John McDonnell MP
This government’s first budget is likely to be remembered as the coronavirus budget. It will be measured, in the coming months and years, against a simple test: did it introduce a comprehensive, effective package that made us all safer and more secure?
Labour will endeavour to work with the government wherever appropriate, and we will continue to do whatever we can to support the tireless efforts of NHS workers and scientific experts. However, there are serious questions about the gaps in the government’s proposed plan.
The package does not extend statutory sick pay to low-paid workers, earning under £118 a week. It appears to exclude from statutory sick pay zero-hours contract workers and part-time workers. And it does nothing to increase the extremely low existing rates of statutory sick pay, currently about £18 a day. That leaves people in the invidious position of having to choose between health and hardship.
The government has relied on tweaks to the benefits system, but does not appear to have a meaningful plan to tackle the five-week delay in receiving universal credit or resource the Department for Work and Pensions to cope with increased applications.
Nor has the government made clear how much of its £5bn Covid-19 response fund will be allocated to the NHS and social care. The reality is that getting through this crisis will be tougher because of 10 years of under-investment in the NHS and neglect of social care.
Our concern is that the coronavirus package is not comprehensive and will shortly have to be revisited. As a result, it may not make us safer and may even put people at risk. The government must urgently clarify the scope of its changes to statutory sick pay, bolstering this package if necessary, and play a stronger role in international coordination. This virus, now declared a pandemic, respects no borders.
If this budget is remembered for anything more than coronavirus, it will go down as a budget of over-hype and under-delivery. The government has played up its infrastructure investment, making inappropriate comparisons with investment numbers in the 1950s and 1970s, when our economy was much smaller.
In reality the government has not even filled in the £192bn infrastructure investment hole the Conservatives created between 2010 and 2020. That’s the amount that would have been spent had the government invested a minimum of 3% of GDP into infrastructure.
The government has also lacked a detailed plan on what this money would be invested in, having shelved its national infrastructure strategy. This could have been a chance for the government to shift the tracks on which the economy runs and invest in green infrastructure. But to reach even the government’s unambitious target of net-zero emissions by 2050 we would need £33bn a year of green capital investment, according to the Institute for Public Policy Research. The government has failed to clear that bar, in a budget that has allocated £27bn for roads and nothing to renewable energy sources such as wind and solar.
Finally, the budget has done nothing to address the crisis in our public services – a social emergency. The Institute for Fiscal Studies confirmed yesterday that current spending per person outside of health will still be 14% lower than 2010-11 levels by 2024-2025. Austerity isn’t over.
Taking action to build a more progressive tax system would have been one way to address the crisis in our public services. The government has failed to tackle longstanding challenges, such as taxing capital alongside income fairly, providing councils with a stable funding base, or rationalising the long list of tax reliefs that provide opportunities for tax avoidance and evasion. Instead the government has extended and created new tax reliefs, and kept widely criticised reliefs such as the entrepreneurs’ relief.
Some have said this could be a Labour budget. Those people haven’t looked at the detail of it. They haven’t looked at how it treats insecure workers in the coronavirus package, or the nature of the current and capital spending. They also haven’t looked at who wins and who loses in this budget.
eople need to understand what conservatism is in this country. What we have to remember is that the Conservative party will say or do anything it can to gain or retain power, except shift power and wealth to working people. The imprint of the Cummings Conservative party remains all over this budget: in its neglect of wages and wellbeing; in the derisory sums committed to rough sleeping; in the government’s own distributional impact tables, which show the bottom decile hit the hardest, and in the bulk of the benefits from tax decisions going to the better off in society.
Despite all the hype of this budget setting a new direction for the Conservatives, ultimately it will prove to be a profound disappointment to all those who believed Johnson’s pre-election promises. And there is a real risk that in sowing the seeds of disappointment and disillusionment this budget could continue to stir up a form of politics that none of us wishes to experience.
John McDonnell, Guardian Opinion 13 March.