This was no ordinary Conservative budget – but these are not ordinary times. In his first budget since taking office a month ago, Rishi Sunak was ebullient as he stated that this government would spend and invest “what it takes” to drive productivity and growth, and “level up” the country. His plan to address the economic impacts of coronavirus was comprehensive, clear in its understanding of the nature of the threat, and included many commendable measures – from making it easier to access statutory sick pay and benefit payments, to helping small businesses cover sick pay costs, though the TUC has called for greater support for low-paid workers. Many of today’s proposals could have come from a Labour chancellor.
That said, in a budget proclaiming an intention to “get things done”, there were some major omissions. Coronavirus may be the most immediate crisis facing the UK, but it is far from the only one: we face a climate emergency; our public services – especially those run by cash-strapped councils – are at breaking point; and for too many, the economy is not delivering security or hope. The chancellor’s budget fell short of the mark on these.
First, the climate emergency. The Institute for Public Policy Research has estimated that GBP33bn of additional public investment is needed every year in measures to meet the government’s net-zero target and restore the natural environment. This budget committed far less than that. This isn’t about choosing between levelling up and decarbonising the economy: it’s about ensuring that investment decisions as a whole decisively shift our economy to a different, greener path.
Yet many of the investment decisions made today were not “climate-safe”. We saw welcome commitments to increasing taxes on pollution and some investment in electric vehicle infrastructure, but that investment was dwarfed by the GBP27bn announced for a strategic roads programme. There was also no sign of the much rumoured measures to retrofit existing housing stock. Overall, the government continues to overinvest in carbon-intensive infrastructure and underinvest in the green infrastructure needed to set us on the path to net-zero.
So, too, the budget fell short of reversing austerity. The headline spending figures conceal that austerity is over for some but not for others. Spending increases are concentrated in health, education and criminal justice, not local councils, which will continue to struggle to provide some basic services. Their spending power per person is still far below its 2010 level. But rather than bolster tax revenues to put public services on a sure footing, the chancellor backed away from politically difficult decisions on taxes that had been trailed in the media – such as a fuel duty rise and potential housing taxes. Without that extra tax revenue it was perhaps inevitable that on support for social care services – desperately stretched and under threat from coronavirus – the can was, as ever, kicked down the road.
For the government, coronavirus has provided cover to delay some of the questions that go to the heart of what and whom the Conservative party is for. At some point, something – whether the fiscal rules, limits on tax rises, or pledges to work for ordinary people – will have to give. For Labour, the existential question is how to respond to a Conservative government that is singing a very different tune on public spending to its predecessors, and willing to turn on the taps to invest.
However it must not make the mistake of accepting or setting too low a bar. The chancellor celebrated a forecast of positive wage growth in each of the next five years: rather than a “jobs miracle”, this should be a basic requirement of any competent government working on behalf of its citizens. It is a poor indictment of our political imagination if these are its limits.
Moreover, it’s time the left learned to do what the right is skilled at and managed so successfully after the financial collapse of 2008: making the most of a crisis. The legacy of the coronavirus will be defined by which parts of the emergency response package become permanent. The chancellor claimed he was putting politics aside to do what is in the national interest. But if it’s possible to so quickly put in place measures to secure family and small business incomes in the face of a public health threat, why can’t we expect the same when faced with families unable to access healthy food, or when workers in fossil-fuel intensive sectors are at risk of unemployment? It has taken a public health emergency to expose the unstable foundations of our society and economy. The prize of the next few months – if there is one – will be winning the argument that a safety net for millions of workers, and support for ordinary people, shouldn’t be reserved for extraordinary times.
o Carys Roberts is executive director of the Institute for Public Policy Research