Last week’s Budget was a test for the Government and more especially, for George Osborne. Could the Chancellor meet his targets? Could he deliver a fair Budget? Could he invest to build an economy for the future? On all three counts he has failed.
Just days after the Budget, we watched the government unravelling, Iain Duncan Smith resigning after feigning a conscience over the cut to disability benefits and the Chancellor going into hiding only to make the unprecedented step of coming back to the House several days after a Budget to explain his failures.
When he did return, he showed typical arrogance and a lack of insight refusing to apologise for the distress caused to the 1,370 people in South Shields and anyone else who relies on Personal Independence Payments.
Instead, the Chancellor used the opportunity to praise himself and his government despite their six years of failures.
The reality is George Osborne is failing on his own terms – forecasts from the Office for Budget Responsibility (the government’s fiscal watchdog) show that he is on course to break two of his three fiscal rules.
Rule 1 concerned the welfare cap, which Osborne breached towards the end of last year following an abrupt U-turn over tax credit cuts.
Rule 2 stated that the national debt should fall as a proportion of GDP. But figures from the Office for Budget Responsibility (OBR), show debt rising to 83.7 per cent of GDP in the current fiscal year, up from 83.3 per cent last time around.
Rule 3 commits the chancellor to running a surplus by 2020. The new Budget figures are not promising, with the OBR expecting an extra £36.3bn in borrowing between the coming fiscal year and 2018-19.
The achievement of a surplus depends on an incredibly sharp turnaround in 2019-20, with spending cuts and higher tax revenues expected to save the day.
When this Government first came to power in 2010, they promised to balance the books by 2015. Instead, last week’s Budget revealed that it is set to borrow £38.4bn more than planned. Growth is done and debt is up and this is set to continue for the rest of this Parliament.
Unfairness was at the very core of this Budget. There were tax cuts for the wealthy paid for by those who can least afford it and half a million people with disabilities were set to lose over £1 billion in Personal Independence Payments.
The Government has since been unable to explain how the £4.4 billion black hole in the budget left by the U-turn will be filled and on whom the axe will fall.
Ultimately, this Chancellor has failed to balance the books, failed to invest in the economy and failed to improve the lives of working families in South Shields and across the whole country.
Labour is standing up for a fairer economy that equips us for the future. The next Labour government will use growth not cuts to close the deficit and put fairness at the heart of government.