Don’t fall for Philip Hammond’s budget trickery. There is an alternative

https://www.theguardian.com/commentisfree/2017/mar/07/philip-hammond-budget

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How perfectly their faces fit the parts they play, this pair of graveyard undertakers to public services. Chancellor and prime minister use their grim solemnity to persuade the nation that there is no alternative. It’s all a charade – and they are, of course, play-acting – but they do it alarmingly well. Polls show they still convince voters that this extreme punishment is a doleful necessary.

Blanket coverage announces Philip Hammond has more in his pocket than forecast, but he warns that any loosening up is “reckless”. He dances along an intellectual tightrope: on the one hand his Goldilocks economy is doing well with pay and employment up, growth better and deficit less than forecast. But on the other, let no one think there is money for anything bar a few crusts for one or two giveaways. His conjuring trick is to explain this: how can this growing economy only afford ever-worsening public services?

Both stories are bogus. The economic outlook is pretty grim, yet even so Hammond has plentiful choices. Since 2010, an enormous sum has been handed out in tax cuts – £43bn this year. Yet the Cameron-Osborne ligature on the public purse is followed in lockstep by their successors as they cut and cut again with purposeful relish.

They plan to cut the size of the state permanently to 36% of GDP, from 45% in 2010. New faces in No 10 and 11 Downing Street are only casting changes for the same old script, ideologically identical. How far can they go? That’s the only question: with an 18-point poll lead they may imagine nothing can stop them squeezing the breath out of public services – except hubris.

Another £12bn axe will fall in April on ‘hardworking' low-paid families, plus £3.7bn taken from disability pay

As set out by the Resolution Foundation, this year an £8bn tax cut goes in freezing fuel tax, and £9bn on cutting corporation tax. A walloping £18bn tax cut goes in increased personal tax allowances – money that sounds helpful to the low-paid but only reaches the top half of earners. So within his iron envelope lies this gigantic giveaway, where corporation tax at 17% by 2020 will be the lowest of any major advanced economy.

We could argue about how much more the UK could borrow to invest in infrastructure: Keynesians would say quite a lot, boosting the economy. For the sake of argument, let’s accept Hammond’s fiscal straitjacket; however, what no one should accept is the choices he makes within it, in either taxing or spending. Imagine if a share of that £45bn tax cut was released for urgently needed spending.

The chancellor appears to have no risk register added to his budget plan: if he did, which risks would flash red as the most politically explosive? Surely the NHS is about to blow its top, starved of funds as never before: £10bn more would match the western European average that Labour reached. That’s not “unsustainable”, but what an ageing population needs. Distracting bungs may ease the small business rates tax shock, with a little extra for social care. As the police warn against cuts, beware the terror incident that makes their case.

Hammond’s risk register might not flash for schools, despite most taking a heavy cut. But teachers’ unions won’t keep the government awake at night – besides, schools for the poorest children, not Tory children, are the worst hit. A welcome extra for technical education will only be a fraction of the 13% cut from further education since 2010. Housing hurts – but it still doesn’t rise high up most voters’ concerns, despite fewer homes being built last year than for 30 years.

Wherever you look – parks, pools, potholes – the fabric is wearing thin. But note the linguistic trickery from ministers such as David Gauke, chief secretary to the Treasury: “It’s not about the money,” he claims, but about “delivering in the most efficient way.” But “doing more for less” has run out of road. Now Theresa May demands her cabinet find a surprise extra £3.5bn cuts. Can they keep persuading voters all this is necessary, as the party plunges for its largely unspoken state-shrinking goal?

Some cuts are potentially explosive, others cause only private grief. The government finds brutal benefit cuts are popular, while victims are isolated with no collective voice. So another £12bn axe will fall in April on “hardworking” low-paid families, plus £3.7bn taken from disability pay. The doublespeak seems to work, as ministers call this savagery “focusing on those most in need”, as if it were some new kindness.

Donald Trump knows that what you say matters more than what you do: May understands Trumpism. She made her mark as a caring egalitarian on the threshold of No 10, governing “not for the rich” but “for everyone”, for “ordinary working families” – and yet she marches her government the opposite way.

She pretends raising tax allowances is for low earners, because few realise none of that £12bn goes to the bottom half. Instead, in April ordinary working families will face a huge hit to their credits and benefits, frozen for the next three years. The Resolution Foundation says this means a 6.5% cut to their incomes – and at a time when their pay is set to fall below rising inflation. Wages are still 7% behind pre-crash levels. That means inequality, relatively flat in recent decades, is set to soar again, as it did in Thatcher’s 1980s.

Meanwhile the millennial generation is the first since Victorian times to earn less than its parents, as the proportion owning homes falls fast. The north-east and West Midlands are 20% worse off than the south. Shopping is all that keeps us afloat, with the highest trade deficit for 60 years. Households hang by a thread: YouGov finds that more than a third would struggle to pay an unexpected £500 bill. This will be the first decade since the 1860s when average households have seen no growth.

Everyone has different ideas on how much the country should save for the coming economic Brexit shock. How much should we pull back from wasteful tax cuts, or raise in taxes, to rescue services and benefits? Each of us has our own priorities for public spending and what it takes to be civilised.

But listening to Wednesday’s budget, let no one fall for the trickery behind the chancellor’s grim-visaged pretence that his cuts are inevitable, and everything else is “reckless”. There are cornucopias of better alternatives.