A Budget that subsidises profiteers and bungs £1bn to wealthy

ANDREW FISHER looks at what Chancellor Jeremy Hunt’s Spring Statement means for the long-suffering people of Croydon. Plus: how to call-out a Tory MP’s lies, live on BBC television

Wrong priorities: the Chancellor has given the wealthiest few a £1bn bonus

There is an old saying in the House of Commons. It’s known as the souffle theory of Budgets: “The louder the cheers on Budget day, the sooner it falls apart”.

Chancellor Jeremy Hunt’s Budget yesterday was a combination of wrong priorities and misguided policy choices, but with a few sprinkles on top to try to disguise it.

On energy, the Chancellor maintained the energy price guarantee at £2,500. Hunt insisted that, “This measure will save the average family a further £160.” Which is not really true. It won’t save anyone anything because we are still paying nearly double what we were paying just over a year ago (when the price cap was £1,277).

And unlike last year, when the £2,500 cap was introduced, it is no longer accompanied by a £400 universal payment. So in real terms this is a 19per cent rise in energy costs.

The way the energy cap works is essentially that the Government subsidises the energy companies to provide energy to households at a sub-market rate. As research by the Unite union shows, the Big Four energy generation and supply companies took £9.5billion in profit last year, and the gas and electricity distribution monopolies recorded profits of £6.3billion.

Rather than tackle rampant profiteering, the Government is subsidising it!

At the start of the crisis, former Prime Minister and Chancellor Gordon Brown suggested taking a stake in energy companies for every £1 of subsidy. The Labour Party has been campaigning for an extended windfall tax. In the end, Hunt opted for neither, and is racking up borrowing while leaving excess profits untouched.

In Croydon, thanks to Conservative Mayor Jason Perry, there will be even less support available as voluntary sector funding to local mental health charities and advice services has been slashed – leaving people to face worsening finances and the 15per cent hike in council tax with less support.

Hunt’s Budget yesterday was all about missed opportunities and wrong priorities.

Under-baked: Jeremy Hunt’s Budget was like a poor souffle

He also announced more big giveaways for the wealthiest and for big business.

The first was on Corporation Tax – which, as previously announced, is rising to 25per cent in April. As Hunt reminded his mutinous backbenchers, this is still the lowest rate in the G7 group of major economies. But to soothe their discontent, Hunt announced £9billion of tax giveaways.

At a time when hundreds of thousands of public sector workers are being told there is no more money available, a £9billion bung to big business is especially startling.

And it’s not just public sector workers – every worker is about to be hit by the freeze to income tax thresholds. According to projections by the Office for Budget Responsibility, this amounts to a stealth tax rise of £29.3billion a year by 2028.

So in the middle of the sharpest fall in living standards on record, the Chancellor is hitting low-income workers with a stealth tax.

Let’s just summarise this – billions taken in tax rises from workers and a £9billion giveaway to profitable corporations. These are the priorities of a Conservative Chancellor when family finances have never been more squeezed.

And it gets worse.

More workers on low incomes having their wages topped up by Universal Credit will now face benefit sanctions and conditionality set by work coaches.

Although many disabled people will have cheered the news that the Work Capability Assessment will be abolished, the Institute for Fiscal Studies said up to 1million people currently on incapacity benefits could lose about £350 a month as a result because the assessment for additional support is proposed to be the test for Personal Independence Payments. People with short-term disabilities or fluctuating physical or mental conditions are most likely to be the ones to lose out.

Basic lessons: the Chancellor’s childcare offer won’t be available immediately

But while it’s the stick for low-income workers and disabled people, Jeremy Hunt found a £1billion carrot to dangle in front of the highest-paid workers with the most generous pensions.

Hunt increased the annual allowance of what can be saved tax-free for a pension from £40,000 to £60,000 and removed entirely the cap on lifetime allowance.

