A Very Tory Budget

Craig DalzellEverything is fine again!Not great, you understand. Not enough to restore the cuts of more than a decade of Austerity or to give you the pay rise you’ve been forced to strike for. But Prime Minister Rishi Sunak has personally saved us from the recession caused by his predecessors such as...Chancellor of the Exchequer Rishi Sunak...but never mind that. The important thing is that Britain isn’t going to tip into the recession that was being predicted this year. The main reason for the stabilising of the economy is that energy prices have come down from last year’s peak (though the big announcement of the extension of the energy price cap isn’t likely to do all that much given that prices are likely to drop below it quite soon – despite them remaining more than double what they were pre-crisis). Energy is one of those costs that people simply can’t really do without – “personal responsibility” only takes you so far when your house is built below adequate efficiency standards – the result being that when energy costs go up, you are pretty much forced to pay them (if you can) out of money that you would have spent on virtually anything else.This one fact alone betrays the oversimplification of the economy down to a single number like GDP. Your “economic activity” is likely to be the same this year as it was last year but you’re spending more on energy than you did then and less on everything else. This means that while GDP itself stays more or less the same, some oil barons get to pocket billions and your high street continues to die. The IFS is projecting that the next couple of years is going to see the largest drop in household disposable income (i.e. what you have left after you’ve paid tax, energy costs, rent etc) on record. A 3.7% drop this year and a further 2% drop next year. For an average UK household, this represents a drop in disposable income of more than £1,500 a year. Things are projected to rise again after this but it’ll be 2027 before your disposable income reaches pre-pandemic levels. This is the second “Lost Decade” that the Tories have presided over since they came to power in 2010. The last one started with the banking crash...it’s starting to look like this one could by compounded by another one so who knows if these projections will be anything close to what actually happens.If that sets the scene for Jeremy Hunt’s first UK Budget, what did we actually see in terms of policies? Remarkably little, is the answer. There weren’t any major announcements over big ticket items like income tax or the like. The biggest one in terms of tax breaks appears to be the announcement that you’ll be able to increase the amount you’re able to save into your private pension before being taxed on it from £40,000 a year to £60,000 a year. I say “you” but very few folk these days are likely to actually benefit from it (though the policy does seem like a broadbrush approach to helping to partially deal with a very specific problem within the NHS) as to earn £60,000 at all (never mind to earn enough to be able to save £60,000 after all other expenses are accounted for) would put you in the top 3% of earners in the UK. This is, in reality, a quite substantial tax bung to a very, very few already wealthy people.Another major announcement was more regulatory than directly financial. The UK is going to embark on a round of “competitive deregulation” of medicines and medical devices. Since the UK left the EU and deliberately sought to diverge itself from EU rules, it has set up a new regime of regulatory standards for such technologies but this means that it ends up being a lot of bureaucracy and work to test new drugs and devices to see if they meet those standards (even if standards were separate but equal to EU standards – thus minimising problems with UK exports to the EU – then it still means testing the items twice to meet both sets of standards). Under this regime of “competitive deregulation”, the UK will now simply fast-track approval of drugs and medical devices if they’ve already been approved by “trusted regulators” in the EU, the USA or elsewhere. This very useful article from 2021 lays out all of the issues around medical device regulation post-Brexit and offered the UK four potential options on how to deal with them. Hunt has chosen Option Four, the one that offers the most power to medical importers, and the least power to British medical exporters and to the UK Government itself.My first comment would be to ask if this sounds like a regulatory race to the bottom to you? Will the UK simply approve a drug that meets US standards but not more stringent EU standards, for instance? Will it guard against known risks of regulatory capture (particularly in the US) or open the way for ever more privatisation of the UK health sector by large US interests?My second comment is a bit broader:– Is the lofty ambition of “Global Britain” really this low? To merely copy the regulations of others without even having a seat at the table to help determine them as we once did before Brexit? The UK has, in effect, given up its influence on the world stage in this sector and will content itself now to being a rules-taker rather than a rules-maker.The final major standout in the budget was a line by Hunt commenting on the rapidly rising rate of unemployment amongst workers aged over 50 where he said that a 50 year old worker should look forward to “another two decades of fulfilment”. That is, we should be embracing the prospect of working until we’re 70. Citing his own physically undemanding, extremely well paid desk job as an example of that level of aspiration.To achieve this moment of “aspiration” Hunt has proposed making it easier for sick and disabled people to get into work without the fear of losing disability benefits...but also that they should start to fear an even greater level of sanctions should they not take a job offered to them – no matter how inappropriate that job may be. He cited the fact that there are more job vacancies in the UK right now than jobseekers but this argument is all but useless unless considered alongside the fact that not every person wants or can do any random job located in a random part of the UK. Offering a former laser engineer and now policy-wonk like myself a carpentry job in Cornwall is going to end about as well as you think.There is a slight positive note in all of this. I wonder if Hunt has been reading our work in a single key aspect. He announced the expansion of a “Mid Life MOT” for workers aged over 50. Details remain somewhat sparse but in an ideal scenario, this might look similar to the policy Bill Johnston and I developed in our book All of Our Futures (which you can buy here in the Common Weal shop). This MOT should cover financial issues where the question essentially boils down to “Have you saved enough in your pensions already while you still have enough time to make up some shortfall?” (The answer usually being “no” because the UK’s pension system is so badly broken...see our book for some fixes to that). It may also cover some kind of medical check up and review so that you can determine if you’re likely to face any challenges or barriers resulting from your health over the next few years (Scotland already does a great deal of this kind of screening though it’s not – as in England – packaged and badged as a “Health MOT”). Most importantly, we should look at our jobs, our workplaces and our homes to see if our advancing age is likely to impact any of these. People should be confident that their employer will support them if their job or their workplace has to be adapted (and should be mindful that suddenly “desking” previously active workers without their consultation and consent can be devastating for morale and for productivity in work). We should also be much more able to adapt our homes where required. This is particularly needed in the private rented sector where Scottish private tenants – an increasingly older demographic – often face near-insurmountable barriers against modifying their homes to fit increasing or changing health needs and even where they can and do, often face the problem of insecure tenancies and the likelihood of being turfed out of that home shortly after modifying it. This is a topic that we’ll certainly keep an eye on though – given the folk involved here – I wouldn’t be surprised if it fails to reach the ambitions that we have for it on any or all counts. We specifically called for the Mid Life MOT to be something more than patching up workers so they can keep the GDP line going up for a few more years before they’re cast on the spoil heap of retirement but that sounds precisely what Hunt is deliberately aiming for.So where is the UK after this budget? Where are we headed with this, the fifth consecutive Conservative PM in newly Brexited “Global” Britain?We’re going to be poorer. We’re going to stay poorer for the rest of this Parliament. We’re going to be forced to work harder, and for longer. And we’re going to see more of the fruits of our work go into the pockets of the wealthy who will get to keep more of it thanks to tax cuts. But don’t worry. It’s not technically a recession if someone else is getting richer faster than you’re getting poorer. So it’s fine. As Hunt says, “the plan is working”. Precisely as they intend it to.Image Credit: UK Parliament