Austerity, at least in terms of the overall spending envelope, is over. However, this will not mean the end of cuts – some Departments can still expect to see reductions in next year’s spending review, as the NHS takes up the overwhelming share of new investment. And with Universal Credit still underfunded and the poorest members of society still seeing their benefits frozen this budget was in no way a free-for-all. Indeed, given the Budget also brought forward tax cuts that will overwhelmingly benefit richer citizens, it is hard not to view it as yet another missed opportunity to help the millions of people who still stand to lose out from Universal Credit.
The most significant new policy is the Digital Services Tax. The expected revenue generated is not substantial, nevertheless the symbolism is profound. It is no exaggeration to say the legitimacy of representative democracy itself will be tested by the pace of radical technological change in the next few decades. Governments have often seemed unaware of challenges to come and the threat to the tax base is one of the clearest. For that reason, this policy is a good and proportionate first step.
Yet perhaps the biggest single message was the Chancellor’s striking inability to raise revenue through conventional taxation – even the Digital Services Tax is deeply unorthodox. This is worrying because the cost of paying for us all to live longer will make the post-crash deficit reduction look like a fiscal picnic. There is no way Britain can afford it without tax rises, so the Government should learn from the Digital Services Tax and get creative. We need to explore radical new ways to raise revenue, from a Land Value Tax, to new property taxes, progressive VAT and taxes on carbon consumption.