This is a move costing £835million a year that will benefit only those with the most generous pensions – including fat-cat company directors. As Torsten Bell of the Resolution Foundation assessed, “Rich people now have no overall limit on how much can be put into their pension pots tax free.”

While 1.7million pensioners live in poverty, this really does feel like the wrong priority: a subsidy to the richest 1per cent.

There was not one penny extra to tackle the massive backlogs and staff shortages in the NHS or social care.

And while areas such as Tipton, Redcar, Blackburn, Oldham, Rochdale, Mansfield, south Tyneside and Bassetlaw were singled out for “new levelling-up partnerships”, there was, once again, nothing for Croydon.

Just what has Tory Mayor Perry achieved for us? We got nothing in the last round of levelling up allocations either, while the Prime Minister’s wealthy constituency got £19million. Instead, Croydon residents are left to face another £36million of service cuts this year and that 15per cent Council Tax hike. Paying more for less.

Hunt’s flagship announcement yesterday was the extension of 30 hours of free childcare for all pre-school children aged nine months. This could benefit thousands of families in Croydon.

But this will not begin to be rolled out until April 2024, when parents of two-year-olds will gain entitlement to 15 hours per week of free childcare.

There is considerable scepticism as to whether Hunt’s increased payments to childcare providers will be sufficient to reverse the attrition from the sector and build the necessary capacity.

If Hunt’s timetable for implementation slips, any electoral gain from what could be a welcome policy may simply fall flat – a bit like a badly baked souffle.

Some of you may have seen me earlier this week on the lunchtime BBC television programme Politics Live, with a lively disagreement with Conservative MP Jake Berry.

The clip quickly went viral on Twitter.

Berry had been appointed as Conservative Party chair under Liz Truss’s disastrous and mercifully brief tenure as Prime Minister.

The first topic for discussion on Tuesday was the Illegal Migration Bill – a Bill which breaches the European Convention on Human Rights and our international commitments to refugees under the Geneva Convention.

After the MP erroneously claimed international law requires refugees to claim asylum in the first safe country, I could be heard off-camera exclaiming “Oh God!”, before being brought by host Jo Coburn to address Berry directly.

After a week-long debate over BBC impartiality, some commenters asked why it was left to me, rather than the programme’s presenter, to confront and correct Berry’s lies …

To watch the Politics Live episode in full, click here.

Some of Andrew Fisher’s recent columns:

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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7 Responses to A Budget that subsidises profiteers and bungs £1bn to wealthy

  1. Chris Burgliss says:

    My job pays me about 33k a year, an average salary, but if you calculate my pension it will still reach the lifetime allowance by the time I’m 59 – hardly a bung for the richest?

    • Nick Davies says:

      Are you sure about that? If you are paying, say, £5000 a year in pension contributions you’d have to live for another 214 years to reach the now to be abolished £1,073,100 lifetime allowance.

  2. Dave Russell says:

    If Hunt had really wanted to help a significant majority of tax payers he would have increased the personal tax allowance, which has been frozen for several years – so a tax increase.
    Multi-billionaires such as Sunak, who has no mandate to be Leader of the Conservative Party and Prime Minister, will benefit substantially.
    Another case of the (obscenely) rich getting richer and the (relatively) poor getting poorer.

  3. Sue Grayson says:

    Berry is the concealed but ugly face of blue passport waving little Brexit Britain – narrow vision, no empathy, drum beating and ignorant.

  4. moyagordon says:

    The issue of people smuggling across the channel is something I’d like to see stopped because very often there are children taken across and they don’t have a choice in risking their lives. I have relatives living in Australia where they introduced similar measures to the ones we are looking to introduce, and it stopped the boats.

  5. The pensions Lifetime Allowance changes were also designed to help stop GPs retiring early. The BMA has welcomed this. Let’s hope it works. Yes, GPs are ‘wealthy’, and are in the top 1% of earners. BTW, a change that only affected the health service would probably have been unconstitutional, if not illegal

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