There had been much made of the new chancellor’s supposed break from the austerity politics of his predecessor in the run up to this Autumn Statement. On Wednesday Hammond dashed any hope of a change of direction.
This government has wasted six years on a failed austerity project, for which they have forced the poorest to pay. This week’s update saw growth revised down, wage growth revised down, investment falling and an “unprecedented” flat-lining of productivity growth. The Tories’ “long term economic plan” lies in tatters, their fiscal targets abandoned.
The IFS responded to the chancellor’s speech by suggesting that real wages are forecast to remain below 2008 levels, even in 2021. That means more than a decade of no real earnings growth, a situation without precedent in the last 70 years.
Under the last Labour Government we witnessed a long period of growing productivity accompanied by increases in wages, strong employment and economic expansion.
The Tories have been making the wrong choices. Over the last six years they have starved our economy of investment and compounded this through the fiscal measures they introduced, with people on low and middle incomes bearing the brunt of the changes to tax and social security cuts and inequalities rising.
This week’s statement saw little change. The government ploughed on with their £3.4bn cuts to Universal Credit work allowances, which the Labour Party has been calling on the chancellor to reverse.
Instead he made a miniscule reduction to the “taper rate”, the rate at which support is withdrawn from families. The government has reduced support to some families by as much as £2,500 through the work allowances cut, but are offering them just £150 back through the taper rate cut! Not only has the government abandoned their fiscal targets but they have also abandoned the important principle that work will always pay.
This was an Autumn Statement of missed opportunities. Hammond could have reversed the cut to the employment and support allowance, the support for sick and disabled people who have been found not fit for work but who may be in the future. The cut will take £1,500 a year from disabled people, knowing that they are twice as likely to live in poverty as a result of their condition. But the chancellor offered no respite to disabled people.
It was stunning that the problems mounting in our pensions system were also not addressed. The government ignored the plight of millions of WASPI women who had their state pension age pushed back with little or no notice, whilst quietly shelving the guarantee of the “triple lock” state pension after 2020. And the growing numbers of self-employed people who were excluded from auto-enrolment by this government and are struggling to save were ignored too.
Unlike the Tories, Labour recognise that each government is judged by how it treats the most vulnerable. The next Labour government will make different choices, acting where this one has only offered warm words.
We have committed to extending pension credit to ensure that the poorest WASPI women are properly supported. This policy will provide up to £155 a week to hundreds of thousands of older women affected now by the Tories’ chaotic approach to pensions policy.
The chancellor did nothing for the five million self-employed people who account for 81 per cent of the increase in employment since 2008. Last week I set out Labour’s five tests for the extension of social security to the self-employed. As part of our Workplace 2020 initiative, we will work with the Federation of Small Businesses, The Association of Independent Professionals and the Self Employed (IPSE) and the self-employed themselves to bring forward proposals which ensure adequacy of support, equality between all employment statuses, fairness and transparency, a continued responsibility placed upon employers and respect for the existing principles of our social security system.
Finally, our shadow Chancellor has announced that Labour will introduce a real living wage, determined by independent experts. This will ensure a full and proper wage for a working day.
The Autumn Statement proved that the Tories have no answers on the economy, on social security or on pension savings. Only Labour has a vision for a fairer, more equal future for us all.