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Budget, Brexit and the Bottom line – Susan Kramer’s speech to Spring Conference

by Steve Beasant on 18 March, 2017

Susan Kramer‘s speech to Spring Conference

As Chancellor, Phillip Hammond had one clear ambition: to be as dull as possible.

And he was doing so well.

If anything, his nick-name “Spread Sheet Phil” seemed too dangerously exciting for him.

But last week he committed the grave mistake of being interesting.

He committed a egregious act of news.

His Budget was supposed to be a dreary tinkering around the edges.

Instead, he pulled off a tyre-squealing U-turn that was so fast it would have impressed Lewis Hamilton – cancelling his centrepiece proposal, the incredibly inappropriate National Insurance increases for self-employed people.

Meanwhile, the man acclaimed as the voice of economic sanity in the Conservative Brexit government was unable to stop the Brexit Bill – despite the best efforts of the Liberal Democrats to give the people the final say on any deal.

The pound has been falling and day after day another company has been questioning their long-term commitment to the UK after the Chancellor lost his battle to keep us in the Single Market.

And of course the SNP has taken advantage, continuing their 100% track record of never losing any opportunity to engineer a fight for independence, with their demand for another independence referendum.

Truly, he could have been finished this week.

This could have been the fortnight that did for him.

Until, that is, Jeremy Corbyn rode to his rescue – with one of the least effective attacks on a floundering government many of us have ever seen.

Corbyn missed an open goal so wide, it would have brought blushes to an England penalty taker.

So let us look at that Budget.

After the chaos and U-turns of the Conservative Government’s last budget, where they were forced into an embarrassing climb down on cuts to Tax Credits thanks to Lib Dem pressure, you would think they’d be more careful this time.

Instead we saw a major tax rise for the self-employed, in direct opposition to the Conservative’s own Manifesto.

It’s no wonder Conservative MPs exploded in anger. Only the very most loyal were prepared to go out and defend the Chancellor’s decision, and as a reward, a week later they joined him on the U-turn bus – not that they would have declared the bus in their expenses of course.

The rest of the Budget was not much better.

The Public sector is facing real crises – not just in the NHS and social care which we have heard about over the winter.

But in schools – The Education Policy Institute said on Thursday that all schools in England face real terms cuts in funding per pupil, and that half face reductions of between 6-11%.

We know that will lead to cuts in teachers, curriculum, counselling.

And the cuts don’t end in schools: local government, policing, prisons: everywhere we are seeing cuts.

These organisations were able to absorb cuts for a number of years without damaging the front line, but they have now reached stress points where that is no longer possible.

But listen to the Government. You have to conclude that they are deaf to it all.

The £2BN they gave to social care in the Budget should have been for one year, not three.

The schools money was partly for welcome technical education, but a large part was for was for selective education at the expense of the vast majority of young people.

In fact, virtually every item of this Tory Budget was an attack on small businesses or the just about managing – like the self-employed or entrepreneurs.

Instead of raising taxes on international online retail giants, who frankly have been getting away with murder, the Chancellor decided to clobber small businesses.

And effectively deferred for just one year the huge hike in business rates that will hit so many high-street shops.

If you need to see how it should be done, you are wasting your time looking to this government – read the forthcoming Liberal Democrat review of business being chaired by Sir Vince Cable.

Conference, this budget was a fiasco.

And there is a reason Philip Hammond and Theresa May thought they could get away with this – Jeremy Corbyn.

His total failure to hold Theresa May to account showed Labour’s problem. He let the Government get away with it when millions of self-employed people deserved someone to fight for them.

The government has still not said when the Prime Minister knew about the rise – or how they are now going to do to fill the black hole in their spending plans.

And we don’t know because the extreme and incompetent Official Opposition has failed. Conference, this country needs a real opposition – it needs the Liberal Democrats.

And because Labour are failing as an opposition, the Government is getting away with ignoring the wider economy.

And let me tell you – all is not well. The past few weeks have shown worrying signs for our economic future:

The pound has fallen again against the dollar, meaning our currency sits around 18% lower than pre-the referendum, makings imports pricier, putting retailers and manufacturers under increasing pressure to raise the cost for consumers.

Latest figures from the Office for National Statistics show that our economy has begun to flat line one again, with falling production, most worryingly in construction and new house building where growth is absolutely vital for the economy.

Wages remain subdued.

Retail sales, long the backbone of our service driven economy, have slowed to their lowest growth rate since November 2013, fell in January.

Our reliance on spending to prop up our economy is greater than ever – two thirds of our GDP now depends on consumer spending.

