Budget 2017: Hammond gets a second attempt at Budget 2017, but will he act?

Photograph: NATO Summit Wales 2014 by the Foreign and Commonwealth Office (License) (Cropped)

On Wednesday, Chancellor Philip Hammond will present his second Budget of 2017. It has been trailed with promises of doing more. But the big question is whether any of the measures will be enough.

Between the growth of wages being anaemic, price rises eating away at households and the private sector not stimulating any positive movement by holding back from investment, it's being argued that Hammond has cornered himself against his own fiscal rules.

The government has made big promises - or at least big announcements, with little that is tangible behind them. The governing reality has frequently been the denial of the existence of a crisis, making excuses or tinkering around the edges.

Consider the big pledges Hammond has made on housing. The Chancellor has refused much needed additional funding, so tinkering measures - such as adjusting stamp duty or loosening restrictions on councils borrowing to build homes - are expected to carry the burden of getting the government to 300,000 new homes a year.

That will mean achieving the completion of around 100,000 extra homes, each year, to reach the target. Which makes it relevant to note that this is, of course, the same pledge that hasn't been met over the last seven years - at times struggling to reach 100,000 at all, never mind an extra 100,000.

These kind of promises, made over and again only to be missed, serve to undermine future pledges to do more. So too, do gaffes like Philip Hammond's Mitt Romney -esque announcement on Sunday that there are no unemployed people (there are).

It hurts the government too, that funding is denied where it is asked for by services, but is magically pulled out of thin air to solve the latest Conservative political crisis - a billion to secure a DUP-Con deal, for example.

The denials, excuses and tinkering extend to other areas. The NHS is expected to be denied the £4 billion in extra funding it's chief has demanded and the existence of a healthcare crisis has been refused.

These attitudes, these tinkering measures, point towards Hammond's approach to the last Budget, which responded to big challenges with a 'steady as she goes' attitude, spending in the millions not the billions.

There are questions still ahead, however, and people who remain vulnerable. What tinkering will help those women, particularly young women, suffering from period poverty? How will tinkering, with cautious suggestions of reducing waiting times, deal with welfare debt traps?

Universal Credit, in the midst of a disastrous rollout, is exacerbating problems - like mounting rental arrears and the simple fact of more than a month without a means on which to live - that are entangled with all areas of life for the most vulnerable.

While the government may be more focused on avoiding any further embarrassments, of which it has had a string lately, by avoiding any backtracks and climbdowns - such as the major reversal on self-employed National Insurance changes back in the spring.

But now is not the time for 'little c' conservatism. Change will perhaps undermine the Conservative position, ever talking of the chaos Labour will unleash by deviating from their fiscal restrictions.

But the Tories failure to match their rhetoric with reality is a party affair. The wellbeing of the people has to come before the wellbeing of the party. It is time to act.

Return of Charles Kennedy's proposal of a penny on tax for education signals worries that more needs to be done on inequality

The late Charles Kennedy, whose practical policies have returned to the table for consideration in Scotland. Photograph: Charles Kennedy speaking at the Friday Rally at the Scottish Liberal Democrats Spring Conference, 2015 from James Gourley/Liberal Democrats (License) (Cropped)

One of the more worrying statistics of the moment is that generational inequality is rising, as the doors that allow social mobility are closing (Inman, 2016). One particularly telling factor is that home ownership has become a distant and fading dream for young people, as modest incomes are no longer enough to get started (Elliott & Osborne, 2016).

So far, George Osborne's efforts have been aimed at finding ways around tackling the key problems: making larger and cheaper loans available, turning rents into deposits and selling off social housing cheaply to tenants. All of these moves are attempts to stimulate the private sector and take care of the middle class - largely at the expense of those worse off. What they don't do is fix the core problems, like a lack of supply that drives rents and prices through the roof.

But Osborne's austere laissez faire isn't going to close the inequality gap. For schools, for example, the place where inequalities first begin to take their substantial toll - whose teachers and administrators are buried under mounting stress that is driving employees away (Harris, 2016) - a place to start would seem to be a simple, practical acceptance: more money is needed. Yet with austerity ascendant, that will be a difficult thing for this government to accept.

Under the present conditions, its really no surprise that the late Charles Kennedy's penny on tax policy has seen a resurgence. Kennedy proposed, as Ashdown did before him, to add one penny in the pound to income tax - an increase of 1% in search of £3bn in additional funds - to support extra spending on education (BBC, 2001; Marr, 2001; Taylor, 2016).

The same policy has now turned up in Scotland. Will Rennie, leader of the Scottish Liberal Democrats, announced the return of this policy to the Lib Dem's platform at the end of January (Carrell, 2016) - only to be upstaged a week later by the Scottish Labour leader Kezia Dugdale's adoption of the same policy (ITV, 2016).

Under Kennedy, this was seen as a bold, but practical measure at a time when the economy was improving dramatically. Under Kennedy's successor Nick Clegg, the emerging financial crisis led to these ideas being translated into 'fairness'. Clegg's, now much missed, red lines in government involved sharing the burden  (Parkinson, 2012) - refusing to have cuts impact on the poorest without the equivalent be expected of the richest.

Amongst the things Clegg fought for was increased spending for the early years at school (Ahmed, 2015), hoping to close gaps so that children might grow up with the skills necessary to seize opportunities on their own merits. During that time, Conservative supremacy and lust for cuts was barely restrained by the Coalition. Now it doesn't seem to be restrained at all.

All in it together, to protect the next generation from crippling public debt, seems to have become the means to disenfranchise the next generation - denying young people public services and affordable housing. Meanwhile, the wealthy are doing just fine (Inman, 2016).

And yet, austerity has laid bare and made finally visible in the UK the true extent of the financial crisis - from which the UK was largely sheltered by the government funded public sector. From homelessness at the extreme, to the now common shortages of affordable homes, the public may now finally - thanks to austerity - be realising the full weight of the burden falling on them.

In those conditions, the re-emergence of policy's like Kennedy's penny on tax is not surprising. A general outcry for more the government to do more cannot be far away. While that, of course, doesn't necessarily always have to mean constant high levels of public spending on fully nationalised services. But more has to be done.

Mariana Mazzucato, economist and one Labour Shadow Chancellor John McDonnell's anti-austerity economic advisors, has argued that the private sector is a weak innovator that is loathe to take risks. Quoting Keynes, she argues that most innovation - the opening of new economic spaces - is done best by government (Mazzucato, 2013) - in the form of a smarter state.

Inequality has many facets that need to be tackled. Education needs more support. Housing needs to be more widely available and cheaper. Young people need to see more opportunities in more fields. None of these things can be achieved without some additional government funding at some stage. Public bodies have the ability, and the right, to act: to open up new economies, to create new opportunities where there are now none, and to invest in new futures.

 

Breakthroughs in all of these areas would lead to new economic growth and wider spread shares of the spoils. A penny on tax for education is a modest, practical start. A small, subtle, rejection of the austerity doctrine. But it is one small solution, for just one part of a huge and interlinked problem of inequality that the government cannot for much longer simply trim around the edges.