Local MP responds to the Budget

An “Awful” Budget, by Patricia Gibson MP for Ayrshire and Arran

When UK Chancellor of the Exchequer Rishi Sunak MP delivered his Budget speech last week, he said his Budget would deliver a stronger UK “fit for a new age of optimism.”

However, his Budget is a source of optimism for few people in Scotland and across the UK.

The International Monetary Fund stated that the UK is forecast to suffer the worst economic damage from COVID-19 of any G20 country, while ordinary citizens are left short-changed.

Millions face a squeeze on living standards over the coming year. A middle-income earner will see their take home pay fall by about 1%. The tax burden is now at its greatest since the 1950s, with National Insurance contributions being raised and personal income tax allowances frozen, cutting people’s disposable incomes,while inflation is set to rise above 4% by April.

While the Chancellor cut taxes on bank profits, he failed to introduce measures to help households already struggling with rising prices on food and fuel. Paul Johnson, Director, Institute of Fiscal Studies, said:

“This is actually awful, yet more years of real incomes barely growing, high inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half decade.”

This budget was a failure in terms of delivering equality, fairness and improving the lives of people in Scotland. Anti-poverty charity Z2K said:

“There’s absolutely nothing in this budget for the 3 million plus whose disability, illness or caring responsibilities mean they can’t work and will be hit hard this winter.”

With nearly one in five pensioners living in poverty, the highest rate since 2008, more than two million older people are struggling financially. Yet the Tories think now is a good time to end the pensions triple lock, meaning pensioners will be £520 worse off next year.

By refusing to use the Budget to reinstate the £20 a week Universal Credit lifeline he only recently cut, the Chancellor has failed to protect recipients, two thirds of whom are in work, from falling living standards.

Equally, while the national living wage increase is important, it is not all that it seems. The new £9.50 rate does not apply to employees under 23s, one of the groups worst affected by the pandemic, and workers on the national living wage in receipt of Universal Credit will lose over half of any wage rise through a sharp reduction in their benefits.

Hard-pressed Scottish businesses also wonder where the Chancellor’s optimism is coming from. With post-Brexit supply chain costs and disruption, labour shortages, price rises, and soaring energy bills, there will be difficult months ahead businesses and their employees.

The Chancellor announced what he described as an increased Scottish block grant. In reality, the Scottish Parliament receive less grant funding in each of the next five years than in this one, despite the continuing challenges presented by the pandemic and economic recovery.

The Chancellor has a difficult job. However, for the majority, he is clearly going about it the wrong way. A hard few months lie ahead.