#Budget2018 reaction: Richard Murphy, Craig Dalzell, Poverty Alliance, Inclusion Scotland + more

Ben Wray

Budget reaction from Richard Murphy, Craig Dalzell, Positive Money, Inclusion Scotland, Poverty Alliance, Scottish Unemployed Workers Network and the Child Poverty Action Group Scotland

THE Chancellor Philip Hammond has delivered his 2018 Budget to the House of Commons.

Hammond said his message to the British people was “their hard work is paying off and the era of austerity is finally coming to an end”, announcing an increase in public spending of 1.2 per cent next year. Announcements included an extra £1.7 billion for Universal Credit, £1 billion for the MoD, a digital services tax on tech giants and an end to PFI.

CommonSpace has got reaction to the Budget from economists, campaigners. NGO’s and more.

Tax economist professor Richard Murphy: ‘A Budget that will be blown apart by Brexit´

“The critical issues about today’s budget is not the detail, although some of them are superficially welcome, but the overall message. There are four such messages, I suggest.

“The first is that the Tories really have realised austerity has to end if they are to have any future electoral hopes. The impression is that balanced budgets might still matter, but that is a vain attempt to retain Tory credibility. The reality is that spend is now, rightly, getting priority. 

“The second message is that other major parties – and most especially Labour and the SNP – need to take note of this. They have built their policies on the basis of mimicking Tory austerity. It really is time that they let go of the shackles.

“Third, rather depressingly, the whole narrative that the government spends taxpayer’s money does, unfortunately, remain in place. This is not true. The government spends money it creates through the Bank of England into the economy which it then reclaims to the extent necessary to control inflation. The dishonesty about this at the heart of government and in our politics is deeply depressing: we are still managing the economy on the basis of myths created in the era of the gold standard. It is essential we move on and build an economics and an economy fit for the twenty first century.

“Last, this whole budget could, and probably will be, blown apart by Brexit. No budget since 2008 is likely to be so wrong. As a footnote in history this budget will only feature for the sheer magnitude of the forecasting errors likely to be inherent within it.”

Fran Boait, Positive Money: ‘A dishonest Budget’

“Today’s Budget is simply a dishonest Budget. Not only has the Chancellor failed to deliver on the end of austerity promised by his government, but he’s also continued to be be dishonest about the necessity of austerity in the first place. 

“Beyond the government’s spin, austerity is far from over for most people in Britain. Schools, hospitals and other vital services remain underfunded and overburdened, while the imminent rollout of universal credit will wreak further financial havoc on households whose benefits are staying frozen. 

“Philip Hammond claims the pain of the past eight years was driven by necessity, not ideology. But austerity was an ideology based on false comparisons between government budgets and household budgets, and a fruitless obsession with targeting a surplus. The Chancellor could easily put an end to austerity by doing away with these dangerous mistruths and taking up his responsibility to invest in our future. He just has to decide whether he is more wedded to defending a failed ideology than the interests of the country.

“It is welcome that the Chancellor is finally ending PFI rip-off and the outsourcing of public investment to a profiteering private sector, for which the Carillion debacle served as a cautionary tale. The government can afford to borrow at a cheaper rate than anyone else in Britain. Governments should take advantage of that privilege instead of burdening the taxpayer with eyewatering interest bills to private firms.”

Bill Scott, Inclusion Scotland: ‘Disappointed in Universal Credit measures’

“Inclusion Scotland are very disappointed that the additional funding for Universal Credit announced in the Budget will still see many, many households left worse off. 

“For example, the £630 a year that some families will gain due to the increase in the earnings allowance will fall well short of fully mitigating the average of £2,400 per annum that millions of these families were expected to lose. 

“Similarly the £200 million a year in additional transitional protection is of course welcome.  But again it does not come anywhere near replacing the average of £395 a month that 230,000 disabled people and their carers are expected to lose through being transferred to UC from legacy benefits  – far less assisting all of those affected by the transfer. 

“All-in-all the Chancellor has failed to address the huge cuts in income that millions of claimants and their families will still experience as UC is rolled out.  In the longer term he and his party may well suffer the political consequences of that”.

Craig Dalzell, Common Weal: ‘Extend tax on global revenues principle to all multi-nationals’

“The most significant aspects of the budget for me were the ones that will perhaps be missed by many. The ones that will have subtle but significant impacts whether intended or not.

“The new digital services tax on services provided by multinational corporations like Google and Amazon will not result in a very substantial increase in tax revenue and are so tightly targeted that they are unlikely to be paid by any but the largest, more prominent and, cynically, the most unpopular companies.

“But the UK is now in the position of charging a multinational corporation based on its global turnover rather than just its profits made (or declared) within the UK.

“This principle should be extended to all multi-nationals. Common Weal and others have called for this approach for years. It is far too easy for companies to move their profits within themselves to hide them in countries with “advantageous” tax regimes or even to swallow those profits wholesale.

“Hammond’s commitment to scrap PFI will draw attention but so should his commitment to the idea of Public-Private Partnerships in general. I will be interested to see what he replaces PFI with in this regard. Perhaps he will look to the SNP’s “Non-profit distribution” model which is slightly cheaper though, as Common Weal has pointed out, it is not substantially different from PFI and carries many of the same risks. Perhaps they’ll do this just as the SNP rightly phase out this model in favour of the new Scottish National Investment Bank. His “centre for excellence” for managing existing PFI contracts certainly sounds suspiciously similar to aspects of Common Weal’s plans for a National Infrastructure Company.

