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The Budget Was An Opportunity To Show A Post-Brexit Vision, But It Failed To Deliver

12/03/2017 08:48
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With the Prime Minister expected to trigger Article 50 next week, there was a lot riding on last week's budget - as the Chancellor himself acknowledged in the run-up. But the budget itself contained no mention of Brexit. No mention of industrial strategy. No game-changing vision for how our country can prosper outside of the EU.

The Government made much of the fact that our economy has performed better than was anticipated last Autumn. But the reality is that the outlook for our economy remains weaker than it was a year ago. The OBR may have been premature in factoring in a Brexit shock, but it remains the case that we are entering a period of deep economic uncertainty.

The sale of Vauxhall underlined the urgent need for an industrial strategy to enable us to attract and retain manufacturers after we leave the EU. Vauxhall imports 75% of its components and exports 80% of its finished products to the EU, which means that, like many manufacturers, the firm has been hit by the double whammy of a weak pound and uncertain market access. Without efforts to re-shore manufacturing supply chains and secure single market access for key exporting industries, there is a real danger that many of our finest manufacturers will up and leave.

The budget was an opportunity to deliver decisive action to bolster our economy for what lies ahead. But in every area that will be vital to securing our economic resilience in the coming months and years, this budget failed to deliver.

Take the regions. The EU referendum result has fed a growing awareness that parts of Britain have been excluded from economic growth for too long, and that we desperately need to rebalance our economy away from London and the South East. Yet the budget contained a mere £30m for the so called Midlands Engine Strategy and Northern Powerhouse. And this is against the backdrop of continued decimation of local authorities under this Government.

From infrastructure to R&D, Britain languishes well below OECD averages for the amount of GDP reinvested in our economy. Without a big push in both, Britain will struggle to remain competitive outside Europe. But on this urgent issue, virtually all the commitments listed by Hammond, from fibre broadband to local road networks, had already been announced. For all the talk of breaking with Osbornomics and finally providing the country with the investment we need, it looks increasingly likely that the £23bn announced last Autumn is all we're going to get.

A healthy economy needs healthy businesses, but the small amount of additional support offered by the Chancellor will not solve the ticking time bomb of business rates, and fundamental reform has been kicked into the long grass. By not tackling business rates and raising taxes on the self-employed at the same time as giving £70bn worth of tax giveaways to those at the top, the Government is robbing David to pay Goliath.

With one-in-four jobs going unfilled because of a lack of skilled labour, the Government are right to point to skills as a priority area. But further education has experienced a prolonged period of funding cuts at the hands of this Government, including a 54% funding cut for non-apprenticeship adult skills training since 2010. The skills announcements in the budget will barely make up for ground lost due to this Government's cuts, let alone close the skills gap or meet the new skills challenges presented by automation and Brexit.

And, of course, many businesses are losing the skilled workers they already employ because of the Government's refusal to support Labour's amendment supporting the rights of EU citizens residing in Britain.

From the pitifully small amounts made available to our crisis-ridden NHS and social care sector, to the woefully unambitious plan for 5G - a series of re-announcements that will perpetuate the patchy and prolonged roll-out of our digital infrastructure to date - the story is the same. This was a business-as-usual budget for a country going through the most unusual of times.

Last June, the country chose to leave the EU. Now we face another choice - about what kind of economy - and society - we want to live in. Do we want Britain to become an economic dystopia where businesses face an uphill struggle in terms of gaining the tools and support they need to succeed and grow? A Britain where a shrinking elite grows increasingly wealthy while everyone else struggles on insecure poverty wages? Or do we want to rebalance our economy, rebuild our public services, and relearn the basic economic principle that Government is there to oversee the creation of a fertile environment in which business and the public sector can succeed? To rebuild our economy on the social principles of community, collectivism, and a fundamental sense of local and national pride that have been ground down by years of free-market fundamentalism?

Sadly, we already know that Hammond is walking us towards economic dystopia. Even if the Prime Minister and Greg Clark's new-found enthusiasm for industrial strategy is genuine, it's long been clear that most on the Conservative benches remain deeply suspicious of the idea. Delivering the Government's promised industrial strategy would require a Clark offensive, but the worrying indication given by this budget is that Hammond is gaining the upper hand. Factor in last week's sacking of Michael Hesletine - one of the Government's few true believers in industrial strategy - and the possibility of the Tories delivering anything approximating a positive vision of post-Brexit Britain looks increasingly remote.

As they crash Britain out of the EU, cutting us off completely from the investment, skills, and markets on which our economy relies, the Tories will no doubt claim that they are implementing the will of the people. But leave voters weren't voting for a poorer, more unequal society or less investment in public services. Indeed, polling carried out for the GMB union shows that almost two-thirds of the public think that cuts to public services have gone too far, and the false promise that Brexit would mean more money for the NHS featured prominently in the leave campaign.

By ignoring these facts and staying on the path of cuts, deregulation, and tax breaks for the very richest, this Government is purposefully and knowingly pursuing a painful path. This is a betrayal of both the 48% and the 52%.

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