Amendment of the Law — House of Commons, 2015-03-23
Topic: Macroeconomics
Michael Hugh Meacher (Labour, Centre-left): The Chancellor did not deliver a Budget last week; he delivered a party political broadcast on behalf of the Tory party. The macro-economic state of our country, which is the real purpose of a Budget statement, was almost entirely absent. His speech had two purposes: first, to give the impression that the worst of austerity was now over and that the sunny uplands now beckon if only we vote Tory at the election; and, secondly, to shoot as many Labour foxes as he could squeeze into an hour on his feet. I want to show that he failed on both counts The Chancellor claimed that factors such as lower inflation enabled him to ease up on austerity by pulling back his target of a £23 billion surplus after the elimination of the structural deficit to a mere £7 billion. The fact is, however, that the pathway by which he might meet even this more modest target of a £7 billion cutback is, frankly, pure cloud cuckoo land. The rate at which the deficit has been cut by this Chancellor has averaged so far about £7 billion a year. The deficit still stands at £90 billion. Yet according to page 23 of the Treasury Red Book, the deficit will supposedly go down by £15 billion next year, then by a whopping £36 billion the year after that, then by £27 billion and then by £18 billion in 2018-19. These are, frankly, confetti figures. They have been manufactured and thrown about simply to produce a political feel-good factor that somehow austerity is easing off. This is the most enormous con being perpetrated on the British people. Either those figures are wildly wrong and will never remotely happen, or, if the Chancellor does choose to push them through, they will mean cuts in benefits and departmental expenditure on a scale of up to three to four times anything that has previously been experienced. I suggest that the nation will never stand for that. If he does press them, I think there will be an explosion on the streets The Chancellor also failed to shoot Labour’s fox that he is still determined to take the British state back to the 1930s. That was the cat he let out of the bag in his autumn statement three months ago. Page 75 of the Office for Budget Responsibility report on the Budget gives the lie to any idea that he has backtracked when it states that Government expenditure under the Chancellor’s latest twiddling of the figures "would be the joint lowest level in consistent National Accounts going back to 1948" The truth is that almost all the vainglorious boasts the Chancellor made are either seriously misleading or not supported by the evidence. He claimed that the deficit was being cut this year, when in fact that is only due to the exceptional delaying of tax payments until the end of the fiscal year by the super-rich to take advantage of the reduction in the top income tax rate to 45%. Without that, which of course will not be repeated, the deficit would have risen this year, and on present policies, it will rise in future years The Chancellor promised the biggest increase in real spending for a decade in 2019-20. As others have said, however, that is only because of the rollercoaster boom and bust after massive cuts in 2016-18, which any Whitehall mandarin will tell the Chancellor is a crazy, not to say utterly irresponsible, way to manage public services. He claimed that national debt will begin to fall in 2019-20, but that is only because he is planning to pocket the £20 billion windfall from selling off the proceeds of bank privatisation, not because there has been any change in the fundamentals of debt inflation The Chancellor complimented himself on a nationwide recovery. The truth is that London and the south-east continue to pull away from the rest of the country. Manufacturing and construction still badly lag behind the financial sector. He claimed that Britain stood tall and was now beginning to pay its way in the world. The truth is exactly the opposite: the OBR is predicting that in 2014 Britain had its biggest current account deficit since 1845. I repeat that: not 1945, but 1845—nearly 200 years ago The Chancellor claimed that with rising real wages, albeit by a fraction and only because of the collapse in oil prices, prosperity was now returning to British households. The truth is that real wages are still nearly 8% below their pre-crash level, while at the top inequality marches on relentlessly. The ratio between the average FTSE chief executive’s remuneration and median pay in those companies is now on average more than 140:1. The Sunday Times rich list shows that the richest 1,000 people in the UK have actually doubled their wealth in the past five years, from a staggering £250 billion to an almost unimaginable £500 billion. I think the conclusion from all this is unavoidable: the real problems of the economy have not been addressed, we are investing far too little, productivity has collapsed and the UK continues to run up debts at an unsustainable rate.