Budget 2016: A Corporate Welfare State in Ascendency

East of the M60‘s frank verdict on George Osborne’s 2016 Budget

  • Corporation Tax cut to 17%;
  • Boost for Academisation of English schools;
  • DevoManc police plans uncovered;
  • Jamie Oliver Sugar Tax given go-ahead.
A misprint, surely?
Surely some misprint? This is the nameplate of 319 362 Northern Powerhouse, a cast-off EMU from the Thameslink system. Image by Hugh Llewellyn, 2015. (Creative Commons License – Some Rights Reserved).

If by chance you happen to be an upper middle-class egotistical headteacher with a fledgling business, pour yourself a glass of fizzy Vimto. You did very well out of this year’s Budget. In fact, you may well be one of the lucky people, all 0.05% of you. As for the 99.95% of us, well, we have missed out.

Today’s Budget continues the Conservatives’ expansion of the Corporate Welfare State at the expense of our Social Security system. There was nothing to raise the spirits of the average Joe or Josephine. Nor was any measures to grow the British economy. Any incentives doled out by George Osborne demonstrated a lack of market research, for instance the launch of Help to Save.

The Chancellor of the Exchequer’s largest giveaways were aimed at small businesses, or the unaccountable people who could run English schools in 2020 (as per yesterday’s article). Cuts in Corporation and Capital Gains Taxes may provide incentives for entrepreneurs, as would a cut in business rates. The launch of a Sugar Tax was applauded by Government and Opposition Benches alike (not least Jamie Oliver, who was the largest exponent of this policy). This was also backed by the SNP, much to the ire of A.G. Barr and Son.

The Sugar Tax was probably the only thing they sugarcoat. The Office of Budget Responsibility’s reports stated that the economy has been scarred by the 2008 – 09 global downturn, pointing us towards more of the austerity/trickle-up voodoo economics. With the exception of continued work on HS3, there was little public sector spending announcement to benefit Britain as a whole. In fact, this year’s budget will see a £3.5 billion cut in public spending before the next General Election.

As is customary with each Budget and Autumn Statement, East of the M60 will read between the lines of this year’s Budget, so you don’t have to. That is because we are good like that.

*                      *                     *

Business

The cut in Corporation Tax to 17% by 2020 could attract more new businesses to the United Kingdom. At face value, this could be good for startups. On the other hand, this could be an instrument to woo overseas businesses – where Corporation Tax rates are higher than British rates – to our shores. Furthermore, this could be an incentive for businesses post-TTIP to grab the spoils of what was our public sector.

With Capital Gains Tax set to fall from 28% (Higher Rate) and 18% to 20% and 10% respectively, this (they may claim) could increase investment in plant facilities. The US rate is 33%. Could this be a signal which reads, “come friendly healthcare businesses, the NHS is yours for the taking” instead of its benign reasons?

What happened to paying the deficit? Isn’t a rise in tax receipts a good thing both for cutting the deficit and keeping our public services properly funded?

The cut in business rates on one hand is a boost to some of our struggling retailers. Shopkeepers could invest the savings into their business. On the other hand, a cut in business rates will also emaciate local authority receipts. By 2020, central government’s grant to local authorities will be scrapped. Recent changes to the funding formula have already affected Northern English municipalities the most, due to stagnant economies.

As stated previously (in our look at the 2015 Autumn Statement), the loss of the local government grant and retention of all business rate revenues will intensify the differences between richer and poorer districts. This was before any cuts in business rates were ever considered. What would have been a laudable policy in 2009 (with the previous local government funding formula) would be a dangerous one in 2019, especially without local government grant aid. (Don’t get us started on the repercussions of a post-Brexit Britain either).

Environment

Any environmental policies from this year’s budget would have fitted on a piece of toilet tissue from Home Bargains. There was absolutely nothing for wind farms and solar panels. Unsurprisingly (and ironically at the same time as the inquiry into Cuadrilla’s proposed fracking of Roseacre and Preston New Road), cuts in fossil fuel taxes.

The temporary abolition of Petroleum Revenue Tax to zero-rating has been made permanent. Its supplementary charge, halved to 10% from 20%. The reason, to boost investment in oil and gas exploration (see also ‘More Fracking Opportunities’).

Local Government

Similar devolution deals with egotistical figureheads at the helm (sorry, Elected Mayors), are being made for the West of England, East Anglia, and Greater Lincolnshire. As with the DevoManc proposals, more of the same devolution of power (or spending cuts) will be offered.

