I have taken some time out to read the detail in the Chancellor’s Autumn Budget and to reflect on the responses of trade unions, businesses, and other commentators. It is a Budget formulated by a government that is out of touch with the issues facing people in Luton South and has the wrong priorities for our future.
Quite simply, it is a low-growth, regressive Budget, one that heaps the tax burden onto working people. As Sharon Graham, the General Secretary of Unite, stated, “the government wants workers to pay for the pandemic. Their incomes are under attack from tax rises and inflation while the super-rich will continue to prosper.”
With rising costs, inflation, and potentially empty supermarket shelves, in Luton South, we needed to see targeted support as we face a difficult winter. Instead, there is no action on rising energy costs and less than a third of households hit by the £20 cut to Universal Credit will benefit from the reduced taper rate. Shockingly, the IFS (Institute for Fiscal Studies) estimates that current forecasts suggest real wages will still be lower in 2026 than they were before the financial crisis. Austerity is not over, as two-thirds of the cuts inflicted over the past 11 years will still be in place by 2024-25.
Analysis also shows that the Budget will not meaningfully improve living standards and continues the stagnation of incomes and earnings. Paul Johnson, Director of the IFS, said in response to the Budget that “over the next several years a combination of tax increases and high inflation will mean very slow growth in living standards.”
The government is making working people in Luton South suffer the impact of the economic crisis through a rise in National Insurance from next April and a freeze in the Personal Income Tax Allowance, as well as forcing local authorities to increase council tax, which will disproportionately impact services in more deprived areas. It comes at the same time as the government announced a £4 billion tax cut for banks’ profits, a cut to the bank surcharge from 2023, and after the £12 billion tax cut to large businesses like Amazon through its super-deduction. Households will pay £3,000 more tax by 2026/27 than when Boris Johnson became Prime Minister. The measures announced will not even make any material difference to business investment, according to the Office for Budget Responsibility (OBR).
As well as opposing the principle of tax cuts for banks, tax hikes for lower paid workers and failing to support those relying on social security, it is also the case that the Government’s policymaking is economically illiterate. The Budget confirms weak medium-term growth, lower than Labour’s record in government, even amid the global financial crisis. Under the Conservative government, the UK is suffering the slowest recovery of any major advanced economy.
The legacy of this Budget will be an out of touch Conservative government that puts bankers before workers and those most in need of support in Luton South. I hope to speak in the Budget debate on Tuesday, where I will be standing up for our dedicated public sector workers by calling on the Government to give them a fair pay rise.