Today’s budget is the last opportunity the Chancellor has to mend our broken economy before Brexit throws the country’s finances into deeper chaos. He is in the last-chance saloon to be honest with the public, writes Ian Murray MP.
By this time next year, if the Tories go ahead with taking us out of the EU, all the evidence points to slower economic growth and falling productivity – leaving the Government with less money to spend on public services.
So Philip Hammond must use this year’s budget to focus on genuinely ending austerity – ignoring Theresa May’s nonsense claims about it already coming to an end. But to do that he needs money and all the Brexit predictions show he will have much less money to spend.
However, with Government borrowing in September at its lowest level since 2007, he has some room to manoeuvre.
Schools, councils, hospitals and social care must be the priority, and they need in the order of £50 billion extra across the UK by 2023.
This would also generate more for Scotland through the Barnett Formula, and that is desperately needed because the SNP is simply passing on Tory austerity north of the Border in a conveyor belt of misery.
In some cases, it’s worse – last week’s Audit Scotland report revealed there was a real-terms cut to the NHS budget by the SNP last year (even worse than in Tory England), and there are warnings that future investment in the health service will continue to grow at a slower rate than in England.
One thing the Chancellor could do to really help end austerity is cancel a planned cut to corporation tax. That’s the tax on profits that companies make, gradually cut under the Tories from 28 per cent to an expected 17 per cent between 2010 and 2020. It will reduce Government revenues by at least £16.5bn-a-year. Even business leaders have said shelving the cuts would generate extra revenue which could ease the burden on our economy caused by Brexit.
As an aside, if Scotland was independent, it’s worth remembering the SNP wants lower corporation tax rates in a race to the bottom that would cause even deeper austerity. The Nationalists’ “growth” commission proposes the same corporation tax as England or two per cent lower. That would be, with the current plans, a level of just 15 per cent.
The Chancellor should also look at innovative ways to raise money, such as extending National Insurance contributions to those of state retirement age who are still working full time and earning above the thresholds.
With so many challenges facing our health and social care sector, the extra money could be ring-fenced for a social care fund to try and ease this crisis.
For Scotland, the resource block-grant paid to the Scottish Government is expected to be slightly higher in real terms in 2019/20 than it was in 2016/17.
I also hope the Chancellor will put incentives in place to keep older North Sea oil and gas extraction platforms active and review the overall tax regime for mature platforms to ensure the industry has a bright and long-term future.
The Chancellor must ensure, post Brexit, that Scotland’s critical finance sector is protected, the ever-successful whisky industry is supported, and new technology such as computer games, artificial intelligence and science get what those sectors say they need.
But, whatever Mr Hammond decides, it is clear that Brexit is already damaging our economy. In fact, it’s costing us £500m a week. Having ruled out remaining in the Single Market and Customs Union, the Prime Minister is now pursuing a policy that she knows will severely harm our economy. If we all thought austerity since 2010 was bad, we ain’t seen nothing yet if Theresa May’s Brexit proposals go through.
So the Chancellor’s hands are somewhat tied.
That’s why, with the costs and risks of Brexit becoming clearer all the time, it is only right that people get to have their say on the deal in the form of a People’s Vote on any Brexit deal.
Let’s stop this economic vandalism before it is too late. Ian Murray is the Labour MP for Edinburgh South