Chancellor Philip Hammond was accused of “astounding complacency” after he ruled out an end to austerity cuts which have hit millions despite claiming that there is “light at the end of the tunnel” for the UK economy.
His Labour Shadow, John McDonnell, said he had failed to address the “crisis on a scale we have never seen before” in public services.
He said that “austerity was a political choice not an economic necessity”, adding: “We were never all in this together as they claimed.”
Hammond (pictured) refused calls from Labour and some Tories to use the extra cash from tax receipts to ease the spending squeeze that is pushing the public sector to breaking point.
But in his Spring Statement, blighted by power cuts across Parliament, he hinted at possible spending increases to come, in his autumn Budget, when he will “set an overall path for public spending for 2020 and beyond” with a detailed spending review in 2019.
Growth will be 1.4% this year, 0.1% higher than forecast, with the forecast for 2019 and 2020 unchanged at 1.3%. The chancellor said borrowing was due to fall in every year of the forecast – and told the House of Commons debt will fall as a share of GDP from 2018-19.
The next revaluation for business rates has been brought forward to 2021, after which the government will move to revaluations every three years, the chancellor said.
He also announced that London would receive an additional £1.7bn to deliver 26,000 affordable homes – including homes for social rent, taking the total number to more than 116,000 by the end of 2021/22.
He unveiled a series of consultations on future policies, including: A reduction in tax on for the least polluting vans to “help the great British white van driver go green.” A possible tax on single use plastic. A new VAT collection mechanism for online sales to ensure that the VAT that consumers pay “actually reaches the Treasury.” How online platforms can help their users to pay the right amount of tax. And a call for evidence “on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas”
McDonnell said of Hammond: “His complacency today is astounding. We face – in every public service – a crisis on a scale we’ve never seen before. Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?
“They are telling him they can’t wait for the next Budget. They’re telling him to act now. For eight years they’ve been ignored by this government. And today – they’ve been ignored again. The Chancellor has proclaimed that there is light at the end of the tunnel. But this shows just how cut off from the real world he is.”
He pointed out that last year UK economic growth was among the lowest in the G7 and the slowest since 2012. Wages are lower now – in real terms – than they were in 2010 – and they’re still falling. And there are three million people in insecure work.
According to the Resolution Foundation, the changes to benefits due to come in next month will leave 11 million families worse off. And the gap in productivity between this country and the rest of the G7 is almost the widest for a generation.
McDonnell went on: “The reality is that the Chancellor and his predecessor have not tackled the deficit. They have simply shifted it onto the public services his colleagues are responsible for.
“Does the Chancellor really believe the NHS can wait another eight months for the life-saving funds it needs? How many more people have to die while waiting for an ambulance?
“Today we have the indefensible spectacle of a Chancellor congratulating himself on marginally improved economic forecasts, while refusing to lift a finger as Councils go bust, the NHS and social care are in crisis, school budgets are cut, homelessness has doubled, and wages are falling. This isn’t a Government that’s preparing our country for the future.”
Ahead of his speech Mr Hammond had faced calls from his own side to call a halt to the public spending squeeze.
Conservative MP and former minister Gary Streeter said the government could afford to be “more generous” to well-organised councils as their funding has been “cut to the bone”. And Tory Brexiteer John Redwood also argued in favour of borrowing to invest in schools, defence and the NHS.