Tony Blair once boasted of feeling the hand of history on his shoulder. For Alistair Darling and the government, it's less a hand and more a bucket of bricks. Forget smeargate and the drip-drip of expenses scandals, the decisions the government made today not only bear upon their electoral fortunes over the next 12 months, they will decisively influence how history remembers New Labour. This in mind, was it an epoch-making budget? No, of course it wasn't. But does it constitute a final break with neoliberalism? Are they determined to make the working class pay for the crisis? Does it offer political openings for the left?
If there was a surprise in this year's budget, it lay in Darling's forecasts.
* The economy to shrink by 3.5% by the end of this year.
* A return to growth by the final quarter of 2009(!)
* The economy will grow by 1.25% in 2010.
* From 2011 growth will accelerate to around 3.5% and remain at that level.
* Inflation will continue to decrease - 1% by the end of this year.
* Thanks to projected economic growth, the yawning chasm of the budget deficit will fall by half by 2013.
Very optimistic to say the least.
So what were the measures announced?
* Unemployment Darling claimed the money already gone in has halved the turn around time between jobs compared with the previous recession. He therefore announced a further £1.7bn for Jobcentre Plus. Also, keen to avoid the persistent youth unemployment that was a chronic feature of the Tory recessions, under 25s unemployed for a year or more will have to choose between a job or further training. For this the government will work with business to create an extra 250,00 jobs. They will also make available £260m of training/subsidy money for sectors with "strong future demand". £250m this year and £400m next year will go to secure extra places in further education.
* Housing The chancellor pledged to work with the banks to make an extra £20bn of mortgages available. This would be secured by a government-backed mortgage guarantee scheme, but there was no mention of projected cost. To try and revive the housing market (mortgage lending may have risen 16% last month, but it is still around half the figures of this time last year), the holiday on stamp duty on properties worth up to £175,000 remains until the end of 2009. £500m is to be made available to restart stalled housing projects, and £100m will go to local authorities to build energy efficient homes.
* Business Loss-making businesses crippled by the collapse in credit can reclaim taxes on profits for the last three years. The much-vaunted car scrappage scheme that's exercised much media commentary in recent days was announced. Hand in a car 10 years old or over and you will receive £2,000 toward the cost of a new one. This is for a limited time only and runs out in March next year. Unsurprisingly Darling remained committed to maintaining Britain's position as the centre of world finance and previewed a package of regulations. These would cover corporate governance, remuneration, accountancy rules, transparency and saver and investor support. Also more would be spent on North Sea exploration to exploit the estimated two billion barrels remaining in "uneconomical" oil fields as well as transforming it into a site for gas storage, offshore wind power, and carbon capture. Furthermore money will be used to support advanced manufacturing, green business and communications technologies.
* The Green Economy Further announcements were served up with a dose of greenwash. £1bn would be invested in green collar jobs. £525m is to be ploughed into offshore wind farms over the next couple of years, which will apparently provide enough electricity to power three million homes. A further £435m will go into energy savings in the public, private and domestic sectors. The European Investment Bank will also make £4bn of capital available for green technology projects and business. There would be tax relief on up to four demonstrative carbon capture projects.
* Benefits From next year, child tax credit will go up £20 - it will be more if the child is registered as disabled. Statutory redundancy pay will be increased and for grandparents who are of working age but care for their children's children, this care will count towards state pension entitlement. To help counteract the declining interest rate, the threshold for pension credit is raised to £10,000. The winter fuel allowance is increased to £250 for over 60s and £400 for the over 80s.
* Taxation This might warm the cockles of Old Labour hearts out there. The one per cent of the population who receive salaries of £150,000+ will now pay the new 50% top rate of income tax. For those who earn in excess of £100,000 all forms of tax allowances are now withdrawn. Income tax remains frozen for the rest of us. Darling also pledged more action on closing tax loopholes. Measures identified by the Treasury will realise an extra £1bn tax revenue over the next three years. Lastly tobacco and alcohol are hit with a two per cent rise in duty, effective from 6pm and midnight tonight. Taken together these will raise an expected £6bn by 2012.
* Public Sector Rumours and expectations abounded of an axe falling on public spending. The chancellor conceded borrowing would grow to £175bn this year, then £173bn, £140bn, £118bn and £97bn for the years after. However he was very clever to avoid the c-word: cut. Instead the emphasis is on "making savings". This kind of action, he claims, has saved some £26.5bn in "efficiencies" since 2004. He is looking to make £9bn more every year until 2013. This will be back up by £60bn in asset and property sales by 2012.
He concluded with a sharp barb for the Tories: that Britain will grow out of recession, not cut its way out.
The budget is certainly a mixed bag. There is a pale green-social democratic colouring to it. While those of us on the left would certainly agree the taxation, benefits, green industries, education and support for manufacturing do not go far enough, they could be viewed as a step in the right direction. All of these provide avenues on which the left can campaign and build upon.
But, and this is a very big but, it shows the New Labour leopard cannot change its neoliberal spots. Darling may have avoided mentioning cuts but they are there, and they're substantial. As Chris Dillow demonstrates, measures aimed at eliminating public sector waste are extremely problematic. As any civil servant will tell you, government efficiency savings have come at the price of attacks on pensions, redundancies, increasing workloads and management authoritarianism. The overall result? A lower level of service provision. And then there is the £60bn sell off of remaining assets. These will necessarily include Royal Mail, the Royal Mint, recently acquired interests in the banks, outsourcing and privatisation of more local authority services. The list goes on and on.
In short Darling has presented a Frankenstein's Monster of a budget. The twitching corpse of neoliberalism has been stitched together with the cadaverous remains of disinterred Keynesianism. The application of a weak current of traditional labourism and green wash has jolted the creature into life. And now it stands, determined to make the working class pay a massively disproportionate share for a crisis not of its making. And it will succeed, unless our movement draws on the experiences of this year's wildcat strikes and workplace occupations.
Sorry, Mr Darling. You say: we pay. We say: no way.
Edit: Press releases from various unions in the comments box.