The Conservatives promised change, but delivered more injustice
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Version 0 of 1. Theresa May’s politics are at war with her very own policies. What she says is utterly undermined by what she actually does. No matter which way I look at Wednesday’s budget, that is the conclusion I end up at. The prime minister vows “a change is gonna come”. Her chancellor delivers more of the same cuts. In No 10, they fret about “just-about-managing” families. In No 11, they make policies that, in their own budget analysis published yesterday, hit the just about managing harder than the rich. To Tory activists, May declares: “The government I lead will be driven not by the interests of the rich and powerful, but by the interests of ordinary, working-class people.” To Tory MPs, Philip Hammond boasts about the cuts he is making to corporation tax. Indeed, flick through the red book and the single biggest giveaway it lists is the two successive reductions to taxes on big businesses, worth £18bn over the next five years. Compare that to the £2bn he’s coughed up for care for elderly people. What lies behind the rhetoric is easy to understand. As May herself puts it, the British voted last June for a sea change: not just to leave the EU, but to make their own government and their economy work for them. The new prime minister took on the role of change agent-in-chief, leading a cabinet short on the Notting Hill set and long on provincial south-easteners. To use a ghastly Westminsterism, the “optics” were brought bang up to date for the post-Brexit era. Yet her policies look and sound like they are straight out of 2013. Most of May’s attempts to break with the past – putting workers on company boards, blocking Chinese investment in nuclear, checking foreign takeovers of strategically important industries – have either been dropped outright or are completely watered down. What she and her ministers are left pushing is continuity-Osborne. The same Osborne, you’ll remember, whose economics proved so unpopular they fed the public rage that produced Brexit. Billions are still being taken off benefits for working people. Nurses, teachers and other public-sector workers are still suffering a huge pay squeeze, even while hospitals and other public services are crying out for more cash. Austerity will be slightly less severe than it was under Osborne, but it will go on for a whole lot longer. Reducing the deficit was meant to be over by 2015; judging by Hammond’s statements, it now looks set to carry on until 2025. That means 15 years of cuts to public services. Britain has not yet reached the halfway point of this planned austerity programme, yet already our hospitals are at breaking point, our prisons keep having mini-riots and I’ve met teachers who bring in their own food and clothes for their pupils. The economic consequences of sticking with Osbornomics are spelt out by the Office for Budget Responsibility. While it retracted some of the pessimism it expressed at November’s autumn statement, the outlook remains grim. Five years from now, our national income will actually be smaller than it is today. For the average working Briton, this will be the worst decade for pay since the Napoleonic wars. By spring 2022, workers will still be earning less, once you strip out inflation, than they were when Northern Rock collapsed in autumn of 2007. Much of this is down to Brexit, but it’s important to remember how weak Britain’s economy was even before the referendum. And ultimately, what meagre growth we’ll get will rely on ordinary families shopping and racking up big credit card debts. Last year, more than 100% of the UK’s growth came from consumption. Hammond’s biggest gamble is his assumption that British families will keep borrowing and spending even while they are getting poorer. In that scenario, only two things can happen, and neither of them is good. Either families will start to batten down the hatches and spend less, which will further slow down our growth; or a growing number of low-paid people will fall into more problems with debt. The political results of this ought to be devastating. Were it not for the culture war being fought over Brexit, in which the rightwing papers back May and Hammond as long as they frogmarch the UK out of the single market, they would right now be throwing buckets of bile at the chancellor. After all, he is making their own readers poorer. He throws spare change at social care when all the evidence is it needs a lot more cash and a total overhaul. The party of entrepreneurship is now jacking up taxes on the self-employed, which is the sort of thing that would normally ensure a slaughtering by the right, especially its outriders among the freelance commentariat. What Hammond is doing with the self-employed is more interesting than that – because it demonstrates how politically insensitive he and May are. The numbers of self-employed have been growing rapidly, so that they now make up one in six of the workforce. There is a stack of evidence and court rulings that firms are gaming the system and ducking taxes by treating their staff as “independent contractors” – when they are no such thing. What Hammond did yesterday is raise taxes on the workers without tackling the abuses. In his world, multinationals such as Uber will see their tax bills fall, even while their taxi drivers must pay out more. Nor is this an isolated case of topsy-turvyism. The chancellor spoke yesterday about how people up and down the country ask: “Will our children enjoy the same opportunity that we did?” His answer was to offer poor kids taxi rides so they can attend free schools. Yet according to the Institute for Fiscal Studies, the number of children in poverty will rise over the next five years by more than a quarter to 5.1 million. And next month the government will cut inheritance taxes paid by children whose parents are worth more than a million – even while tax credits and housing benefits will be scrapped for the third or fourth child in poor families. In both cases, a child’s financial situation will be radically changed not because of anything they have done, but through their parents’ actions. It just so happens that the child lucky enough to be born to very rich parents will get richer still, while the poor child will be punished. What Brexit and Trump show is that these blatant injustices and contradictions cannot carry on for ever. At some point, they will be resolved – and probably not in ways that May or any mainstream politician will welcome. The prime minister was right in sensing that the British wanted an overthrow of the old regime. But she is failing to deliver it. |