'Chancellor's spending does not repair 10 years of damage'

Chancellor of the Exchequer Rishi Sunak holds his ministerial 'Red Box' as he stands with his minist

Chancellor Rishi Sunak delivered his budget last week - Credit: PA

Leader writers at such usually enthusiastic pro-Tory papers as the Mail, Telegraph and Times seemed furious at Chancellor Rishi Sunak’s alleged betrayal of Thatcherite principles with his October Budget announcements.

A Financial Times (FT) columnist and former Tory activist, Robert Shrimsley, wrote of Sunak “spending like a sailor”. One former Conservative minister told the FT that the Tory Chancellor “sounded like Gordon Brown”.

The comment speaks volumes about the limited scope of debate around political economy.

What so upset right-wing pundits was Sunak’s supposed embrace of a “big state” and associated failure to force the public sector to wear the hair shirt of austerity after the dramatic rise in spending and historically cheap borrowing triggered by the pandemic. Of course, such columnists avert their gaze to the consequences of a decade plus of public sector cuts, which undoubtedly contributed to Britain’s often woeful record amidst the Covid crisis.

What much post-Budget commentary ignored is that the October 2021 “spending spree” does nothing to repair the damage wrought over successive Tory-led administrations since 2010. The chancellor boasted that real-terms spending per pupil in England’s schools would soar to its 2010 (!) level, not next year, but by 2024-25. A previously unexpected injection of £4.7bn was still less than a third of the figure championed by the government’s short-lived education recovery “czar”, Kevan Collins.

The Sunak Budget included funds for 75 “family hubs”, yet previous cuts have resulted in the closure of nearly 1,000 Sure Start centres. Locally, there is now a very real prospect of two Hackney children’s centres closing with the loss of 109 affordable nursery places.

As revealed prior to the speech, the chancellor ended the latest public sector pay freeze from next spring, but with no guarantee of real rises (especially with tax hikes), much less compensation for years of pay erosion. Meanwhile, the Budget offered some consolation to universal credit (UC) recipients working close to full-time. In Hackney 40% of some 34,000 residents on UC are in paid work, which means they may benefit from revised regulations, so offsetting the loss of the £20 weekly top-up. For the other 20,000 not currently employed there is no relief from the £1,040 cut.

George Binette, Hackney North & Stoke Newington Clp Trade Union Liaison Officer

George Binette says that of 34,000 Hackney residents on Universal Credit 40% are in work - Credit: George Binette

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But what of Labour’s response to the Budget? Shadow chancellor Rachel Reeves, a last-minute substitute for a Covid-positive Keir Starmer, certainly conjured a memorable soundbite with her image of bankers toasting tax relief with champagne on short-haul flights. Despite a well-crafted speech, Reeves and the Labour front bench did little to highlight the devastating impact of the previous 11 years and could not project a substantial alternative of “fair taxation”.

At a time when the privatised energy sector is in crisis and water companies dump raw sewage into the nation’s rivers, the party’s leadership refuses to adopt policies on public ownership of utilities agreed overwhelmingly at its September conference even as its pledge of a £10 an hour minimum wage seems all but irrelevant when the Tories are already committed to £9.50 an hour from next spring.

Of course, a combined Covid and flu wave as well as Brexit fallout, not to mention unforeseen events, could swiftly cloud the chancellor’s sunny economic outlook, but for now the Sunak team has plotted a path to the next general election. With inflation resurgent and living standards stagnant, even as the government pays little more than lip service to the climate crisis, there is much for the wider labour movement to fight against. Faced with Europe’s toughest restrictions on industrial action a “winter of discontent” seems improbable, but the rough ahead for the Tory chancellor may still prove rocky.

George Binette is the Hackney North and Stoke Newington CLP trade union liaison officer.

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