Osborne has not solved the cost of living crisis

Britain needs convincing ideas about how to ensure that real wages rise.

Stand back from the detail of today's Budget and what we observe is Britain's political class trying – and failing – to respond to the crisis in living standards facing Britain.

They are doing this at the same time as they, of course, seek to outmanoeuvre their political opponents and build support among their friends. One manifestation of this will be the growing tussle over tax cuts, which will increasingly dominate party politics in the years ahead (see tomorrow's NS).

Until there are convincing ideas that resonate with the public on how to ensure that real wages will rise, party leaders will remain in the familiar territory of fighting over tax and benefit changes.

The political need to support living standards and kick-start growth, which greatly outstrips the practical ideas on how these goals can be achieved, resulted in a number of contradictions that ran through today's Budget.

Changes to personal tax – billed as reducing the burden on low-to-middle-income Britain – actually result in by far the biggest gains going to those in the top half of the income distribution. A statement of vaunting ambition about the need to reform and simplify the whole of our tax and National Insurance system immediately gets submerged in a sea of tax wheezes. And the heralding of a new model of growth is fleshed out with a set of micro-measures that will be wearily familiar to anyone who has spent time in Whitehall over the past decade.

There are, naturally, things to welcome. Steady growth in apprenticeships, extra support for science, a helping hand for first-time housebuyers and taxing private jets are all to the good. The extension of mortgage interest support will prove important in a year that is going to see more and more households pushed closer to repossession due to the impending hike in interest rates. And there may be some begrudging acknowledgement from an angry public for the cut in fuel duty.

But the real measure of today's political class will be whether they can develop a compelling account of what really underpins shared growth, in which the gains are more fairly spread across the working population. Without this, all of today's tax tweaks and the associated reform rhetoric will be neither here nor there.

Gavin Kelly is the chief executive of the Resolution Foundation.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.