This was a Budget spun by a Government that claims to be listening to the struggles faced by ordinary working people. The reality, however, is that Hackney residents are unlikely to benefit from many of the changes Chancellor Philip Hammond has pledged to introduce.
In his first and last spring budget, Hammond bowed to political pressure to provide a £435m relief fund in response to next month’s hike in business rates.
The announcement will be well received by Hackney’s thriving small business community, which had feared the worst after learning that rates in the borough were set to rise by an average increase of 46 per cent.
Local pub owners can also breathe a slight sigh of relief, as Hammond announced a £1,000 discount in rates for pubs with a rateable value of less than £100,000 — a figure he claims will cover 90 per cent of all pubs in the country.
Despite this, it is doubtful whether the transitional relief represents a long-term solution to the ongoing business rates debacle. With this budget, Hammond has effectively tried to “kick” the problem of rate rises further down the road, which is in essence why the issue has become such a thorn in the Conservatives’ side in the first place.
In failing to tackle the way that rates are calculated, which is currently linked to property valuations, the issue of business rates is likely to crop up again in the not too distant future. With rents rising by over 40 per cent in Hackney over the last six years, small businesses in the area are disproportionately affected by the revaluations, and this transitional relief represents little more than sticking a plaster over what is an increasingly festering wound.
A far more immediate and unwelcome change to come from this week’s budget announcement was Hammond’s decision to raise National Insurance contributions for the self-employed. With 13.6 per cent of Hackney’s residents declaring themselves as self-employed in 2015, a two per cent rise in National Insurance contributions is unlikely to prove popular in the borough.
The Chancellor has defended the rise on the grounds of fairness, arguing that it will only hit people who make more than £16,000 a year and will raise an extra £145 million a year. However, with self-employed people receiving no holiday pay, sick pay or occupational pension scheme, and having taken entrepreneurial risks to set themselves up in the first place, a hike in their contributions hardly seems fair.
As well as disproportionately impacting the gig economy (which has grown by 70 per cent in London since 2010), the announcement also means the Conservatives have broken a general election promise, having pledged no increases in VAT, income tax or national insurance contributions in their 2015 manifesto. With corporation tax for big businesses being cut yet to 17 per cent (employees currently pay 20 per cent on their basic income), it is clear who the Tories are favouring once again.
Elsewhere, an extra £2bn was pledged to tackle the growing social care crisis. The caveat? This figure is to be introduced over the next three years. The Local Government Association has suggested that £2.6m per year is required to plug the gaps in funding, and with many local services already operating on a shoestring (Hackney’s social care funding has been hit by £42m of cuts since 2010), this “extra” funding is unlikely to prove effective or sufficient.
In education, the big announcements came in the form of funding for another 110 free schools nationwide, as well as free travel for kids at grammar schools and free school meals. Some of the 110 new free schools are expected to be selective, in a move condemned by Labour politicians as elitist.
The data on the subject of grammars is clear; bright, deprived kids are far less likely to attend grammar schools than their more affluent counterparts, and the reintroduction of such schools is likely to further widen gaps in inequality. Comprehensive schools in Hackney are already struggling under budget cuts, with Lubavitch Senior Girls’ School in Stamford Hill facing a 19 per cent reduction in funding by 2020. The money being poured into funding and supporting new grammars could be far better utilised to help Hackney’s outstanding network of comprehensives.
“Spreadsheet Phil” was busy cracking jokes at Labour’s expense throughout yesterday’s speech. However, in failing to provide a long-term solution to the business rates fiasco and attacking low to middle income self-starters, he’s making a mockery out of Hackney’s hard-working residents and traders.