“Finally, Hammond’s doubling down on the humanitarian and moral disaster that is Universal Credit is worthy only of scorn. The policy is failing people and it is directly harming people. Freezing the taper rate at 63 per cent so that the poorest working people end up paying more in tax per additional pound earned than the very richest is reprehensible. This is not “making work pay”. Universal Credit should be scrapped and replaced with a Universal Basic Income. In addition to raising the minimum wage to at least the same level as the Real Living Wage, Hammond should start measuring the percentage of people who earn less than the equivalent of a full time worker on the RLW. Working an hour a week might make you disappear from the unemployment figures, but this is not a recipe for a decent life.

“It will take time to absorb fully the impact of this year’s budget but “a budget for everyone” would certainly attempt to address the UK’s shocking levels of regional inequality and would seek to deal with the growing UK’s wealth inequality. Maybe if he does that, Hammond will be able to mean it when he says that the era of Austerity is over.”

Peter Kelly, Poverty Alliance: ‘Missed opportunity to end austerity’

“While we welcome the much needed changes to Universal Credit work allowances, today’s Budget is a missed opportunity for the UK Government to fulfil its promise to end austerity. By continuing the damaging freeze on working age and child benefits, this Budget risks pushing even more people into poverty.

“In our society we believe in justice and compassion. And yet If current trends continue, by 2021 one in three children in Scotland will be living in poverty.  That simply can’t be acceptable. Freezing these benefits at a time of rising living costs has meant a cut to the incomes of families who can least afford it.

“For families this means having to choose between heating their homes and paying their rent. It means children not going on school trips, getting winter jackets, or eating healthy breakfasts each day. It means more and more people resorting to food banks. It means opportunities being limited, choices being restricted, and potential being unfulfilled.

“While the Budget has increased the National Living Wage, this does not reflect the true cost of living and won’t be sufficient to tackle in-work poverty. The new real Living Wage will be announced on Monday as part of Living Wage Week. Employers who want to ensure all their employees can access a decent standard of living should sign up.

Sarah Glynn, Scottish Unemployed Workers Network: ‘Not enough to quiet concern over Universal Credit’

“I’ve just sat through the whole budget waiting for the government’s answer to the widespread concern over Universal Credit. All Hammond would recognise were concerns over just two issues. He promises some extra help for people moving over from existing benefits – two weeks of support for those moving from JSA, ESA or IS, but only after July 2020. And what about people making new applications? New applicants will go on having to wait those 5-6 weeks for their first payment, building up unmanageable debt, and creating huge problems for social housing providers as rents are delayed. All that has been promised for them is the possibility to pay back that debt more slowly, and that only after October 2019.

“And Hammond will give more help to people in work by increasing the work allowance – ie raising the cut-off rate for eligibility. This is a reversal of previous cuts both to Tax Credits and then in the change from Tax Credits to Universal Credit.

“They have also made it a bit easier for self employed people to get started – but it will go on being a nightmare for them after that; and they admit that the full change over to UC will not be complete until December 2023, though they still plan to begin to force people on existing benefits to move to UC from July next year.

“Nothing has been done about the benefit freeze that has reduced the real levels of benefits for years, or the benefit cap that reduces some families’ benefits even further, or the rape clause, or the chaos caused by lack of staff and training…

“And after that miserable announcement on Universal Credit, Hammond went on to announce a tax cut for big earners by raising the threshold for higher rate income tax.

“And the whole budget was dressed up as a reward for the ‘hard work of the British people’ – a phrase he repeated multiple times to suggest we were all in this together – given to ‘hardworking families, strivers, grafters and carers’.

So no change to the rhetoric, and no change to austerity politics, and definitely not enough to quiet concern over Universal Credit!”

John Dickie, Child Poverty Action Group Scotland: ‘Bigger salvage operation needed for Universal Credit’

“There is no question that the work allowance increase is good news for families receiving universal credit but a bigger salvage operation is still needed for the benefit.  This is crunch time for universal credit.  The positive announcements  on work allowances need to be followed by a pause in it’s roll-out to allow for a fundamental review of its design and, crucially,  a commitment to restore all the money that’s been taken out of it. 

“The comments came in response to the Chancellor’s decision to increase the work allowances in universal credit by £1,000 .   The Child Poverty Action Group (CPAG) also welcomed the move  to introduce a two-week run-on of some existing benefits for people moving to universal credit (from July 2020) and to reduce the maximum rate of debt deductions from universal credit  from 40% to 30% (from October 2019).   

“However Mr Dickie slammed the failure to end the wider benefits freeze that is driving rising child poverty in Scotland and across the UK.

“With nearly one in four children in Scotland officially recognised as living in poverty this should have been the Budget to bring families in from the cold by ending the four-year freeze on family benefits.  Child benefit, a lifeline for many low-income families, will have lost 23% of its real value by 2020, compared with 2010.  That’s core money for struggling families in and out of work.    If there is substance to the claim that austerity is over, ending the freeze and allowing family benefits to rise again with rents and inflation must be a priority.”

Picture courtesy of Foreign and CommonWealth Office