Savings are falling – and consumer debt is rapidly rising on credit cards, personal loans and overdrafts.

This is completely unsustainable.

So it’s no surprise that the Chancellor was recently told:

“The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England described as well above equilibrium level.”

Oops, I’ve miss-spoken, that’s wasn’t recently. It was Vince Cable in 2003.

He was telling the then Chancellor what he didn’t want to hear.

That Chancellor didn’t see any sign of losing an election to a weak opposition, but he was building the economy on sand – and ultimately he paid the price.

I want to be clear: We cannot continue to rely on consumer spending and increasing personal debt to fuel our economy. As prices rise thanks to the collapse in the pound we are beginning to see spending slow down.

And if it stops, the consequences would be dire. According to the Money Advice Service, 17 million adults in the UK have less than £100 set aside for a rainy day.

Those on benefits have already seen their incomes squeezed thanks to the Government’s cruel decision to freeze or cut benefits.

Our nurses, our teachers, our police, have endured enough pay caps and are still set for two further years in which their pay packets fall below inflation.

Conference, no one listened to Vince Cable in 2003, or 2004, or 2005, 6 or 7 – but he was right, and in 2008 we all felt the consequences. We cannot let it happen again.

Of course, the last crash was caused by the collapse of the American housing market. There is now a real danger that the next crash one will be made in the UK – thanks to Brexit.

Ah! Brexit!

The biggest single threat to our economy and just one passing word in Philip Hammond’s Budget speech.

See no evil, hear no evil, speak no evil!

Only by burrowing into the small print could you find that within five years we will be borrowing over £100BN more to cope with the impact of Brexit.

To put that in context, that is enough to build 115 brand new state of the art hospitals or pay almost 90,000 nurses a year. Actually, I could put that on the side of a bus!

But presumably the £100BN black hole reflects the scenario of a positive trade deal with the EU.

Because David Davis – he’s the economically literate one of the 3 Brexit men – told Parliament on Wednesday that the Government had no clue of the economic impact of the UK crashing out of the EU without a trade deal.

No clue.

Nothing.

Nada.

The words “dereliction of duty” frankly hardly cover it.

Conference, the government is driving this country towards the edge of a cliff blindfolded.

It’s not even clear that when we leave the EU that we will be full members of the Word Trade Organisation and covered by its rules until 163 countries have agreed. Unfortunately, quite a number of those countries have bones to pick with us not least because we made their joining the WTO rather difficult.

Even with WTO rules, 90% of our trade with the EU would face significant tariffs, never mind all the non-tarrif barriers and costs.

Services, so vital to the UK economy, are not even covered by WTO rules.

We would have all the problems of the Irish Border, the lack of a nuclear regulator, no medicines’ approval agency, no access to the European Investment Bank – I could just go on! And EU citizens in the UK as well as our citizens in the EU would be in complete turmoil.

For many in the UKIP wing of the Tory party, with which Theresa May has become so enamoured, this is actually desirable. And we have that guru of charm and thoughtful reasoning Boris Johnson saying that it is “perfectly OK”.

And Conference, this could happen. Oxford Economics, in their analysis of likely outcomes of the EU negotiations suggest a 39% chance of falling back on WTO rules – only slightly behind the chance of a Free Trade Deal.

No wonder we need a referendum to let the people decide when the “deal or no deal” is done.

Theresa May is putting ideology before economics.

If the Conservatives weren’t ideologically committed to cut after cut, pursuing an absolute surplus at the same time as tearing Britain out of Europe the job would be done. We would have balanced the books.

Instead, the pain goes on. Austerity continues, services are cut, and the public suffer a Brexit Squeeze.

Let me be clear. This is the Conservatives’ choice. They have chosen this path, and ignore the costs of their choices.

We could ease the extreme financial pressure on public services, like the NHS. Public sector workers could see the end of their pay cap. We could accelerate our investment in infrastructure, especially affordable homes.

We would be positioned to tackle the huge changes that are coming from the “gig” economy, robotics, artificial intelligence and climate change and indeed turn them from challenges to opportunities.

So I give the Government this warning:

You may not have a functional official opposition, but you do have a responsibility.

Stop listening to the hard right of the Conservative Party who want nothing more than a hard Brexit, and start acting in interests of the businesses and jobs that underpin our country- and start by committing to staying in the Single Market.

Do not undermine our economy and thereby damage our NHS, social care and schools and leave our vulnerable with inadequate support.

Do not divide our country by rejecting common ground and consensus.

Labour may give you no opposition but the Liberal Democrats, led by Tim Farron, we will.

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