Will we pay the price for the Budget’s lack of ambition?

This week’s budget lacks ambition and, despite some good measures, falls short of what was needed at this crucial time, says Mike Clancy, Prospect general secretary.

Most Budgets are billed as seismic political moments, however the plan delivered by Chancellor on Wednesday has a better claim than most to be regarded as an event that will set the political weather.

The Chancellor offered a policy package aimed at short-term spending to help the economy recover, followed by tax rises and spending cuts in the medium term. While there were some measures included in the budget that Prospect welcomes and had called for, such as the extension of the furlough scheme, overall the Budget fell short of what was needed.

First, making securing the economic recovery the top priority was right. To this end the Chancellor was right to extend furlough until September. He also provided a £400m package for the heritage and creative sectors to help bridge the gap until reopening is possible. But his approach was patchy, leaving holes that threaten the future of entire sectors.

For example, there was nothing in the Budget for aviation, despite the scale of the damage done to the sector by the virus, and the likelihood of ongoing government-imposed restrictions continuing to hamper recovery for many months. And buried in the detail of the Budget prospect uncovered that the self-employed were once again treated as second-class citizens, with their support effectively ending two months before support for employees, and gaping holes continuing to exclude hundreds of thousands from support.

Prospect will be stepping up its lobbying for both aviation and the self-employed in the coming weeks and months.

In the medium term the Chancellor was on more familiar ground, sticking to the message that public spending will be restrained in coming years. In fact, this Budget included a cut of £4bn to public spending, taking total cuts to £16bn by 2025, a move that the Institute for Fiscal Studies have said “will feel like austerity”.

Despite our campaigning, the government refused to budge on the public sector pay freeze, and rising inflation means the average civil servant will experience a £700 real-terms cut this year. There was no recognition of the benefits of investing in staff and the wider public sector, and a noticeable absence of the rhetoric of rewarding key workers that was so prominent among ministers just a few months ago.

Most frustratingly, the government completely failed to reflect on what we have learned in the pandemic about the impact that cuts have had on our ability to respond to a crisis. There can be no better example of this than the Health and Safety Executive, which has been hugely overstretched during the crisis as a result of the 50% cuts it has suffered since 2010.

With health and safety now key to reopening the economy, and inspectors in short supply, we were hoping that the Chancellor might invest in more HSE capacity. It was telling that while the Chancellor found £100m on hiring new tax inspectors to hunt for fraudulent furlough claim, he could not identify extra funding to recruit health and safety inspectors.

Finally, Rishi Sunak billed this Budget as building the foundations for our future economic success as a ‘science superpower’. This is a laudable ambition, but there was little substance behind it beyond the re-announcement of a new fast-track visa scheme for scientists.

We heard very little by way of a plan to raise research and development spending across the public and private sectors, nothing about valuing STEM skills in the public sector, and nothing about how the government would invest in new green infrastructure such as the nuclear power stations that we need in order to hit our Net Zero targets.

The Chancellor did at least manage to avoid some of the more obvious pitfalls. He listened to our call to refrain from raising National Insurance Contributions for the self-employed (for now at least), he did the right thing by extending furlough, and there were some small measures such as a new apprenticeship model for the creative industries which are welcome. But overall, it is hard to escape the feeling that we may be paying the price for the lack of ambition shown in this Budget for many years to come.