Politics: Increases in spending in cash are being eclipsed by the inflation rate
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Last week saw the most keenly anticipated budget statement from the UK Chancellor of the Exchequer since, well, the last one around six weeks ago.
2022’s fourth Chancellor, Jeremy Hunt for those struggling to keep up with the conveyer belt of ever-changing faces, spent just over 50 minutes at the Despatch Box unpicking what remained of former Prime Minister Liz Truss’s grand plans which, we were told, would give the UK “growth”.
The only resultant growth most of us were able to see was in the interest rates which dictate how much our mortgages are going to cost at the end of the month.
In terms of what the latest Chancellor announced last week, I think my response is one overwhelmingly of disappointment.
Anyone who woke up last Thursday morning worried about how they were going to pay their bills and find their way through the cost-of-living crisis over the next few months and years ahead will still be left wondering about that.
Because the fundamental fact of this is that for all the increases in spending in cash terms being announced by the Chancellor they’re being eclipsed by the inflation rate that’s hit a 41-year high. The purchasing power of any extra money that the Chancellor is announcing is more than being eroded by that situation with inflation.
Whilst accepting that many of the measures announced are better than if they weren’t happening at all, in most cases they are still only a partial mitigation of the increased costs people are facing. Let’s not forget that these increased costs are not purely down to inflation alone - there are quite a few self-inflicted wounds from the last budget and Brexit certainly isn’t helping diminish the challenges we face.
Jeremy Hunt should have followed the lead of the Scottish Government by matching progressive policies like the Scottish Child Payment - but instead he has cut household incomes by raising energy bills yet again and imposing stealth taxes on families.
On the taxation side, there were a number of key measures the Chancellor could have taken which would have placed the burden of increased taxation more fairly on those with the broadest shoulders.
One of those would have been expanding the Windfall Tax, so that it wasn’t just about oil, gas and energy companies, instead expanding it to big retailers like Amazon for example.
The Chancellor could also have taxed ‘non-doms’ – persons who reside in the UK but whom the UK Government regard as having their permanent home in another country.
hat would have collected about £3.2bn which currently isn’t being raised.
Another option would have been to tax company share buy-backs.
That could have raised another £11bn.
So, in a £55bn ‘consolidation package’, as it has been called, which was split roughly fifty-fifty between spending cuts and increased taxes, straightaway we have in those three measures a sum in excess of £15bn which could have been raised without having to increase the tax burden on some of the people who are least able to afford it.
The Chancellor had the opportunity to make fairer choices, but instead he chose to impose deep and harmful cuts to family budgets and public services.
To paraphrase Matt Hancock, who is currently enjoying a few weeks away from his job in Westminster earning a reputed £400,000 for being in the jungle – Scotland has a different set of priorities, please get us out of here.
