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‘No bonanza’

Economic experts demolish claims Autumn Budget is ‘ending austerity’
Ryan Fletcher, Tuesday, October 30th, 2018

Economic experts have demolished Tory claims that yesterday’s (October 29) Budget is “ending austerity”.


In a damning analysis the Institute of Fiscal Studies (IFS) pointed out that headline spending boosts for vital public services will do little to row back on years of damaging Tory cuts.


Conservative plans to increase NHS funding by 3.4 per cent a year may seem generous after a nearly a decade of austerity, but the IFS pointed out that health service budgets have grown by 3.7 per cent on average over its seven decade history.


Meanwhile the £1.7bn a year extra allocated to Universal Credit is a “small increase in generosity” when compared to the cuts of £4bn a year inflicted on welfare budgets since 2015, the IFS said.


IFS director Paul Johnson said, “This is no bonanza. Many public services are going to feel squeezed for some time to come.


“Cuts are not about to be reversed. If I were a prison governor, a local authority chief executive or a headteacher I would struggle to find much to celebrate. I would be preparing for more difficult years ahead.”


Unite general secretary Len McCluskey agreed with the IFS’ verdict that many public service cutbacks are still to come.


He said, “Austerity is not over. Despite the chancellor’s desperate efforts at make believe, back in the real world there is still the horror to come of billions of pounds slashed from public spending.”


The IFS also took aim at the Chancellor’s new Digital Service Tax on internet giants such as Google and Facebook, branding it a “sticking plaster”.


The tax will only be introduced in 2020 and could only leave online behemoths on the hook for a few tens of millions of pounds – hardly dinting the billions they rake in each year.


At the same time the government handed out tax breaks that favour the rich, with analysis showing the wealthiest 10 per cent will receive £410 from income tax and benefits changes, compared to just £30 for the poorest 10 per cent.


In his response to the Budget today, shadow chancellor John McDonnell said the Budget was a “bitter disappointment” for those hoping for a reprieve from austerity policies that have resulted in “a period of falling wages, crumbling public services, insecurity in an economy visibly failing across great swathes of the country”.


“And because the cuts are still, even now, grinding on, the stagnation will continue, as the official forecasts say,” McDonnell said.


“Investment forecasts have been revised downwards across the OBR’s forecast period. Real wages will barely recover. Growth will remain far below its long-run trend.”


He added, “Let’s put on the record: austerity is not ending. In the weeks and months ahead, people will recognise that the Prime Minister’s promise has been broken.”


“There are rumours that this was possibly a pre-election budget with pre-election tax giveaways. If the Conservatives are contemplating a general election let me say, on behalf of the Labour Party, bring it on.”


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