It is clear that the economic policies being pursued by the Conservatives under George Osborne and Boris Johnson are not working. Unemployment is rising and millions of Londoners are feeling squeezed by rising costs. London needed a budget that delivers economic growth and invests in the future of London. That means lower taxes for the majority, real action not rhetoric to tackle the banks and action to create new jobs.
The direction of the London economy tends to move in lock-step with the national economy. So when the British economy contracted at the end of 2010 it seems certain that the London economy shrank too. We know that unemployment in London is rising once more – up 16,000 in the latest 3 months.
George Osborne conceded that the Budget should have been one that addresses the weakness of economy by promoting growth. But continued cuts in government spending remove the single most important weapon which could reverse economic decline.
London has been hit hard by the Conservative party’s cuts including:
- £2.1 billion (21%) cut to transport funding – Boris Johnson said he was ‘pleased’ with this decision and called it ‘a good settlement’. Londoners endure rising fares and daily delays.
- Over £400million (22%) cut to police funding. This means over 1000 police officers will be cut between 2011 and 2014.
- Hundreds of millions cut from local government – London councils face cuts of 11.25% compared to an average of 9.93% for the rest of England.
- Economic development funding cut from £275 million to £130 million. Boris Johnson’s chief of staff, Sir Simon Milton, said the funding was ‘good news for Londoners’.
In fact, as a recent survey for the Institute for Chartered Accountants in England and Wales shows, these spending cuts are hurting businesses and causing unemployment in all sectors, not just those that directly rely on government demand, but also businesses who are suffering from the negative effects of the cuts in the wider economy.
Instead of promoting growth, the Tory-led government’s response was billed to include a massive attack on the fair rules that regulate employment, planning, and businesses.
Even though it is now widely accepted that the lax regulation of the financial sector was a major factor in fuelling the crisis, the Tory plans are for a massive deregulation push. Hard-won rights on maternity and paternity rights, equal pay and anti-discrimination as well as health and safety are all under threat.
A planning free-for-all is suggested and taxes and rules on business are likely to go – even though all of this is done in the name of reducing the deficit.
It will also create a race-to-the-bottom where better employers are under-cut by those who cut corners, such as sweatshops. We will all be worse off as a result.
There is an alternative
The Budget could have been an opportunity to promote the growth of the economy and improve the prosperity of the overwhelming majority of the population, currently suffering from the double-whammy of cuts and high inflation.
We need that here in London where unemployment has now soared to 9.4 per cent, making it the third-highest in the country, behind only the North-East and West Midlands.
We need the Mayor to be pressing for a budget that puts employment and growth ahead of defending the super-rich.
These are some of the key points I wanted to see from this budget to help London grow and invest – instead of cutting public services, pay, jobs and our quality of life further.
A Budget for London would be underpinned by:
- Lower taxes for the majority: Cut VAT back to 17.5% which would benefit middle and low incomes and create jobs. It can be paid for by reversing the tax cuts for the rich in the June 2010 Budget.
- Lower costs not stealth taxes. In London, this means ending the high rail, tube, bus, tram and DLR fares policy imposed by Osborne and Boris Johnson, which reduce the amount of money Londoners have to spend and put huge pressure on the majority who are being squeezed here in London.
- Reverse the police cuts. In London police numbers are being cut by Boris Johnson, just as they are nationally. The size of the police cut goes beyond what the service can bear without hitting local neighbourhood police teams, and builds in a projected 1000 fewer police in the capital by 2014. Restoring frontline and community policing is necessary in the fight against crime.
- Tackle the banks. Bank profits are rising once more, along with bonuses. But bank lending to business is still falling. The Budget should introduce regulations obliging the banks to increase their loans. Where we own the banks, such as RBS and Lloyds an instruction is necessary.
- Invest in housing. Home building is at an 88-year low, even while 1.8mn households in England are on council waiting lists and hundreds of thousands of building workers have lost their jobs. In London, just 7,600 new homes were built last year even though the waiting lists for council housing have risen to 362,000. Government investment in housing and allowing councils to supplement this by borrowing is the way to tackle this crisis.
- Invest in transport. A modern competitive city needs a transport system that works. This means restoring a programme of investment in projects like the extension of the Croydon Tramlink and the extension of the DLR to Dagenham Dock to continue to grow capacity on the system.
- Invest in our young people. The Conservative party treats our young people as a burden rather than as our future – cutting training, apprenticeship allowances, increasing student fees and scrapping EMA. Damaging and self-defeating cuts need to be reversed if we want to maximise the potential of our young people and build a dynamic economy.
- Reverse the fall in living standards. The poor and those on middle incomes are being forced to pay for a crisis caused by the banks. A vast number of benefits are being cut, most of which go to those in work – and Londoners are hit hardest by the cut in housing benefit. A budget for real growth would massively reduce the welfare bill. In particular the high cost of living in London means steps like the child benefit cut, the housing benefit cut, EMA and student fees, hit London hardest. London’s cost pressures must be taken into account. Real work to make the London Living Wage a reality – taking more people out of benefits – is required.
- Maintain employment protections, not destroy them. The right to equal pay, freedom from discrimination, maternity and paternity leave and the right to work in a safe environment benefits us all. Only the worst employers benefit from their erosion or abolition.
- Building business and jobs. The recovery will remain stalled and public finances at risk of renewed deterioration unless government takes action. The cut to London’s economic development budget – a budget that has been halved this year alone by £145m – is economic vandalism that has left London highly exposed. Reversing those decisions and restoring these budgets would a significant first step to reviving the London economy.