The Camden New Journal published the below op-ed from me on the Budget and what it means for our ability to spend on our priorities.*
I’m perplexed by Labour’s claims that saying that government spending will now rise – the ‘end to austerity’, as announced by Theresa May – means that all restraints are off. The only reason we have a declining deficit is because of careful stewardship, which would be jeopardised by overspending again.
Labour’s “It’s all water, so let’s splash as much of it as we can” is hopefully naive and would be economically disastrous. As my op-ed says, there’s a difference between running a bath and flooding the house.
Besides my role as a councillor, I’m an economist by day, so I spend much of my time interpreting economic data. Don’t worry – I’m more fun at parties than that sounds.
Last week, we had a flurry of good economics news: unemployment at its lowest since 1975, wages rising by their fastest in a decade, and inflation and rents falling.
To top it all, the deficit is now at its smallest since 2002. In next week’s Budget, the independent Office for Budget Responsibility is due to reduce its forecasted deficit for this year by £13 billion compared to its forecast just seven months ago.
That £13 billion is a bonus thanks to the government’s economic stewardship since 2010 – and two-thirds of the way towards the record £20 billion a year funding boost that the Conservatives have committed to the NHS.
That bonus is primarily because tax revenue has been much higher than expected, while spending has continued to rise. Yet readers – who have seen Camden’s budget rise by £37 million this year, but seen the borough cut services – know that what matters is how money is spent, not always how much.
As a result, I’ve made representations to government on what should be in the Budget. I’d like to see more funding for housing, for example. The government has given Sadiq Khan a record £3.15 billion to fund affordable housing, and Britain’s building more homes than every year but one since the 1980s, but I make no bones about saying we need more.
Much of that can be funded by scrapping HS2, but while I believe that folly’s time is up soon, it won’t be this week. So the only way we can fund our priorities – like building more homes or giving that £20bn extra to the NHS – is to continue to be careful about what is spent in other areas.
The end of austerity means government can spend more on its priorities. But running the bath is not the same as flooding the house, and you should be wary of snake-oil salesmen that say spending can increase on everything.
If Britain’s not careful on what we spend, we’ll jeopardise the economic progress that has been made: not just the good economic news we’ve had recently, but our ability to fund that boost to the NHS and housing, too.
* It was meant to run before the Budget alongside an op-ed by Camden Council’s leader, but she didn’t hit the deadline, so it was delayed until this week.