Grahame Smith; Reckless Budget that will harm workers and stifle business

WOW. No one can argue that the Budget wasn't historic. Cuts of 25 per cent across all government departments except for health and international aid go wildly further than anything ever attempted by the Chancellor's predecessors.

The war on welfare long sought by the Tory right has begun in earnest, with a lag behind genuine need now built into the system. The main tax rise is hugely regressive. Another historic element was the staggering chutzpah with which the Chancellor described his statement as progressive.

The Chancellor's main problem continues to be the complete lack of evidence to support his central argument that immediate cuts and a recklessly ambitious timescale for fiscal consolidation are necessary to appease increasingly aggressive markets. Market prices still stubbornly refuse to confirm the bleak view of the UK painted by the Chancellor. The market reaction to Darling's 2010 Budget and 2009 PBR was entirely benign.

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The implication that prior to his "unavoidably" harsh statement, the UK sat on the verge of a Greek style meltdown is plain silly. The UK's debt to GDP ratio, servicing costs and, most importantly, debt maturity have rendered it something of a safe haven for markets. Yes, fiscal consolidation is necessary – but a timescale of balancing the budget within the lifetime of this parliament will visit needless social and economic devastation on workers and communities across the land and in all probability make little if any inroads into the deficit.

What of the specific measures announced? Let's start with the cut in corporation tax to 24 per cent in four years. The Chancellor omitted to mention that the effective tax rate for the UK's largest companies is estimated to be 21 per cent to 22 per cent and that the last National Audit Office inquiry found that one-third of the UK's top 700 companies effectively paid no corporation tax. To pretend that this measure will generate higher private sector investment is simply misleading.

The bank levy? Charged against bank assets it risks exacerbating ongoing lending problems and, as numerous commentators have pointed out, risks institutionalising the moral hazard that contributed so heavily to the recent crisis. Far better would have been a tax on speculative transactions.

There is no vision for growth beyond the firmly ideological stance that "rolling back the state" will unleash a wave of entrepreneurial activity. To listen to the Chancellor you could be forgiven for believing that the UK is an over-regulated, over-taxed hellhole for business. Of course, the international comparative evidence confirming that the UK is a good place to do business tells a very different story.

If private sector growth was inadequate during a decade of economic stability, ongoing deregulation and high profitability, can we really expect the private sector to pick up the slack during a period of massive global uncertainty, very weak demand at home and abroad and ongoing problems with access to finance?

There were some glimmers of hope. Perhaps the modest measures on personal allowances signal a fairer taxation system to come and the increase in capital gains tax is long overdue. Overlooked but welcome is the proposed consultation on a longstanding STUC policy objective: a general anti-tax avoidance rule.

Nevertheless, in totality, the Budget is a disaster for the workers the STUC represents across public, private and voluntary sectors.

• Grahame Smith is general secretary of the STUC.