What would a Breakthrough Party Spring budget look like?

 15th March 2023

Today marked the Spring budget, a key date in the political calendar as both the Conservatives and Labour tried to show the British people which party is the safest pair of hands with the economy.

After the calamitous Autumn mini-budget, which wiped £30 billion from the economy and ended with Liz Truss lasting less time in office than a lettuce, we expected less chaos today and that’s what we got.

Chancellor Jeremy Hunt’s announcements tinkered around the edges of a broken economic system that his party has presided over for the best part of four decades. 

Despite this dismal reality, there are some small concessions, some crumbs of comfort. A three-month freeze on energy bills will come into force between April and June, after which market prices will likely begin to fall anyway.

And on childcare, the Tories have pledged a £4 billion package which will extend free childcare provision to one and two year olds. How this didn’t exist already is simply beyond me.

But these moves will barely scratch the surface of the more systemic issues that the poorest people in our society face. A combination of low pay and massive mortgage, rent, food and energy price rises has meant that food bank usage continues to increase, 3.9 million children are living in poverty and 6.7 million households struggle to heat their homes. 

While the government tries to say this is only because of the war in Ukraine and the COVID-19 pandemic, it’s actually largely the result of government policy.

Corporate profiteering ran rampant during the pandemic and continues in its aftermath.

BP, Shell and Centrica, who own British Gas, boasted historic record profits, FTSE 350 company profits have risen by 89%, supermarket profits doubled and agribusiness profits are up 255% on pre-pandemic levels.

Parasitic landlords are hiking up private rents, leaving tenants in economic turmoil. In London, the 15.8% annual rate of growth was ‘the highest ever annual rate of any region’, with rents outside of London also hitting record highs.

In Manchester, rents went up by 23.4% in a year, while Liverpool saw a 19.4% rise. But it isn’t just big cities which are seeing these massive rises. Chatham in Kent saw an increase of 21.4%, while three seaside towns, Weymouth in Dorset, Torquay in Devon and Margate in Kent, saw increases of 19.1%, 18% and 16.9% respectively.

In the social housing sector, tenants have also seen their rents rise by 4.1%.

What about the billionaires? The number of UK billionaires increased from 147 in 2020 to 177 in 2022, with their collective wealth increasing to £653 billion.

So when public sector workers ask for a pay rise which matches inflation, you’d think that would be a pretty fair demand, right? Especially given the stagnation in wages over the last 15 years. But no: Tory politicians and right-wing rags have proclaimed that giving workers an inflation-matching pay rise would cause a ‘wage-price spiral’. 

That claim turns out, like most things the Tories say, to be a bare-faced lie. Pay rises for public sector workers barely impact inflation. But do you know what does? Surprise surprise, it’s corporate profits.

Don’t worry though, the government does have the money to spend an extra £5 billion on defence over next two years, and the Defence Secretary says we should double defence spending by 2030. See how this works?

Anyway, enough of the Conservatives. Where is Labour on all this? They have pledged to freeze energy bills, which are already at a record high, and support a £10 minimum wage, lower than the increase which is coming in on April 1st of £10.42. They oppose a wealth tax, have committed to partnering with private businesses to deliver services, and are pushing for high growth to lift people out of poverty.

And despite saying they’re against austerity, Keir Starmer and Rachel Reeves repeatedly talk about ‘fiscal discipline’ and not breaking their ‘fiscal rules’, which in practice means no nationalisation of key industries and very little investment in infrastructure and public services.

This rehash of trickle down economics and embrace of austerity politics will only further benefit the rich. No wonder so many millionaire business leaders are now lending their money and support to Labour. After all, they know their money will be safe with the red Tories as much as with the blue ones.

There are a couple of policies which, if part of a bigger plan, could be welcome. A windfall tax on energy companies and abolishing non-dom status are much needed, but on their own won’t be anywhere near enough.

Labour talks a lot about ‘sticking plaster politics’, but their solutions are simply that. Nothing more, nothing less.

Right now, during this time of crisis, we need a budget which redistributes wealth, ownership and power from the super-rich to ordinary people.

That starts with taxing the rich. 

In 2019, Richard Murphy, from Tax Research UK found that there was a £90 billion a year tax gap, which included tax dodging and avoidance from the super rich and large corporations.

It’s clear that we need to overhaul HMRC so it focuses on tackling tax evasion, tax avoidance and corporate fraud. This would generate tens of billions of pounds every year.

Research conducted by YouGov suggests that up to three quarters of British people are in favour of a wealth tax, in particular when the threshold for paying the tax is high.

78% of people supported the introduction of a wealth tax of 1% on wealth above £10m, 73% favoured a one off 2% on wealth over £5m and 53% supported a wealth tax ‘payable on all individual wealth above £500,000 and charged at 1% a year for five years’. 

A wealth tax could potentially repay up to £262 billion of government spending in the UK, according to the Wealth Tax Commission.

People also favour raising the rate of capital gains tax, a tax which is paid when selling assets such as property and investments, so that it is equal to the rate of tax paid on income from work.

And we need to implement a progressive tax system to reduce economic inequality, reducing tax for most people while ensuring the rich pay considerably more. This would put more money in people’s pockets.

Hundreds of billions of pounds can be taken out of circulation by taxing the super-rich. This amount of money can be created and spent by the government, ensuring inflation remains stable.

This approach would allow us to enable a fairer, happier and more equitable society, and deliver the policies the country sorely needs: public sector pay rises, Universal Basic Income, the nationalisation of energy, water and public transport, saving our NHS, building more council housing, and investing in a green transition.

For decades now, we have been told a lie by the political establishment that government finances work like a ‘household budget’ or a ‘credit card’ and that we need to ‘balance the books’.

If we want to change anything in our society we need to break free of this neoliberal consensus. 

Our government is making the political choice to make the vast majority of us poorer and the top 1% much, much richer. It’s time to rise up and demand so much better.

We need a real political alternative to the status quo, to build a future worth fighting for. Here are our policies that will do just that.