As we await yet another budget statement from this Conservative government, let’s consider ten myths that the chancellor and his colleagues have used to justify their actions. When Jeremy Hunt stands up in the Commons tomorrow, listen as he reels them out one by one. And note how fundamentally dishonest these arguments are.
1. These cuts are only necessary because of events that are outside this government’s control
Every single Conservative MP voted for the daft budget that dare not speak its name which Kwasi Kwarteng and Liz Truss put together. They cheered and waved their order papers. It was Rishi Sunak and Jeremy Hunt’s very own Conservative Party colleagues who acted so rashly that they increased interest rates and the cost of government borrowing. Along with mortgages and rents. It is only necessary to calm the financial markets because their own colleagues panicked those markets.
2. The cuts are fair and have been planned to do the least harm
The people who got us into this mess are now busy writing lucrative memoirs, giving astonishingly well-paid talks to wealthy lobbyists, or trying to ingratiate themselves with the public on TV reality programmes. Those who played no part in creating the problems face tax rises and cuts in services they need to use.
This budget reduces the money available to government departments by over 10% because it forces them to deal with high rates of inflation without increases in their funding. Those cuts will fall hardest on those who use the services most often. The poor and the disabled use public services a lot more often than investment bankers.
3. The right priorities have been chosen
The quickest and cheapest way to cut energy bills is to invest in better insulation, generate more wind powered electricity onshore and offshore, improve battery storage and incentivise use of power at off peak times. As chancellor, Sunak consistently failed to back such initiatives and the few token gestures he is now making are dwarfed by his generosity towards oil and gas exploration. He continues to back clumsy slow and expensive nuclear power stations that might come on line in ten years’ time.
4. It is necessary to cut capital spending
When a government faces a problem with running costs rising faster than income there is absolutely nothing to be gained from cutting back on sensible capital expenditure. Investment in the future is usually the single best way to cut costs and reduce inflation. In a recession it is normal for governments to try and increase spending on sensible long-term projects in order to even out the impact of the downturn. This one is cutting it.
5. This government believes in levelling up
Since 1990 the UK has seen a continual increase of regional inequalities in productivity; in complete contrast to other European countries. Levelling down has continued to proceed apace. Scrapping investment in important capital projects like better rail links for Bradford is a way to prolong and deepen regional inequalities not a way to solve them.
6. Pay rises have been driving inflation
Pay rises in the public sector have lagged well behind price rises for over a decade. That means people working on behalf of the public have taken pay cuts in real terms and helped to reduce any inflationary tendencies. It is necessary to look elsewhere for the causes of inflation.
7. The pain is fairly distributed
If you happen to have wealthy married relatives who die then it is possible in modern Britain to inherit one million pounds without paying a penny in inheritance tax. If you earn your money then before the budget you started paying tax if you earned only £12,571 pounds in a year. Anyone earning that amount is highly likely to need to supplement their income by visiting a food bank.
It would take 79 years of work for that low earner paying income tax to earn the amount that can be inherited tax free. Those who shelter their money in offshore bank accounts before repatriating some of it to buy influence in the Conservative Party pay nothing on what they have hidden.
8. This is nothing to do with Brexit
During the Brexit campaign it was often pointed out that leaving free access to our biggest market would add to costs, limit sustainable growth, and create labour shortages. Higher prices and a smaller economy were widely predicted by Remainers. Those who made the predictions were dismissed as peddling project fear.
In reality, hundreds of thousands of reliable employees left the UK which pushed up prices in the private sector, delivery vehicles wasted fuel and time waiting in queues at Dover which increased their costs and extra bureaucracy has reduced exports, increased costs and then prices.
Project reality is that Brexit slowed the British economy and increased inflation. Both of which are major causes of the shortfall in government revenues that Sunak and Hunt are telling us we must accept pain in order to repair. Those who promoted Brexit are expecting the nation to pay a heavy price for believing their false promises.
9. The date of the election was not on their minds
The Conservatives think that if they cut back hard enough now then there will be money to spare for tax cuts a couple of months before the next election. They will then announce that they are brilliant at managing the economy and sunny uplands await us if we would only just agree to vote for them.
It remains to be seen whether the public will ever again place its trust in a party that created such huge problems. This government has imposed massive austerity on others in a misguided attempt to fix its own mistakes; it then has the nerve to claim we can trust it to manage the economy responsibly.
10. The prime minister and the chancellor are a safe pair of hands
Sunak and Hunt aren’t responsible managers of the economy reluctantly undertaking a painful but necessary exercise. They are members of the very same political party that got us into this mess. They claim to be sensible but in truth they are just somewhat less extreme than those they replaced only a few weeks ago. That is hardly an adequate qualification to be trusted to manage the economy of our nation.