Rishi’s Budget Porkies
October 31, 2021
Let’s start this week with a quiz. Multiple choice – which of these is true?
The UK is “well on the way to recovery.”
The UK has “the fastest growth in the G7.”
We are in a “new age of optimism.”
“We can’t afford to borrow any more.”
Eon Productions have invited me to play a cameo role in the next James Bond film.
They’re all false, apart from that last one. Which is also false. But if Rishi Sunak is allowed to tell porkies in the Budget, I’m allowed to make a rhetorical point in my column.
“Our success will be measured not by the billions we spend, but by the outcomes we achieve, and the difference we make to people’s lives,” he said. Hard to disagree, but Mr. Sunak and I want to make different differences.
I want to end poverty, create jobs, and tackle the climate emergency. He wants to… do what exactly? Strip away the rhetoric, and it’s hard to see what his budget will achieve. On Thursday I was in a meeting with the other northern Labour Mayors. “He was auditioning to be Boris’s replacement,” said one, “that budget was aimed at Tory MPs, no one else.”
In September, our Combined Authority sent the Chancellor our Comprehensive Spending Review proposals. Specific, evidence-backed schemes. £639 million of projects attracting £3.5 billion of private investment, creating 14,500 jobs. Projects on low-carbon living, increased research and development, and strengthening the UK’s resilience to future pandemics.
We’re making rapid progress towards a Clean Energy Economy, with new jobs in net-zero industries. We’re closing the education gap and getting more people into jobs & training. We’re focusing on rapid renewal for our towns, high streets, communities and places. On transport and infrastructure that drives green growth.
My vision – and NTCA’s vision – for the region is a place where kids want to stay when they graduate. A place where people want to bring up families. A place with good jobs, with good prospects and good wages. But it needs investment.
On that, who do you think the UK Government borrows from? Government sold £450 billion in bonds through the pandemic. A bond is a legally-binding IOU. Government says, “you give me £1000 now, and I’ll give you it back in ten years time.” They pay interest in the meantime, known as the ‘coupon’. Interest rates are currently 0.1%. So for every £1000, Government pays £1 a year.
But here’s the clever part. The bonds were sold to the Bank of England, via something called Quantitative Easing. Which means the Bank of England pays the interest right back to the Treasury. If you think that’s exactly the same as creating money, you’re right. So in fact, borrowing to invest puts the UK Govt in debt to no one but itself.
So Mr. Sunak’s choice to cut Universal Credit by £20 a week and plunge 300,000 children into poverty was not economic, but ideological. All he’s done is make the future worse – every child who has a difficult start in life weakens our whole society.
He could have invested £639 million here, in the North of Tyne. He could have empowered us to create 14,500 jobs. Each job pays income tax and NICs. Payroll taxes alone would repay the money in just five years. Add in the VAT, corporation tax, and low-carbon growth, and Government would see its money at least doubled.
Why didn’t he? The answer is ideology. A fortnight ago, I was in the room and heard the Prime Minister say that Government has limited power to fix the climate crisis – it was up to the free market and consumer choice. He said elsewhere that the lorry driver crisis is the fault of lorry drivers and haulage firms. His Government outsourced test and trace to private companies with no experience, in a colossal waste of public money.
In short, this Government is led by people who don’t believe Government should fix things. And so it is, we go into COP26 with no credible plan to fix the climate emergency for our kids and grandkids. Just a cut in taxes to Air Passenger Duty, the most polluting form of transport there is.
Originally published in the Journal and Evening Chronicle 01 Nov 2021