Should Philip Hammond increase public spending in the Spring Statement today?
Jonathan Reynolds MP, shadow economic secretary to the Treasury, says YES.
Eight years of austerity have not just brought with them a hefty social cost, but caused significant economic damage.
We have yet to see what the Office for Budget Responsibility figures will reveal in today’s statement, but analysis at last year’s Budget showed that this has been the worst decade for productivity since 1812.
This, alongside underfunded public services, regional inequality, and a labour market producing too few decent jobs, is one of the biggest problems facing the UK economy.
Starving the economy of capital, which is desperately needed for our infrastructure and public services, is strangling our growth potential.
In addition, local services are struggling to meet even basic needs – the recent effective bankruptcy of Northamptonshire County Council is a dramatic warning sign of impending crises. With interest rates at record lows, now is the time to invest in our economy and start to repair some of the damage.
Read more: Philip Hammond signals an end to austerity
Chloe Westley, campaign manager at the TaxPayers’ Alliance, says NO.
With Philip Hammond facing calls to “end austerity” and start an irresponsible spending binge, it’s worth remembering that his predecessor faced the same calls even when the deficit was running at £140bn a year.
Even Conservative politicians have been arguing in favour of “borrowing to invest”, foolishly accepting the wrongheaded arguments of Jeremy Corbyn and co.
But what guarantee is there that any extra spending would be put to good use? Taxpayers are still forking out billions for discredited projects like HS2, while spending on defence and policing is falling. Why is the government persisting with the state pension triple lock while social care is clearly under significant pressure? Why did the UK spend £13bn on foreign aid last year?
So no, Hammond shouldn’t increase spending when the government’s priorities are wrong as they are. If he thinks there’s any scope for fiscal loosening, it should come in the form of tax cuts that benefit everyone, rather than bungs to interest groups.