Budget review: Nothing on Brexit and nothing to boast about

Left Foot Forward

People don’t have enough to spend - yet the government doesn't reflect, writes Prem Sikka

 

With Brexit, the UK is heading into choppy waters. But today’s budget does not offer much comfort.

The most glaring omissions from the Chancellor were his lack of any economic policies to address issues arising from Brexit or investment in social infrastructure.

There are some crumbs for schools and a small amount to fill pot-holes in the roads. There is £100 million to address the A&E crisis, but nothing about restoring the beds that have disappeared.

There is some extra money for social care but nowhere near enough to address the damage caused by previous cuts.

Despite years of austerity, the public debt next year will increase to 88.8 per cent of GDP and that is another £100 billion. The reason could be that many people don’t have enough to spend – yet that does not encourage any reflections.

There is no real redistribution in the budget. The rise in the living wage to £7.50 is inadequate. The new higher rate tax threshold of £45,000 will benefit about 15 per cent of earners.

People earning more than this will continue to pay only two per cent of their income in National Insurance Contributions (NIC). The rate for incomes below that is up to 12 per cent.

£200 million to improve broadband networks would be welcomed by many. But why is this being given away, especially as BT and others will also receive all the future income from the resulting assets?

Highly profitable North Sea oil and gas companies will also receive subsidies.

The Chancellor claimed that the latest round of curbs on tax avoidance will generate another £830 million, but did not explain why the previous initiatives have failed to raise the amounts forecast.

He announced a possible review of the system of business rates and promised to give 90 per cent 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. 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 £5,000 to £2,000.

It is hard to point to any concrete achievements in this budget.

Prem Sikka is Emeritus Professor of Accounting at the University of Essex

See: Budget 2017 liveblog: Responses to Philip Hammond’s statement

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