IN 2010, George Osborne set in stone a decade long self-defeating austerity strategy. This budget, set as we begin to emerge from a pandemic, is the most important since then in terms of setting the economic direction for the future, writes Jonathan Edwards MP.
Such events in history often herald an opportunity for reflection on the type of society and economy we want to see for the future. The political division it seems to me in this context, is between those representing vested interests who want to return to business as usual as soon as possible, and those that want to tackle the UK’s gross structural problems, namely sectoral, geographical and personal wealth inequalities.
The Chancellor nailed himself firmly to the mast of the former in his Budget which makes his programme a huge missed opportunity. The vast majority of people desire a fairer socio-economic model as opposed to one that sees the super-rich hoard wealth.
It’s sobering to learn that 25% of wealth in the UK is held by just 1% of the population.
There was nothing radical in the budget.
Instead of simply freezing tax bands, the Chancellor should have directly tackled the issue of individual wealth polarisation.
Why didn’t the Chancellor follow the US Administration and increase income tax on those earning more than £300k a week?
In my response to the Budget, I proposed a new pandemic tax band at this level.
Glaringly omitted from the Budget were any taxes on held wealth. Norway, Switzerland and Spain have different forms of annual wealth taxes. Alternatively, the Chancellor could have launched a one-off wealth tax. At the start of the pandemic, I called for a one-off tax on assets above £10m.
The richest 1000 people in the UK have a combined asset value of £600bn, the least they can do is bear the brunt of the fiscal repairs that will have to be undertaken.
In terms of geographical wealth, the offer for Wales was poor, with the money announced for our nation mostly compromising of old funding being brought forward. Instead of introducing an innovative system of varying regional corporation tax which would signal a serious intention to level up, the Chancellor announced a series of sporadic free ports in England.
The pandemic has hastened the speed of the online retail revolution. Online sales accounted for 35% of all spend in January this year, an increase of 15% in just one year. Amazon sales have increased 51% in one year, reaching £19bn in spending. With such a radical change in consumer behaviour, it was disappointing to see no new measures to secure a fair share of revenues from global online giants. If we fail to tax the digital sphere, what hope is there for our high streets?
There is one glimmer of hope for our communities in Carmarthenshire that has nothing to do with government action.
The pandemic will, I have little doubt, lead to a revolution in flexible working. This will enable communities in Wales to offer an unrivalled work-life offer based on our abundant leisure opportunities. If the British Government want a return to long commutes, low wages, long hours and low-quality jobs, they are on the wrong side of history.
The Budget should have included a massive increase in broadband and telecommunication infrastructure spending to facilitate the transition. A far better investment than throwing money at the black hole of London commuter routes.
The British Government may have missed an opportunity to address the inequalities at the heart of our society, but it is this issue of addressing wealth inequality that will continue to drive my own work in Westminster.