Britain's Budget 2021

Britain’s Budget 2021

The following points are taken from the Institute of Fiscal Studies analysis of the Budget presented to Parliament on 3 March 2021. They reflect my own perspective of the Budget and are not intended as as summary of either the Budget or the IFS analysis. They are my comments. If you wish to see the details of the IFS Analysis then go to https://www.ifs.org.uk/budget-2021

The Government is planning to spend £14 to £17 billion less on public services each year after 2021 than he had planned pre-Covid. The IFS analysis questions the credibility of this given the mounting pressures on the NHS, schools, courts and other services. This cut follows years in which the Government has failed to meet the needs of these services and the growing problems within them of which we are all too aware .

The government has extended the temporary £20 per week boost to universal credit and working tax credit by six months, benefiting around 6.5 million families. It delays until October the point at which benefit receipts will fall from month to the next, by more than 20% for some. This means that incomes of some of the poorest families will fall by over £80 between one month and the next. Those still claiming the out-of-work benefits that preceded Universal Credit - most of whom were already out of work before the crisis struck - did not benefit from the temporary boost to benefits last March and the Chancellor did not change that today. Most of the 2.5 million claimants of these benefits have health conditions which limit their ability to work. In six months’ time the end of the boost to Universal credit will mean overnight reductions in incomes. As the government has found already, this can create political pressure; but it can also create real difficulties for families in adjusting to the change.

Freezing the income tax personal allowance and higher-rate threshold is a straightforward, broad-based and progressive way to raise what, at least in normal times, we would think of as a significant chunk of revenue. It also means that more people will pay higher-rate income tax. The situation existing before this decision, and therefore still existing, remains that the lower ones income, the relatively more that one pays in tax. No mention was made of the fact that Council Tax ( an extremely regressive form of local taxation) is set to rise. Nor has consideration been given to the increasing cost of living which people are experiencing whenever they go shopping.

As the news of the budget is being absorbed, we also hear of concerns about the problem of obesity. What we are not hearing is any suggestion that the access, by the less well off sections of the population, to quality food, as opposed to the affordable, less nutritious food, is to be improved in any way, either by reducing costs or by increasing benefits and wage rates.

Corporation tax will reverse course, rising from 19% to 25% in 2023. In each of the next 2 years, around £13bn will be spent on a massive subsidy to investment. The increase is delayed for two years whilst other changes will take place within a year. There is a great deal of speculation that these proposals are designed with an eye on an early election in September 2023

The furlough scheme is to be extended in full until June, and then phasing it out through the summer. The self-employed income support scheme (SEISS) has also been extended for a fifth payment covering May to September. The “newly self-employed” who first started self-employment in 2019-20 will also be included in the scheme. Although around 600,000 people could be in this group, many - perhaps a majority of them - will still be ineligible for SEISS as they will have had less than 50% of their income from self employment in 2019-20. The Chancellor gave a figure of 700 000 people who have lost their jobs due to the Covid epidemic. This figure will rise considerably when the furlough scheme comes to an end, and maybe before as employers resist paying more to workers on furlough as the Government phase out the scheme.

The Budget 2021 strengthens the case for workers to step up their resistance to the Government and the employers whom the Government continue to support. People Before Profit have been proved right in their actions on Budget Day to organise protests. It is important that we broaden the base of People Before Profit . The coming months will put great pressure on individuals and families as they seek to cope with the conditions arising out of Covid with job losses, higher living costs and the possible loss of homes. These are not situations which people can resist in their own. Nor can we rely upon politicians, locally or nationally. We must unite and fight. The strength of workers lies in their solidarity in action. Workers of the World Unite. We have nothing to lose but our chains.

Scribart 4. 03.21