Reflecting on the Budget

The Let’s End Poverty campaign, which many churches are supporting, had called for a Budget that prioritised the poorest. This was not it. Everyone in the UK, including the least well off, will benefit from the increased spending on public services, which will certainly make a big difference to many people experiencing poverty.

However, despite announcing over £70Bn a year greater in spending, it was difficult to find money targeted directly at improving the lives of the poorest in the UK, nor was progress made in restoring the international aid budget to its target of 0.7%.

Lived experience of poverty

In the run up to the Budget we talked with people experiencing poverty to get their views on what a good Budget would look like.

It is no surprise that there were the range of concerns about climate change, the economy, defence, and immigration that can be found in any group of UK citizens, but when it came to issues directly impacting on poverty there were three themes.

There was a call for people needing benefits to be treated with respect. People wanted an end to the rhetoric that treats the poorest as lazy, or not ‘properly’ disabled or simply cheats.

While the Budget contained a familiar crack-down on benefit fraud, there was a welcome acknowledgement from the Chancellor that the rise in fraud is driven by organised crime exploiting the weaknesses in the Universal Credit system.

Group members recognised that we are in difficult times, but wished to see some money directed at alleviating poverty, be that an end to the two-child rule, increases in benefits, or an extension to free school meals.

These would have indicated that poverty is on the new government’s agenda and provide hope for the longer term. A reduction in monthly debt repayments that can be taken from Universal Credit payments and additional investment in breakfast clubs represent small very low-cost steps forward.

The most specific concern was the change to how disability is assessed which was planned by the previous government. These changes remain in the plans, and are expected to cut £2Bn from disability benefits starting next year.

This means that over the next 3 years an estimated 400,000 disabled people will have their benefits cut by around £5,000 a year. It is important to recognise this group has a high incidence of poverty, are three times more likely to face hunger than the general population, and make up 7 in 10 of visitors to foodbanks.

Acknowledging reality

The £70Bn of additional spending announced in the Budget did not go on alleviating poverty. It was largely about addressing known problems in the public finances and especially public services.

In 2023 the independent Institute for Government rated every major public service bar schools as performing worse than 12 years previously, with insufficient funding for improvement. The largest service, the NHS, was struggling and both the criminal justice system and local government where widely acknowledged to be in crisis.

The March 2024 Budget partially protected the NHS, but planned deep cuts in almost every department from 2026 onwards – though did not set out how those cuts would be achieved. This prompted the Chair of the Office for Budgetary Responsibility to describe the plans as “worse than fiction” on the grounds that at least “someone has bothered to write fiction”.

There is a row about what was known about before the election, but during the election campaign it was always clear that the next government would have to cut, borrow, tax or a combination of all three.

Sadly, no major party would engage with the issue and instead, they preferred carefully worded promises about freezing or cutting (some) taxes. If politicians want to understand why public trust in them is at an all-time low, all parties may want to reflect on why they made those choices.

After this Budget the UK is a higher tax economy (38% GDP in tax, up around 1% in this Budget and around 3% since the pandemic), but still has significantly lower tax levels than our EU neighbours. The spending is front loaded, which means that while there are large rises this year and next, after that most departments will not see real terms increases in their budgets.

The hope is that this slug of money will stabilise our public services and create a platform for improvement. It is by no means certain to work, and the business that the new taxes mainly fall on may struggle, but at least there is now a belated engagement with reality.

The purpose of change

The Budget represents a major long-term change in our economy. It is worth reflecting on more than the predictions of how much money we will have and how fast economic growth will increase it, which the Office for Budgetary Responsibility and Treasury documents necessarily focus on. The economy must have a purpose beyond growth.

From a Christian perspective it might be judged against how it enables people to flourish, to fulfil the potential that God has put within them. In the context of our society, well-functioning schools, hospitals, and even courts and prisons are part of that, and this Budget prioritises these. It must also offer sufficient support to enable the least well off to thrive and contribute to society. The most important number not mentioned in the Budget documents is 14.4 million – which is the number of people experiencing poverty in the UK. Despite spending £70Bn more per year, the Budget is unlikely to move that number.