zero hours contracts is just one trend of many that can evidence this. Indeed, figures last week showed that there are now almost one million people on zero hours contracts, a four-fold increase from 2000. This means four times more people have no job security, unsure of their financial future week to week, and financially a lot worse off than those in contracted work.
Of course it is important that we continue to challenge the direction of national economic policy, but shouting about it is not enough. Regional and local organisations and our communities must continue to demonstrate that an alternative is possible. We must learn from and accelerate the brilliant progressive work already taking place across the UK. Because real economics is not about feeding national growth figures – is about locally-realised solutions that benefit people and places.
Sally Hunt, University and College Union (UCU) General Secretary
Our colleges have been cut to the bone in recent years, and we urgently need proper investment to give people of all ages looking to improve their skills the best chance to succeed.
If the chancellor wants a country that is match-fit for Brexit, he needs to look at a rounded funding package that covers young people and adults and introduce it now, not at the end of the decade, so that colleges aren’t at a standing start when the new technical routes kick in.
Plans for technical education to have parity of esteem with degrees are not new, but we need more detail on these plans, not simply news that the government have earmarked technical courses as a way for more students to pay fees.
Interesting to hear Prof. Sikka’s take—he’s right that the promised £830m from tackling tax avoidance feels overly optimistic, especially given the lack of results from previous attempts. Without serious reform to close loopholes, these projections risk being more political theatre than policy.