Philip Hammond missed the chance to change course with his post-Brexit budget, argues Seema Malhotra MP
It is fair to say the budget headlines did not go as Philip Hammond planned: ‘Spite van man’, ‘Tories break tax vow’, ‘Phil picks a pocket or two’, ‘Rob the builder – white van man gets battered by budget’. It is a good example of how when you do things in a hurry, you get things wrong.
The chancellor got it wrong in March. And if he takes anything away from this it should be that he made the wrong choices, at the wrong time, and in the wrong way.
That is why Labour, along with many of the Tories who lined up to help force the U-turn, were right to oppose the increase in national insurance for the self-employed particularly when delivered in this way.
If the government is serious about equalising tax treatment it should also be focused on how it works in partnership with the self-employed to balance and share risk with those who are working hard to grow our economy.
The budget did not give much good news either on reversing the trend on productivity. Productivity growth has been revised down yet again. After seven years of Tory government we still lag over 30 per cent behind Germany and the United States.
Productivity growth being revised down is not just about the uncertainty of Brexit. It is a reflection of the government’s lack of coherent strategy and investment, and its recycled infrastructure plans. After seven years, the government needs to take responsibility for its poor record – there is no one else to blame.
A challenge Labour must grasp in winning the argument on the economy is showing the impact of the government’s past decisions on where we are today. It is a way to explain that what is happening now is not by accident but a consequence of the decisions the Tories have made earlier in their years of power. Take schools: the Tories stopped the Building Schools for the Future programme after 2010. Two schools in my constituency had funding pulled. One school in another constituency I visited recently told me they have received some funding for improvements planned under BSF in 2010. The problem is that they have received less, been able to build less, and the classroom facilities they can afford to purchase are fewer. That is the real difference between a Tory and Labour government.
Recent reports by the National Audit Office show that £6.7bn is needed to bring existing school buildings in England and Wales to a satisfactory standard.
Ministers are choosing to give billions of pounds to build new free schools while existing schools are crumbling into disrepair – not just my view but the conclusion of Whitehall’s spending watchdog. Auditors have concluded that the department for education is facing a £2.5bn bill to purchase land for free schools and question whether the plans for so many new free schools will be value for money.
Take a second productivity challenge. The United Kingdom is 54th out of 80 countries surveyed for 4G coverage, with levels lower than Bulgaria, Albania and Romania. This is the fifth time the government have announced its highly limited roll-out of fibre broadband. Once the roll-out is complete only seven per cent of homes and businesses will have benefitted.
Corporation tax cuts brought in by this budget and previous budgets which are reducing the corporation tax rate to 19 per cent this year, 18 per cent next year and 17 per cent the year after are set to take over £15bn out of public finances in this parliament. That is a direct cost to the taxpayer.
There is not a single large or small business that I have talked to who has put corporation tax levels at the top of their list of issues. They have raised with me infrastructure, affordable housing for employees to be able to live nearby their work so as to help achieve a more stable workforce. They have raised education, skills and public transport. The government is pushing this agenda – much of the direction planned pre-Brexit – while at the same time presiding over education cuts which the Institute of Fiscal Studies estimates to be eight per cent per pupil spending by 2020.
In recent months teachers have told me about growing parent poverty, about kids coming to school hungry or without clean school uniform. Schools having to cut teaching posts and non-teaching welfare and support staff. Curriculum teaching time is being reduced, the school day being slightly shortened. Combine that with the pressures teachers remaining face as school pupil numbers increase and they are faced with increasing class sizes, and with increasing numbers of children facing mental health conditions and unable to get the support they need.
How can the government be proud of this record? This is the reality of what our schools are facing and it is the worst they have known in a generation. Keeping the pressure on is key if we are to see any chance of an education cuts U-turn in the autumn budget. The government should delay or reverse their corporation tax cuts and instead prioritise the needs of our schools.
This budget was a missed opportunity. We needed a plan to address the real challenges that businesses and families are facing, a proper plan for funding our public services, an economic plan that gives an honest assessment of the risks of Brexit and a sensible response to those risks.
We should have had a proper vision of the future and a pathway to how we genuinely get there – even more important now with the political upheaval ahead. This budget is unfair, it makes the wrong choices, and it is set to leave us a poorer, less equal and less prosperous nation.
Seema Malhotra is member of parliament for Feltham and Heston. She tweets at @SeemaMalhotra1