UK Poverty Post

Budget 2009 – A missed opportunity

Well, this wasn’t quite Lloyd George in 1909. People’s Budgets don’t, it seems, come round every hundred years after all. No increase in benefits; no increase in tax thresholds; and the much trumpeted ‘targeted help’ adds up to 0.5% of GDP – a tenth the size of President Obama’s fiscal stimulus earlier this year, and barely worthy of the name.

So, on the big numbers, and on the big picture changes, the government has failed to deliver – in sharp contrast to the boldness it showed in dealing with the banking collapse. It seems the melodramatic warnings of big business have weighed heavier in Alistair Darling’s calculations than the voices of people like FRED.

But what of these targeted measures? Well – barring the enormous caveat above – there’s a lot to commend. Action on youth unemployment is welcome – with a job or training guarantee being offered to all long-term unemployed young people – and particularly timely given that today’s unemployment figures have shown that 15.1% of 18-24 year olds are unemployed. It’s even targeted at exactly the sort of industries we as a society should be promoting, with Care First offering 50,000 traineeships for young people in the care sector. But why wait till next year? A hundred thousand young people may already have been out of work by the time they get access to this help.

Meanwhile, Mr Darling announced some substantial investment in green industries, a small amount of money for new, energy efficient social housing, and a Strategic Investment Fund to provide resources for the industrial strategy announced on Monday. And the initial measures to claw back revenue are progressive ones – including tax increases on the very highest earners and the closing of tax loopholes for the superrich. These are all good things, and all chime with what we called for in our six-point rescue plan. But, in the context of the Treasury’s own prediction of a 3.5% contraction of the economy this year (which is itself at the more optimistic end of the forecasting spectrum), the amounts on offer are small – and certainly not transformational.

There’s also a little more money for the expansion of low-cost credit that we’ve called for. But the extra £270 million or so over the next two years for the Social Fund will be under the same restrictive conditions for eligibility. And an extra £18.75 million for the financial inclusion Growth Fund will open up only 85,000 more loans by 2011 – a drop in the ocean compared to the debt weighing down on people trying to survive on poverty wages or benefits. Meanwhile, the announced cuts in public spending just around the corner threaten to do damage to the livelihoods of people who are dependent on them that far outweighs the good of this limited investment.

Meanwhile, even before the recession, this Budget had been earmarked by campaigners as the last chance to meet the 2010 child poverty target. An authoritative study from the JRF and IFS calculated that £4.2 billion had to be found in child benefit and tax credits to do that. When Mr Darling announced an extra £20 in the child element of child tax credits, it had a lot of us reaching for our calculators. Would an extra £20 per week be enough? Belatedly, it dawned on me: the amount in question was £20 per year. That’s 38p a week. I can’t work out if the Chancellor takes child poverty campaigners for idiots, or if this was an intended insult. Either way, it sums up much of this Budget – you couldn’t fault the idea, but its execution was far too mealy-mouthed.

In our report, we said that the recession was a crisis that needed urgent government action to prevent it becoming a catastrophe, but also that it offered up an opportunity to rebuild society on a fairer, more sustainable basis. On both counts, the government has talked well. Yet in its lack of boldness, this Budget has to be marked down as a missed opportunity. We can only hope that by being ultra-cautious on public spending, the government has not also prolonged the recession and ended up costing itself – and millions of people across the UK – dearly.