The Resolution Foundation have reported that workers in the UK are £11,000 worse off a year after 15 years of “almost completely unprecedented” wage stagnation.
They said “Nobody who’s alive and working in the British economy today has ever seen anything like this. This is definitely not what normal looks like. This is what failure looks like…”
Far from being a global phenomenon (which is certainly what the Government would have us believe), the UK is also lagging behind comparable economies such as Germany. For example, in 2008, the gap was more than £500 a year; now, it is more like £4,000. In fact, the UK is the only country in the G7 where pay is lower today than it was in 2008. It is the only economy in the G7 that is smaller now than pre-pandemic and it has the lowest growth forecast for 2023 of any G7 nation.
So, any responsible government should have done two things at last week’s budget. Firstly, they should have insulated people from the cost of living crisis and tackled poverty pay in the process. Secondly, they should have invested in a comprehensive industrial strategy to reverse the decline in living standards. But neither happened.
On a day when so many of Britain’s key workers were forced to strike over poverty pay, they were offered nothing. Indeed, instead of setting out how his Government would tackle the issue of widespread in-work poverty, or how those 7.1 million people on NHS waiting lists – many of whom want to go back to work – could receive the treatment they needed, the Chancellor threatened more vigorous benefit sanctions.
For the families struggling to afford energy bills, they were offered crumbs. The announcement that energy bills will be kept at the same rate for just three months: well, that is still a real terms increase of 19%. There was no mention of making the windfall tax more robust to provide much needed support and no promise that bills will come down in line with falling wholesale prices – all the while big oil and gas giants are raking in billions of super profits.
On our collapsing public services, the Chancellor ignored them too. Unprotected departments face 10 per cent cuts to real day-to-day spending per capita by 2027-28.
And on industrial strategy, to be fair to the Chancellor he did utter the words “industrial strategy” but they were a passing reference and that’s where it ended, sadly.
There was no extension of support for energy bills for businesses, no support for manufacturing which is predicted to contract by 3.3% this year, no mention of the urgent support needed for our steel industry, and nothing for small and medium enterprises.
We heard about the “full expensing” scheme for larger businesses, which might have actually been meaningful if it sat alongside an actual industrial strategy, but in absence of one they are just another tax break for large companies.
And the vision for the future? Well, there was mention of AI, Quantum Computing and ARIA (the UK’s mini and underfunded version of the US Government’s celebrated innovation hot house, the ‘Defense Advanced Research Projects Agency’). But the rhetoric wasn’t matched by the funding required.
Indeed, only a few weeks ago Sir Paul Nurse reviewed the state of the nation’s Research Development and Innovation landscape. The review found that direct government spending on research, as a proportion of the UK’s Gross Domestic Product, is just 0.46%. This compares with an average for other OECD, or higher-income, countries of 0.6%. It puts the UK 27th in a list of 38 such nations, not the position we should be in to match our ambition to be a true global leader.
This budget should have been a game changer. It should have been bold, ambitious and dedicated to improving lives. It should have set out a clear industrial strategy investment plan. It should have increased the living wage to £15 an hour, and delivered a major improvement in benefits for the poorest, a pay deal for all public sector workers, and a plan to tackle in-work poverty.
It should have included a genuine tax on oil and gas companies and the introduction of a wealth tax on the assets and profits of the super-rich could easily have funded a massive injection into our public services. Indeed, that idea is not radical, it is hugely popular. According to a recent YouGov poll, 78% of voters support an annual wealth tax on those with assets worth over £10 million. To this end, Patriotic Millionaires and Tax Justice UK even provided a wealth tax plan to the Government prior to the budget that would have raised over £50bn a year for our public services.
Instead, we got a budget that entrenches poverty, that restricts our country’s potential, and off the back of that budget the Office for Budget Responsibility has projected that living standards are expected to fall by 6% over the next two fiscal years.
This is not just symbolic of this Government’s failure, it shows a fiscally and socially irresponsible Government for what they really are, and they need to go.
We need a general election now.