Chancellor Jeremy Hunt released his maiden budget this week in an attempt to address the ongoing crises in the UK economy and jobs market. The measures introduced in the budget have been met with a generally lukewarm reaction, with government supporters saying progress is being made, and those in opposition criticising it as tone-deaf to the problems facing working people.
Some of the headline measures introduced in Hunt’s budget include scrapping the work capability statement to encourage more benefits claimants into work, an extension of childcare allowance to children over 9 months old with the aim of getting more parents back into work (although with no plan as yet to increase recruitment and retention in the childcare sector), and scrapping the tax-free pensions cap altogether.
The budget also extends the energy price guarantee until June, reclassifying nuclear energy as environmentally sustainable to bring more investment, £63m for new “returnership” programmes and other measures to encourage over-50s back into work, an increase in the main rate of corporation tax for profits over £250k from 19% to 25%, a commitment to raise defence spending by £11bn by 2028, and £900m for a new AI-focused computer facility to boost the UK’s AI industry.
Hunt has said that partly due to the measures introduced in his budget, the OBR have forecast that the UK will avoid a technical recession this year. This forecast has been met with scepticism from other economic commentators, but is something the government has seized upon to justify their plans.
The scrapping of the tax-free pensions allowance is reportedly an attempt to convince more NHS workers, especially senior doctors, to stay in work for longer instead of retiring in their 50s to solve the staffing crisis in the health service.
In reality, this measure benefits those who are able to save more than £1 million into their pension pots, and is effectively another tax break for the very rich. Most UK citizens (apart from the top 1% of earners) are not able to save over £1m in their lifetimes, and scrapping this tax will not have the desired effect of convincing more people to stay in work.
The main solution to the UK’s staffing crisis will have to come in the form of more immigration; 245,000 extra immigrants coming to the UK for work. This solution is the most efficient way to solve the problem, but will not be trumpeted by the government as it will go down like a lead balloon with the hardline, Brexit-supporting party grassroots on the backbenches.
Hunts budget does include a relaxation of immigration rules for some jobs in the construction sector, but this will not be enough to bring any meaningful change. Whilst it is true that the UK has full control over its immigration policy post-Brexit, it is unlikely that the government will use that control to increase immigration to the levels required to solve our staffing crisis.
In summary, this budget does little to tackle the plummeting living standards and historically high tax burdens affecting working people. Whilst the government are raising budgets for defence, as well as increasing contributions to the NHS in real-terms, but the Treasury is continuing to enforce efficiency savings on most other government departments.
More tax paid by working people, coupled with smaller budgets for public services are contributing to the stagnant living standards Brits are experiencing. Yet the government still insists that we have never had it so good. People are staring to realise just how much wool has been pulled over their eyes by the Tories, and it wont be long until their platitudes fall on entirely deaf ears.
stay safe
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