January 28, 2022

Budget 2021: An Analysis

So, if you’re like me (which is statistically improbable, but alas), you probably saw Rishi Sunak squirming while delivering an ultimately pretty mediocre budget. He didn’t solve any of the fiscal issues that the Government faces, and really has gone full fiscal drag on us all to save face among his party, and we’re all the worst for it. 

First, we look at perhaps the headline tax hike: Corporation tax to increase by 2023 to 25%. I’ll level with you, this is a good change, but it’s a shame it doesn’t come coupled with other necessary reforms to the tax system to ensure that it is the rich, and not everyone else, who pay for the pandemic.  

That being said though, the fact that there were no changes at all to income tax, and that the Exchequer clearly hasn’t even considered putting a couple of pence on top-rate tax, or reintroducing the 50p tax rate, is shameful. The fact that Sunak hasn’t even thought at all of shifting the majority of the bill to the rich demonstrates exactly where his sympathies lie. And no, Rishi, the last 10 years of the Tory slash-and-burn fiscal policy, of cutting back the NHS and tossing people out onto the streets in order to put profit in donor’s pockets hasn’t made us ready for this crisis, because at least 80% of the mess we’re in right now is a crisis not of pathogens, but of politicians.  

The additional welfare spending is also paltry and will not help ordinary people when they need it most. The £20 universal credit uplift, while helpful at the moment, is set to be lifted 6 months from now, at exactly the time the Government anticipates that unemployment will peak, and at exactly the same time as furlough will be gradually lifted. Be in no doubt: this budget is not a budget for ordinary people like you, it’s a budget designed to paper over the cracks, and for this Chancellor to save face in front of an increasingly radicalised Conservative party.  

Following the budget, Sunak has been attacked (and rightfully so) from all sides. Former Chancellor of the Exchequer (and vampire) George Osbourne called his Corporation tax hike ‘unenterprising’ and said that he would’ve increased VAT, rather than increasing Corporation tax. Not really surprising when VAT disproportionately affects the poor, and corporation tax disproportionately affects the richest 0.01%. Even Former Prime Minister Theresa May was critical of the Sunak budget, saying that he neglected massive areas of industry, as well as aviation.  

I say this a lot when talking about economics, and I think it’s worth bringing it up here again. Economics is ultimately the study of how humans balance the infinite needs and wants that we have, and the scarce resources with which we may fulfil some of those needs and wants, with the goal of maximising utility for everyone. What’s the point of bothering with economics, if the policymakers at the top don’t care about that last part? If they’re not really focused on producing the maximum utility on the macroeconomic scale, producing and distributing enough food and other resources such that everyone has the very basics, but that just doesn’t happen, and this budget is a testament to how placating the invisible hand just doesn’t do that – it makes some into billionaires, and it condemns millions more to having to use food banks to survive, a shameful reality that will continue to get worse over the next year of this disastrous, shameful budget, and its proponents. It’s clear that the Government has declared war on ordinary people, they don’t care if you’re struggling or barely getting by, so long as the cash keeps flowing, and they can continue to rip up your rights at work post-Brexit. 

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January 2022