“Austerity has been imposed on the British people for 12 long years. If it worked, we would all be living in luxury by now.”Diane Abbott MP
By Diane Abbott MP
The Chancellor Rishi Sunak’s Spring Statement was unveiled with some fanfare. But it does next to nothing for ordinary voters. This should not be a surprise. Sunak is the richest Chancellor of the Exchequer since records began. He himself is a millionaire. And in case he personally falls on hard times, his wife is a billionaire. Sunak has no idea how ordinary voters live. But he is extremely ambitious and widely tipped to succeed Boris Johnson as Tory leader.
Notably he began his Spring Statement speaking at length about Ukraine. The subliminal message was that, if there are any problems in the economy, it is all down to the war in Ukraine.
The truth is that the state of the economy was dire even before the war in Ukraine. This Tory government has massively deepened inequalities of all types during the pandemic and continues to ratchet up austerity. Sunak did nothing about that with his statement. Instead, as expected, Sunak said that he is prioritising fiscal rules in a time of crisis. Reducing debt and the deficit without a plan for growth, just means more austerity. And it should be remembered that austerity has been imposed on the British people for 12 long years. If it worked, we would all be living in luxury by now.
In response to a clamour from Tory MPs Sunak has cut fuel duty. But that does not mainly help “hard pressed families” as he claims. The main beneficiaries of cuts in fuel duty are large companies with big vehicle fleets. And a negative side effect is that some of them may postpone switching to electric cars.
Increasing the National Insurance threshold will help those earning between £9,000 and £12,000 a little. But the big winners will be people earning over £45.000. They will get a NICs cut of over £3,500. This was a Spring Statement for big business and the rich.
For over 40 years a key plank of Tory economic policy has been cutting business taxes. But Sunak admits that while we have the most generous tax breaks for business in the G7, we also have the lowest business investment. Then he announces more tax breaks. But he knows perfectly well much of these tax breaks won’t be used for investment, they just mean more money for shareholders.
In his statement Sunak set out this policy of tax cuts in purely ideological terms, saying “People spend their own money better than the state.” Then he went on to promise that basic rate tax will fall by 1p by the end of this parliament. This sent Tory MPs into a frenzy of excitement. But the promised tax cut is far outweighed by the money ordinary people will lose in real terms, including because of the effects of inflation on public sector pay, pensions, social security and public services.
The reality is that this Spring Statement is designed to boost the job prospects of Rishi Sunak, nobody else.