Philip Hammond's rushed Budget hits the wrong people and has the wrong priorities

The reality is that Philip Hammond is offering more of the same, says Seema Malhotra. 

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It is fair to say that this week's headlines have not gone the way the Chancellor planned: “Spite Van Man”, “Tories break tax vow”, “Phil Picks a Pocket or Two”, “Rob the Builder! White Van Man gets battered by Budget”, and that is just to name a few. Now rocked by the Tory tabloids and a likely rebellion in Parliament, the Prime Minister has hit the pause button on the Chancellor’s planned increase in national insurance for the self-employed. 


The lesson for the Philip Hammond is -- if you do things in a hurry you get them wrong. And the Chancellor did get it wrong. Not just because he was breaking the clearest of election promises but because his Budget reeked of unfairness. He targeted self-employed low and middle earners to plug a £2 billion gap in his own black hole – a hole created by the tax giveaways to those at the top. 


According to FSB statistics, there are around 8,000 small businesses in my constituency who could be affected by the change. A typical self-employed earner bringing up a family on about £25,000, could lose up to £20 a month. That’s money they won’t have for putting food on the table or paying for school trips and uniforms. 


The self-employed are the engine of the UK economy. I myself had two periods of self-employment before I became an MP and I know the challenges faced. You don’t have an employer to fund your pension, pay for training, cover you with another member of staff if you are off sick, or give statutory holiday pay. It can be harder to get a mortgage or rental agreement.


If the government are serious about equalising tax treatment and the rights that go with that, they should focus on how to work in partnership with the self-employed on how to balance and share the risk with those who are doing the right thing. This is an important area for reform, but not in this way.


The Budget showed that this is a No-Change Chancellor. His style may be different but Philip Hammond is persisting with the wrong choices of his predecessor that have left the economy with severe underlying weaknesses which threaten the long term prosperity of British families and businesses.


After seven years of Tory Government, our productivity lags behind Germany and the US by more than 30 per cent. The problem is well known, but it is shocking nonetheless. Last year to the gap widened to the worst since records began and it likely to get wider still. What did we get from the Chancellor to address the productivity challenge? Nothing that we can have any confidence in. 


And let’s be very clear, to worsening gap is not just due to Brexit. It is a reflection of the Government’s strategy and investment record: They regularly recycle infrastructure plans but fail to implement them. The Government must own up to their responsibility for their poor record. They now have no one else to blame.


If you want a good example of the Government’s failure on infrastructure look broadband.  The UK is 54th out of 80 countries surveyed for 4G coverage, with levels here lower than in Bulgaria, Albania and Romania. This is the fifth time the Government have announced this highly limited roll-out of fibre broadband. Once the roll-out is complete, only 7% of homes and businesses will have benefited.


Another unfair choice that the Chancellor could have changed are the cuts to corporation tax which are set to take out £15 billion from public finances in this Parliament alone. The irony is that not a single business, large or small, that I have talked to – and I talk to lots of them -- has put corporation tax cuts at the top of their wish list. What they say they need are better infrastructure; affordable housing so employee can live near where they work, investment in skills and reliable public transport.


Our education system is the most important investment for improving our future economic performance and resilience. What we see is a pattern of government neglect alongside a blind ideological pursuit selection which benefits a few at the expense of the vast majority of students. 


The National Audit Office calculates that £6.7bn is needed to bring existing school buildings in England and Wales to a satisfactory standard. Ministers are choosing to give billions of pounds to fund new free schools, while existing schools are crumbling into disrepair. 


In recent weeks and months, teachers have told me about growing parental poverty, and about kids coming to school hungry or without clean school uniforms. Parents are sometimes unable to afford school trips. Schools are having to cut teaching posts and non-teaching welfare and support staff, curriculum teaching time is being reduced and the school day is being shortened. As pupil numbers increase, teachers face increasing class sizes. Increasing numbers of children face mental health conditions but are unable to get the support they need. How can the Government be proud of that record, which is the reality of what our wonderful schools face—the worst they have known in a generation?


The Government should delay or abandon their corporation tax cuts and support schools, which work hard to ensure that the children of our country get the education they need. Indeed, at a minimum, they should delay the application of the apprenticeship levy to schools.


What was missing from the Budget was a proper vision of our future and a pathway to get there. We needed a proper plan for funding public services, an economic plan that suggests a clear sense of direction, an honest assessment of the risks of Brexit, and a sensible response to those risks. It was an unfair Budget, it made the wrong choices and is set to leave us poorer and less prosperous as a nation.

 

Seema Malhotra is Labour MP for Feltham and Heston.