Elaborating on the Greater Manchester and Liverpool City Region proposals are plans to devolve criminal justice powers in the former conurbation. This could see localised rehabilitation programme provision and a replacement for Strangeways prison. Details of this proposal are sketchy (we don’t even know where Strangeways’ replacement may be).

Movement

Throughout Greater Manchester, plans for High Speed 3 [between Manchester and Leeds] have been announced. This aims to cut journey times from 50 to 30 minutes. An extra £161 million has been pledged for the transformation of the M62 motorway (which is reality is a rehash of the Smart Motorway project).

Missing, as always it seems, are any measures to improve the UK’s bus network. Though more than half the UK’s bus patronage lies in Greater London, buses are the second most-used form of wheeled transport after the private car. As part of Greater Manchester’s devolution agreement, there is reference to regulating or franchising the city region’s buses. Outside the Metropolitan areas, seemingly nothing of the sort.

People

3.4 million self-employed people could see a cut in National Insurance contributions with the eventual abolition of Class 2 contributions. Income Tax personal allowances could be raised to £12,500. Though this may be seen as a generous tax cut, the flip side means we shall be paying by other means. Such as more trips to the garage thanks to potholed roads. Or Health Insurance, if the NHS ceases to be free at the point of delivery. Or taxi fares, because of continued cuts to local bus routes.

Dressed up as a benign proposal though badly researched is another one of HM Government’s Help To range of products. Alongside Help To Buy and Help To Work, we now have Help To Save, a savings scheme designed for low-income families. Sounds good? Not until you delve a bit deeper.

Help To Save will be designed for Hardworking People® on Universal Credit. Firstly, how do you save the required modest amount on a measly UC payment? Secondly, do you lose access to your funds if you cease claiming Universal Credit, or in receipt of a DWP sanction? Thirdly, why couldn’t Hardworking People® who aren’t claiming UC be allowed to create a little nest egg through Help To Save along with claimants? Furthermore, what is wrong with National Savings and Investments’ packages? Or Premium Bonds (an invention of Harold MacMillan’s Conservative government no less)?

In a similar vein is The Lifetime ISA. From the 06 April 2017, savers under 40 years of age, could save up to £4,000 p.a and receive a 25% bonus from the Government on each pound they credit.

Though the savings schemes may have good intentions, one should wonder why a government (that is trying to pay down the deficit) is acting like a Building Society. Surely this leaves less in the public purse for keeping our libraries open? Are the cuts to ESA payments funding these flights of fancy?

Housing

No amount of Help To Save nor Lifetime ISA savings could guarantee immediate access to the property ladder. Consistent with previous Osborne budgets, home ownership and the use of spare farmland is flavour of the month. In Tameside’s case, the latter is consistent with the latest Greater Manchester Spatial Framework map. It advocates building new houses on flood plains like Jet Amber Fields in Denton, or infill sites like the grass verge on High Street/Pine Street junction in Stalybridge.

Health

As well as having two world class football teams, Greater Manchester has a world class reputation for tooth decay statistics. World class in the sense that the city region has often finished in the bottom half of the healthy teeth league. Hoping to reverse this position is the possibility of a Sugar Tax.

The Sugar Tax, which has stolen the front page headlines for today’s Budget, would comprise of a soft drinks levy. Therefore, your occasional can of fizzy Vimto could be more expensive than at present. It is also bad news if Jack Daniels and Coke is a favoured tipple. Its aim, as well as fighting tooth decay, is to tackle childhood obesity and fund the Primary School Sports Premium.

As a rule of thumb, fizzy drinks or cordials are seen as sugar-laden soft drinks in many eyes. Will the 23 teaspoons of sugar calorie-laden Venti Mocha with syrups be targeted? How long will it be before Greggs’ Rainbow Muffins cost another 20p? Could the EU cry foul over a Sugar Tax?

Education and Privatisation

As detailed in our previous article, the Academisation of English schools will be subject to a draft bill (being read tomorrow in the House of Commons). In this year’s budget, George Osborne rubber-stamped plans to abolish LEA control and extend teaching hours beyond 3.30pm. Changes to funding will be considered, with a similar model to that of business rates with local authorities.

Northern English schools – obviously including Greater Manchester’s of course – could be subject to some form of special measures. Under the Northern Powerhouse Schools Strategy®, £20m a year has been pledged, following a report by Sir Nick Weller.

