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Autumn statement 2023: Why Jeremy Hunt’s budget snuffs out hope for the economy [1]

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Date: 2023-11

Another autumn statement has come and gone with any faint hope of the beginnings of an economic revival extinguished.

Once again, we have measures ranging from inadequate and counterproductive, to ones that will simply cost the poorest and benefit the richest. But the most damage will likely come as the result of the announcement of the cash freeze to investment spending (our public sector investment is already lower than in comparable countries), which in the long term will mean more real-terms cuts to our public services, which are already in tatters.

This government has spent its entire term saying it wants to make our economy stronger. But we can see across all markers – and in the day-to-day experiences of our lives – that this has not been realised. Perhaps the reason for its failure is a complete misunderstanding of what the economy is, and how it functions – or ceases to.

One of the most fundamental things to understand about an economy is this: an economy does not stand alone. It is not an entity outside of us that we must serve or placate. The economy is the sum total of our work, purchases and social interactions. As the new campaign to which I am a signatory says: We Are the Economy!

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Understanding this is key to understanding why the economy is struggling, and how we can turn things around. Yet it is something that this government, and many media organisations, do not currently seem to grasp.

Back in 1880, England and Wales understood the importance of educated and skilled workers for the functioning of society and the economy, and began to provide free education. Countries that fail to invest in education fail to prosper. Over subsequent decades, politicians recognised that the same is true for good health, housing and connectivity. As a result, governments wisely invested in essential public services like the NHS, social housing and public transport.

But after 2010, all that stopped. For the last 13 years, we have suffered the consequence of failing to invest in essential public services.

Investment in social housing has fallen by 60%, leading to a net loss of 165,000 social homes since 2010. Homelessness has increased by 74% in the same period. The north of England has received 60% less funding per person on transport infrastructure than London. People in the north can access fewer jobs by public transport than those in the south by a factor of seven, while even its own ‘levelling up’ and local transport ministers rely on driving rather than the use of public transport outside London. And after a decade of deteriorating healthcare (and other services that keep us well) we have record NHS waiting lists of 7.6 million people, with 2.5 million unable to work due to long-term sickness.

Fit young workers struggle to find an affordable roof over their heads. And because of the failure to invest in skilled, well-paid work, our economy relies increasingly on insecure work, and real wages and incomes are falling. According to the TUC, real terms pay remains 2.9% lower than it was at the start of 2008.

Like the human body, our country and economy need the right inputs to function well. Failure to invest leads not only to incalculable physical and mental costs, but also means Britain is less productive – and that means a weaker economy. Besides the majority of ordinary people, the biggest loser of those policies has been the very institution that imposed austerity: the Treasury. Low investment has led to a fall in real incomes and a weakened economy. This means lower tax revenues and an ever-rising budget deficit.

And we must be clear: the idea this government has repeatedly touted – that we can only invest when the economy is stronger – is a wilful decision to put the savings cart before the investment horse. By reversing the logic of investment generating income (and tax revenues) the British government has stupidly justified years of ideological austerity.

The climate emergency means this economic failure is now a matter of grave ecological consequence too. Private vehicles contribute to 88% of all transport emissions, while public transport contributes only 4%. Instead of a publicly owned energy company that enables us to invest heavily in renewables and retrofitting and make energy affordable for all, we’re paying the earth to private energy companies.

Fundamentally, we need to restructure our economy – away from a dependence on dirty fuels and physical infrastructure. We can do this by investing in social infrastructure (schools, universities, hospitals, community housing) as well as services like music, art, social and childcare – along with retrofitting and building green social homes, and upskilling and re-skilling our workforce. Such investment will generate savings and tax revenues, balance the budget, and get us on track to meet our climate commitments.

We’ve watched underinvestment erode the foundations of our society for far too long. Housing, transport, education and healthcare are not add-ons or ‘nice-to-haves’. They are as essential for our economy as they are in our day-to-day lives. Now, with rising poverty and inequality, and in the midst of a deepening climate emergency, we can’t afford not to invest in the collective services that will keep us and our planet well. If we do not all keep this in mind and act on it, we will continue to pay the price.

We Are the Economy is a campaign signed by over 70 organisations, MPs and economists who called on the chancellor to use today’s statement to invest in the essential public services we all rely on – read it here.

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[1] Url: https://www.opendemocracy.net/en/oureconomy/autumn-statement-2023-budget-jeremy-hunt/

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