Budget 2021 reaction: ‘Why is it cheaper to fly than catch a train?

Greater Manchester Mayor Andy Burnham has given a decidedly mixed reaction to the Budget and Spending Review unveiled by Chancellor Rishi Sunak.

Mr Burnham said the announcements made today (Wednesday 27 October) represented an attempt to present a “feelgood Budget” but carried the prospect of “a hangover” once the figures were studied in more detail.

Mr Burnham said there was plenty of good news about promises of investment in transport and local councils being awarded money from the Levelling-Up Fund.

But he stressed there were a number of notable omissions from Mr Sunak’s big speech, including on rail and climate change, and also criticised the policy on Universal Credit.

Is the Government buying into Greater Manchester’s ideas on public transport?

Mr Burnham said the Budget provided the “clearest sign” so far that ministers are “buying into” the city-region’s ideas for overhauling its public transport system.

He welcomed the investment of more than £1bn in transport and the six successful levelling-up bids by Greater Manchester councils.

However, he warned that more financial support was still needed to achieve his full vision of a system similar to the one in London.

Mr Burnham said: “We’ve had from the Chancellor the clearest sign that the Government is buying into the idea of a London-style public transport system for our city-region.

“We’ve made a really strong case about that and we feel this is a big step forward.

“However, that has got to mean London-level fares for us. That is what will define whether Greater Manchester gets a London-style public transport system, and we’ve put in bids to be able to lower fares and increase the frequency of services.”

Worries about rail across the north

Mr Burnham said the Budget was “less encouraging” when it came to rail.

He said he was worried that promises made to improve intercity services across the North of England by the Government were slipping off the agenda.

He said: “If you go back to the original Northern Powerhouse we were promised increased connectivity between the northern cities. That includes this prime minister.

“We believe we have been repeatedly promised a line going from Liverpool and Manchester to Leeds via Bradford. The north is united on this.

“I feel like some bad news is being delayed here, although we will wait to find out what the Government decisions are.”

Where was climate change in the Budget?

Mr Burnham said he was concerned about the environmental content of Mr Sunak’s speech, which comes just days before the UK begins hosting the crucial COP26 climate talks in Glasgow.

He said a green agenda was not clearly visible in some of the transport policies and there were omissions on using the need for change to create good-quality jobs.

Mr Burnham said: “With COP looming it was odd to hear the Chancellor prioritise cuts to air fares rather than rail fares.

“While we can see the benefits for regional airports there is something seriously wrong here with the economics of transport in our country when it costs less to catch a plane than to catch a train.

“There has to be drastic changes to the financing of public transport so buses and trains become much more affordable than they currently are.

“Overall I would say the Budget was weak on net zero. I would have preferred to hear slightly less about carbonated wine and much more about a decarbonised economy.

“I would have liked to hear about the huge impact of a net-zero economy to deliver good-quality jobs in their thousands across Greater Manchester, about a retrofitting programme of people’s homes to make them cheaper to heat and light and therefore run.

“I feel this raises questions about whether we have done enough to have credibility when the world’s spotlight is on us in Glasgow next week.”

Does the policy on Universal Credit go far enough?

Mr Burnham also had mixed feelings of the change to Universal Credit.

He welcomed alterations to the taper rate but criticised the fact that in Greater Manchester only 38% of claimants would actually benefit.

He said that when people on low incomes were struggling to make ends meet that was concerning.

He said: “We welcome the partial U-turn on Universal Credit but this doesn’t go far enough.

“Almost two-thirds of Greater Manchester claimants will not benefit, that’s about 120,000 people out of 200,000 and many of them are disabled people hit by the cost of living crisis.

“Surely something should have been done to help these people.

“We feel it’s unfair to U-turn for some Universal Credit claimants but not for all. Everyone receiving it is being hit by rising energy costs, rising fuel costs and food costs.”

Will the short-term benefits of the Budget last?

Mr Burnham said he was worried that Mr Sunak had announced financial policies that sound good for the short-term but have costs hidden further down the track.

He said: “The Chancellor tried to give a feelgood Budget but there is certainly a risk of a hangover.

“He has said all Government departments are receiving a real-terms rise in expenditure next year, but closer inspection says to us that won’t be sustained through the rest of this parliament, and at some of the departments we would say are most critical for levelling-up.

“Some of the nice headlines do feel a bit flat when you look at some of the detail underpinning them.

“It felt like a Budget for today, not for tomorrow.”

What has the Government said?

Key announcements in the Budget include:

– A £2.2 billion package of Universal Credit reforms to allow claimants to keep more of the benefit if they earn more from work.

– Some £7 billion worth of cuts to business rates following a review into the property tax, with the cancellation of next year’s increase in the rates multiplier and a 50% cut to next year’s rates for most retail, hospitality and leisure businesses.

– A major overhaul of alcohol taxation, including cutting the cost of Champagne and prosecco, which Mr Sunak said are “no longer the preserve of wealthy elites” from 2023.

– Pubs will be helped with a new lower rate of duty on draught products, knocking around 3p off a pint as part of the reforms.

– Previously planned rises in alcohol and fuel duties will also be scrapped.

– A cut in the surcharge levied on bank profits from 8% to 3%.

– Flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a new lower rate of Air Passenger Duty from April 2023.

– Whitehall departments will receive a real terms rise in funding as part of the Spending Review, the Chancellor said, amounting to £150 billion by 2024/25.

Mr Sunak told MPs: “Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising.”

He promised “help for working families with the cost of living”, with the OBR expecting CPI inflation to reach 4.4% but warning it could go further and hit “the highest rate seen in the UK for three decades”.

The Chancellor was given some leeway for greater spending as a result of an improved economic outlook, with the OBR predicting the economy will return to its pre-Covid level at the turn of the year.