The road to commercialised education may continue to haunt postgraduates, years after finishing university. There are plans afoot to sell off the Student Loan Book in the new financial year, starting with pre-2012 students.

Tobacco and Alcohol

Though duty rates on beer, spirits and ciders will be frozen, there will be a rise in duty on most wines and higher strength sparkling cider. This will come into effect on the 21 March 2016.

All tobacco has risen by 2% above the Retail Price Index rate of inflation. Woe betide smokers on the ready-rub; hand-rolled tobacco has gone up by 5% above the Retail Price Index rate. Smokers of e-cigs, which use liquid rather than lighted tobacco, are let off the hook.

The 2016 Budget from a Tameside perspective

This year’s budget would, at best, do little to improve the situation of Tameside people and the borough’s economy. Most of the change will come via the DevoManc proposals, which includes ongoing projects from the Vision Tameside scheme and electrification works to the borough’s railways. These being from the previous parliament.

Though the cuts to business rates, Corporation and Capital Gains taxes may be a good incentive to the borough’s small businesses, this move could take a hit on the council coffers. Firstly, the abolition of the Local Government Grant is likely to have an affect on funding the nine towns’ public services. The retention of all business rates at present receipts may record a slight shortfall. Cutting business rates may increase that, forcing Tameside MBC and other councils to increase parking charges and waste collection services.

The former could depress business rate receipts. Councils will forced into making a profit, which could lead to mergers. Its relationship with its citizens may be compromised in favour of wooing businesses. Without its schools and any other public services, local authorities could become business development agencies.

In both the Office for Budget Responsibility’s report and the words of Jeremy Corbyn, growth has slowed thanks to depressed wages. Tameside has had decades of depressed wage rates, some of which exacerbated by zero hours contracts and cuts in public sector employment. Low wages equal lower tax revenues. Few of the borough’s low-income employees and job seekers may struggle to save up to £50 a month. Without decent wages, the vitality of Tameside’s nine towns is affected. Limited means through business rate revenues will create a gulf between Altrincham and Ashton-under-Lyne. Let alone the gulf between Solihull and Stalybridge.

The academisation of England’s schools will have a perverse effect on Tameside’s schools. Only five of the borough’s schools have Academy status. The former Stamford High and Hartshead High schools have merged into the New Charter Academy. Though a separate entity in name, Copley High School as Copley Academy, is also ran by the same sponsors opposite IKEA. Could we, seriously, see one of the borough’s main academy sponsors run all the schools? Tameside’s best performing secondary school in the recent OFSTED ratings is under LEA control: that of Mossley Hollins High School with its swish buildings looking out to Top Mossley.

Stagnation will be the order of the day, growth will be non-existent or trifling. What’s about to happen to our public sector is considerably worse.

East of the M60 Comment: One Small Step to Privatasia

Never mind the Sugar Tax, never mind the lack of substantial public works projects or life-enhancing schemes. Try to imagine what your local authority will be like in 2020. With changes to the management of English schools and the loss of the Local Government Support Grant, local authorities may become more business-like. Its remoteness from its citizens will become greater, as almost every public service may be farmed out to private contractors. The emphasis will switch to attracting businesses who could help to pay the business rates.

As for the streets, could we be forced to sweep and grit our own street? Chaos on a pre-1832 Reform Act level could return. The Tories’ 2020 vision is probably a free-for-all where capitalists and cronies could yomp along the remains of closed leisure centres. A dystopia of trashed coffee shops which, in living memory, was a public library.

This could be why they are pushing the Lifetime ISAs and Help To Save schemes. Instead of the rainy days and life events, these ‘rainy days’ could be used to fund the taxi fares to work; to pay doctors’ bills; to tide over a three-month DWP sanction. To pay for that one way ticket to Iceland, and leave the once-pristine four bedroom cottage behind (which has fallen to 90% of its original value thanks to fracking).

Unless we put our foot down, Mad Max is going to be a fairy story. Especially in Northern England where local government have started cutting the bones. I for one does not fancy a Tory Jerusalem in England’s Pock-Marked Lifeless Hills. Changes to the running of our schools and the administration of our local government finances are mere stepping stones towards our pleasant land becoming a neoliberal hellhole. Funded by £4.4 billion worth of disability benefit cuts.

No amount of new trains or black market cans of Vimto could change this view.

S.V., 16 March 2016.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Up ↑

%d bloggers like this: