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Britain’s unimpressive budget reveals a lack of ambition.
Dit artikel komt uit The Economist
You could forgive Andy Burnham for feeling chirpy. Britain’s prime minister begins his second hundred days with a healthy lead in the polls and a better-than-expected run of economic growth. His chancellor, John Healey, presented a budget that succeeded in riling neither bond vigilantes nor Labour backbenchers. And, in news to stir any English heart, France is doing much worse, as its public finances languish and its streets are occupied by rioters.
In Britain election fever is in the air. So the need to please voters could explain why, in a budget that was mostly empty of substance, Mr Healey did find a few billion pounds to finance a £100 ($133) payment to four in five households, supposedly to offset energy bills. Shortly after the chancellor stopped speaking, the legion of Britons checking whether their house qualifies for the money crashed a government website.
De redactie van NRC selecteert de beste artikelen uit The Economist voor een breder perspectief op internationale politiek en economie.
Mr Burnham insists he has ruled out an election for at least 12 months—but he would say that, wouldn’t he? What is troubling is that this budget epitomised the inadequacy of his approach to government. The changes are vast in the narrowest sense that they include 98 costed policy measures, comfortably more than any other recent budget. There was a smidgen of good news on streamlining data-centre approvals. Also, places will be funded more from taxes paid by local residents and businesses, giving them an incentive to stimulate growth. Mr Healey focused energy policy on cheap power, and did not succumb to the perennial temptation of new chancellors to rewrite the fiscal rules.
And yet in almost every sense that matters, the budget’s changes are trifling. The sums involved were trivial and few of its measures grapple with Britain’s deep economic problems. Instead it presents a spasm of tweaks that will worsen the perverse incentives which plague the tax code.
The prime minister is even more difficult to pin down than Sir Keir Starmer. True, he is cannier than his predecessor about throwing out politically popular goodies, like the £100 payments and cheaper supermarket gherkins, thanks to lower grocery tariffs. But whenever Mr Burnham is bold—as he proposes to be by limiting pensions, funding social care and reviving Britain’s relations with the European Union—he puts off difficult decisions until after the next election.
That approach to governing will soon wear thin. The spending review, due in 2027, will be tough. To pay for defence and prevent harsh cuts, Mr Healey will have to raise around £30bn, says the Institute for Fiscal Studies, a think-tank. „We start from a position of strength,” the chancellor said on Wednesday, not entirely convincingly. Health, pension and welfare spending will keep marching up, straining Britain’s effort to fund a full-freight welfare state on the cheap, perhaps to breaking-point. Hovering above this is the question of how artificial intelligence will reshape society and the economy.
Mr Burnham’s big ideas are no match for those challenges. He is a nostalgic politician, talking of an end to „40 years of neo-liberalism” at a time when the future is rushing onward. That is a pity, since there is plenty to do—and plenty where Mr Burnham and the neoliberals at The Economist could see eye-to-eye. Devolution is one, and there Mr Burnham has made a good start. Britain really is damagingly over-centralised. There is no reason cities must ask the Treasury to finance transport projects, rather than raising the money themselves.
Another would be reviving Sir Keir’s occasional interest in pro-growth supply-side reform. Labour was elected on a manifesto which argued that faster growth was the way out of Britain’s fiscal woes. Yet that deregulatory revolution has barely begun. Fewer homes are built now than before Labour was elected. The latest forecasts from the Office for Budget Responsibility, a watchdog, suggest that the government will miss its target of 1.5m homes built over the course of this parliament by a full half million. Angela Rayner, the housing secretary, has lately taken to calling it a „stretch target”.
Britain’s welfare system has pulled too many young people out of work and onto ill-health benefits, something Mr Burnham has promised to legislate on next year—but which he did nothing about in the budget. The prime minister is also a long-time critic of stamp duty, a levy on property transactions that is probably Britain’s most growth-destroying tax. Like the previous Labour government, he has so far dodged the need to clean up the perversities and traps in Britain’s tax code. It is not too late to act.
Serious work is needed to ready Britain for the changes AI may bring. The data-centre announcements were a first step. But Britain should reform its copyright laws, so that AI models can be trained locally. And what do Mr Burnham and Mr Healey have to say about ensuring Britain captures the productivity gains of AI? Or on how to stop AI from exhausting the capacity of the British state by jamming up the courts, tribunals and official consultations with spurious, chatbot-generated slop?
In short, there is plenty to do and an urgent need to be getting on with it. The prime minister should ignore talk of the need for a new mandate. Britain is a parliamentary democracy and Mr Burnham has its confidence. Rather than remaining beholden to a manifesto that had a large picture of Sir Keir on the front, he has three years to be as bold as he chooses.
What will not succeed for Mr Burnham, or for Britain, would be for the prime minister to pass the time dishing up more policy-lite optimism. Politically, voters are likely to lose patience with a government that merely treads water—even if it does throw them the occasional bung. Economically, Britain is limping along with growth rates barely above 1%. If it is to begin to solve its many problems, it needs growth.
Mr Burnham has no reason to call an election for its own sake. As Sir Keir showed, a mandate and a solid majority are no substitutes for an actual governing agenda. But if Mr Burnham cannot come up with a better vision of how to use the next few years, he should call time and go to the country.
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