Britain’s Budget — not even a brighter shade of fail

In November, Britain’s finance minister, Jeremy Hunt, chided the Treasury’s independent budget watchdog, the Office for Budget Responsibility (OBR), for having forecast a UK recession in 2023, claiming instead that the UK economy had grown and had “turned a corner”. 

Three weeks ago, official figures confirmed that Britain had been in recession for months. 

In Wednesday’s Budget 2024, Hunt was at it again, insisting “we will soon turn the corner on growth” and announcing personal tax cuts worth £10-billion under pressure from right-wing Tory MPs desperate about their dire election prospects. 

The Labour Party is 20% ahead in the opinion polls and has been for pretty well ever since Liz Truss’ abortive mini budget of September 2022 that crashed the economy and terminated her short-lived prime ministership. 

Britain’s economic situation is now the worst it has been for decades. Average household living standards are forecast to be lower at the end of this Parliament than the last one. 

Taxation is expected to reach the highest share of national income since 1948, post-World War 2. UK national debt as a share of gross domestic product is at its highest for 70 years. 

Public services are in a poor state due to more than a decade of dire Tory austerity — eight million waiting for National Health Service treatment, huge backlogs of court cases, woeful conditions in many care homes, headteachers at their wits’ end, and many municipalities facing bankruptcy. Nothing seems to work any more in Tory Britain.

Future economic prospects look poor. The OBR forecasts for growth are dismal. Interest rates are high. Debt is going up. Productivity and skills are terrible. Not even a brighter shade of fail.

Tory right-wingers were clamouring for Hunt to give the economy a bounce. But the only bounce he delivered was a post-dated cheque to pay for his tax proposals. 

And his personal cuts are more than offset by higher tax bills from freezing personal income tax thresholds and allowances for years to come: seven million Britons will pay income tax for the first time or join the higher rate tax band, having been suffering a long cost-of-living crisis.

Hunt’s five-year public spending squeeze will worsen the quality of Britain’s public services which have already had 13 years of savage cuts. Even before Budget Day, word had come from the chair of the OBR that his plans for public services announced in November were a work of fiction, not to be taken at face value due to the grave damage they would do if carried out. 

But, on Wednesday, Hunt stood by those very plans even though they mean cutting public investment by £14-billion by 2028-29 and once again slashing the day-to-day spending of the “unprotected” departments like justice, police, prisons, transport and local government by a further £20-billion per year. 

That has met with a chorus of disbelief. Before Budget Day, the widely respected director of the Institute for Fiscal Studies, Paul Johnson, warned that any budget tax cuts “are likely to be undone after the election” and not to be taken seriously. They are here today, gone tomorrow gains from a here today, gone tomorrow government. 

Moreover, Hunt’s personal tax cuts are of the very kind that the International Monetary Fund advised against, coupled with his promises of economic growth that are contradicted by the Bank of England and many City of London economists. 

It’s all based on plans for public spending reductions no one thinks are deliverable because of the damage they would inflict upon public services, already cut by £180-billion — Hunt promised a further £20-billion, without specifying where exactly these fresh cuts would fall. 

The Tories’ satnav keeps returning to their starting point, the disastrous austerity strategy they first adopted in 2010 which has stalled economic growth and savaged living standards. 

All Britain can hope for now is an early election and a fresh Labour government, one determined to deliver the change the country is crying out for — but sadly saddled with a grim financial outlook. DM 

Lord Hain’s new anti-corruption, pro-wildlife thriller The Lion Conspiracy: Collusion, Extermination, Insurrection is published by Jonathan Ball in May.