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Britain’s Budget — not even a brighter shade of fail

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Lord Peter Hain is a former British Cabinet Minister and anti-apartheid campaigner whose memoir, ‘A Pretoria Boy: South Africa’s ‘Public Enemy Number One’, is published by Jonathan Ball.

Tory right-wingers were clamouring for Finance Minister Jeremy Hunt to give the economy a bounce. But the only bounce he delivered was a post-dated cheque to pay for his tax proposals.

In November, Britain’s finance minister, Jeremy Hunt, chided the Treasury’s independent budget watchdog, the Office for Budget Responsibility (OBR), for having forecast a UK recession in 2023, claiming instead that the UK economy had grown and had “turned a corner”. 

Three weeks ago, official figures confirmed that Britain had been in recession for months. 

In Wednesday’s Budget 2024, Hunt was at it again, insisting “we will soon turn the corner on growth” and announcing personal tax cuts worth £10-billion under pressure from right-wing Tory MPs desperate about their dire election prospects. 

The Labour Party is 20% ahead in the opinion polls and has been for pretty well ever since Liz Truss’ abortive mini budget of September 2022 that crashed the economy and terminated her short-lived prime ministership. 

Britain’s economic situation is now the worst it has been for decades. Average household living standards are forecast to be lower at the end of this Parliament than the last one. 

Taxation is expected to reach the highest share of national income since 1948, post-World War 2. UK national debt as a share of gross domestic product is at its highest for 70 years. 

Public services are in a poor state due to more than a decade of dire Tory austerity — eight million waiting for National Health Service treatment, huge backlogs of court cases, woeful conditions in many care homes, headteachers at their wits’ end, and many municipalities facing bankruptcy. Nothing seems to work any more in Tory Britain.

Future economic prospects look poor. The OBR forecasts for growth are dismal. Interest rates are high. Debt is going up. Productivity and skills are terrible. Not even a brighter shade of fail.

Tory right-wingers were clamouring for Hunt to give the economy a bounce. But the only bounce he delivered was a post-dated cheque to pay for his tax proposals. 

And his personal cuts are more than offset by higher tax bills from freezing personal income tax thresholds and allowances for years to come: seven million Britons will pay income tax for the first time or join the higher rate tax band, having been suffering a long cost-of-living crisis.

Hunt’s five-year public spending squeeze will worsen the quality of Britain’s public services which have already had 13 years of savage cuts. Even before Budget Day, word had come from the chair of the OBR that his plans for public services announced in November were a work of fiction, not to be taken at face value due to the grave damage they would do if carried out. 

But, on Wednesday, Hunt stood by those very plans even though they mean cutting public investment by £14-billion by 2028-29 and once again slashing the day-to-day spending of the “unprotected” departments like justice, police, prisons, transport and local government by a further £20-billion per year. 

That has met with a chorus of disbelief. Before Budget Day, the widely respected director of the Institute for Fiscal Studies, Paul Johnson, warned that any budget tax cuts “are likely to be undone after the election” and not to be taken seriously. They are here today, gone tomorrow gains from a here today, gone tomorrow government. 

Moreover, Hunt’s personal tax cuts are of the very kind that the International Monetary Fund advised against, coupled with his promises of economic growth that are contradicted by the Bank of England and many City of London economists. 

It’s all based on plans for public spending reductions no one thinks are deliverable because of the damage they would inflict upon public services, already cut by £180-billion — Hunt promised a further £20-billion, without specifying where exactly these fresh cuts would fall. 

The Tories’ satnav keeps returning to their starting point, the disastrous austerity strategy they first adopted in 2010 which has stalled economic growth and savaged living standards. 

All Britain can hope for now is an early election and a fresh Labour government, one determined to deliver the change the country is crying out for — but sadly saddled with a grim financial outlook. DM 

Lord Hain’s new anti-corruption, pro-wildlife thriller The Lion Conspiracy: Collusion, Extermination, Insurrection is published by Jonathan Ball in May.

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  • Denise Smit says:

    I wonder what will happen under a Labour Government. In what way are they going to fund their wishlist wellfare state without taxing even more. Everything for free

  • Warren Wilbraham says:

    It’s heartening to see that incompetent politicians facing electoral risk are the same the world over. Promise now, pay later. Would be interesting to see some analysis of where the UK would be if they had not Brexited.

  • Mark Cowell says:

    A fresh Labour Government? Please no.

    I recall Liam Byrne, the The former chief secretary to the Treasury (of the last Labour Government), left a note for his successor (David Laws) which said “there’s no money left”. And he was 100% right. The UK has still not recovered.

    You were in 2 of Gordon Browns 4 cabinets and therefore absolutely complicit in Labours last economic train crash, which took the UK economy back to the stone age in 2010

  • Jan Malan says:

    I think Brexit impoverished Britain. I personally think the Labour Party will impoverish Britain quicker and more drastically.

  • Richard Baker says:

    Similarities with SA uncanny! Time to revisit the whole idea of party politics and government globally. So many issues are fundamental and important to how an economy (and even electoral democracy) works and can sustain itself (how many western democracies are not running massive deficits?). These cry out for cross-party debate and consensus with longer-time durations-joint government on those in fact.
    The cabal of party-political classes and machinations of 5-yearly election cycles with focus on being returned to power (and not the good of the country) and policy time-frames are simply too short and unworkable.
    No one or other party is capable of resolving such major and growing crises.
    Too many people, too many who do not/cannot contribute, too many who rely on government grants-using up other people’s (net true taxpayer’s) money. Can’t carry on!

  • Malcolm Mitchell says:

    Despite all the prophets of doom, those who commented, it is a well know fact in political science that there is not a mountain of difference between Labour and Conservative’s performance in the UK over many decades. This is because of the time delay between policy formulation and its implementation combined with the UK’s regular change in governing party (unlike SA) the Tory’s are generally implementing Laborite policy and vice versa.
    As an Irish citizen I say that over centuries both are equally bad!

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