Watching Budget Day in Britain is a somewhat surreal experience. The Chancellor brandishes his red box out of which comes a speech devoid of ideas, while the Leader of His Majesty’s Loyal Opposition resorts to long-rehearsed slogans that are similarly empty. Both crack terrible jokes to discredit the other party but neither lands a knock-out punch. On goes the political spectacle while the economic situation for millions of people up and down the country gets increasingly desperate.

The Chancellor Jeremy Hunt, for all his protestations to have a plan for growth, is presiding over the slowest growing of all the advanced economies. Britain is projected to avoid a recession in 2023, but half of all UK households will have lower living standards than two years ago — a loss of up to £4,000 per family.

Unemployment continues to fall, but inactivity is rising: there are more than 500,000 people of working age who have dropped out and are not even looking for jobs, many due to ill health — not to mention all those on disability benefits. Productivity, which is vital for wages and living standards, is stagnating and even falling in areas of the country such as the Midlands and parts of the three devolved nations. Once a powerhouse, even London’s productivity growth is close to flatlining.

The tragic paradox is that the aggregate economy is becoming richer even as millions get poorer. Hunt’s claim to stand with the optimists against the declinists sounds more like complacent boosterism than the necessary dose of realism.

For his part, Keir Starmer was as vocal on the failure of 13 years of Conservative rule as he was silent on New Labour’s errors and excesses that contributed to the mess we are in. An economic model over-dependent on the City of London. An over-reliance on service sectors to the detriment of high-tech manufacturing and industry. An imperial Treasury that exercises hegemonic control over Whitehall. And disparities between and within regions that became more entrenched.

From finance to accountancy and law, many services sectors keep London and the metropolitan parts of the South East going. But financial services, thriving life sciences and creative industries notwithstanding, the UK economy is broken. It fuses rentier capitalism that extracts excess profits — often underpinned by speculation and debt — with a low-wage, high-welfare model. Thus income from work needs to be supplemented by the taxpayer, so that working people can feed themselves and their families. 

Yet the delicate foundations are disintegrating. Close to two million people are destitute and rely on foodbanks to make ends meet. Support measures such as the government’s Energy Price Guarantee subsidise affluent households who have both the incomes and the savings to cushion the impact of higher energy prices. Meanwhile parents miss meals in order for their children to eat.

Our society increasingly resembles an inverted pyramid — with wealth and power at the top and pauperdom and hopelessness at the bottom. We are told “there’s no alternative” but surely it does not and should not have to be this way.

Our politics is small

Our politics is small and inversely related to the scale of the task. Government and opposition compete over competence while largely ignoring the fundamental questions. First, why do both accept a fiscal framework that privileges the public finances over household finances and businesses? What’s the point of meeting arbitrary targets related to budget deficits and public debt when these are means rather than ends? 

Faced with the disruption that brought about the Boris Johnson and Liz Truss insurgencies, both Rishi Sunak and Keir Starmer are reverting back to the old consensus of Gordon Brown and George Osborne that debt and deficit targets matter more than levels of public investment. Yet the lack of investment turns out to be the main driver for the vicious circle of low-growth, low-productivity and low-wage in which Britain is seemingly stuck.

Second, the UK economy lacks markets that are open, competitive and generating real value. Since 1997 when the New Labour came to power, about two-thirds of all sectors have seen an increase in concentration of ownership and large players. High street banks. Supermarket chains. Tech platforms. All are oligopolies operating in markets which some would euphemistically describe in terms of “imperfect competition”. Excess profits are the result of high consumer prices that leave people worse off while enriching top executive and large shareholders.

Third, the burden of taxes is on labour rather than capital, which penalises all those lacking assets and income from assets. For nearly forty years, labour’s share of income has declined, as productivity growth outstripped wage growth. Neither trickle-down wealth nor redistribution alone will rebalance things. Rather, we need to distribute assets and grow them, while also considering more effective wealth taxes and, for example, a land value tax to reduce council tax.

And the list goes on — more varied ownership models, proper fiscal decentralisation to local authorities, greater state capacity to design and deliver an ambitious industrial policy… But you wouldn’t know this by listening to the Budgets speech, most of which was leaked long before Jeremy Hunt rose to speak in the House of Commons. 

That brings us to a final, fundamental question — the disregard for parliamentary democracy and the kowtowing to the international money markets. Budget purdah was once a respected norm, when budgets were kept secret until the Chancellor opened his red box in the chamber. Transgressions rarely occurred and led to resignation, as with the Labour Chancellor Hugh Dalton who promptly stepped down after sharing some budget titbits with an evening paper journalist in 1947.

No more honour code today. For decades successive governments have engaged in budget spin and budget news management — through leaks to government-supporting papers or press releases. The justification is to market stability, yet why should international finance matter more than the national polity? Surely we deserve much better. And whoever offers a vision for national renewal will actually deserve to win the next election.