The bookie’s favourite to be the next PM, Rishi Sunak, took to the stage on Wednesday afternoon to announce the second monumental budget of the Coronavirus pandemic. Expectations were high and Sunak’s suit and charm did not fail to disappoint. Yet whilst the single community may have been satisfied by the budget or indeed the Chancellor, Labour leader Keir Starmer didn’t hesitate to bring his sense of humour to the table, lambasting the 40-year old son of East African parents about his photographer budget. The witty remarks may have eased the almost empty chamber but the true messages of Starmer’s speech may have finally stuck the mud.

Will the UK economy bounce back? Will the UK economy become greener as it does? Or is Starmer right? And the Conservatives are just “papering over the cracks”?

In truth, the true impact of this year’s budget will be played out over the course of the decade, yet we can still gauge the impact as it stands. In its current shape, the budget has undoubtedly given some of us hope whilst some of us concern. One thing is for certain however - none of us should be indifferent. This a budget which can change the course of the UK’s economic history.

So where does the hope lie? And where should the concern arise?

The stock market’s response offers the first insight into such questions. The FTSE 100 index of blue chip shares closed 1% higher at 6675 points on Wednesday with leading risers including housebuilders such as Barratt Development and the airline group IAG. On the one hand, this showed confidence in both an industry enriched by the pandemic and one pulled apart, suggesting the future looks somewhat brighter for most businesses. On the other hand, it highlighted investors confidence in industries which are far from green and net zero – a problem that we will see reoccur.

In many senses, the rising FTSE 100 index was to be expected, considering Sunak will be injecting a package into the UK economy requiring a hefty £355 billion of borrowing. Some £100bn of that will be spent on support for jobs, such as the furlough scheme, whilst more will go towards restart grants for retail, gyms and hospitality and a further £700m will be used to prop up the fragile art, culture and sporting institutions. This gives both workers and businesses more of the reassurance they need to get back earning, investing and spending. As Sunak reiterated multiple times, this is indeed a very generous package, one which surpasses those seen on the continent and one which will, without fail, cause a headache for George Osborne.

In another sense however, one might have expected such a rise in the stock markets earlier. Much to the anger of the Treasury, everyone seemed to know the budget before Rishi got a chance to deliver his precious speech. Despite this, one major question was left unanswered until Wednesday – who will pay for the colossal price tag?

Rishi’s direct answer was businesses. Corporation tax will rise from 19% to 25% as of 2023. Although an initially daunting jump, it quickly transpired that only 10% of the wealthiest firms would see their corporation tax situate at 25% and others would experience a smaller jump or rather none at all. The blow has been cushioned by numerous other policies. Naturally, this is a tax increase which fits the Conservative’s campaign promises, keeps the average earner happy and will return an extra £17.2bn by 2025-26. Even Labour has backed this decision (although they couldn’t really oppose it in the first place). Everyone’s happy then?

Well, two of the wealthiest Tory donors, Alexander Temerko and Michael Spencer, believe that raising corporation tax is the wrong thing to do. Some have subsequently called into question whether we could see a Conservative promise to cut corporation tax before the next election and double back on themselves. Many businesses certainly have a mixed opinions on the matter, questioning whether Sunak’s investment and Help to Grow drives will counteract the changing fiscal bill they’ll receive after 2023. Regardless of the answer, everyone knows that someone will have to foot the bill and perhaps businesses should shoulder that burden.

You’d be forgiven at this point for giving the budget a fair judgement. Unfortunately, ‘honest’ Sunak has distracted us with his slick hair and dealt out tax threshold freezes for the next 6 years. The scale of the impact of such a move has been drastically understated by the chancellor. By 2025/26, an extra 1.3 million people will pay income tax and another 1 million will pay the higher rate of income tax as a result of these freezes. These 2.6 million will be dragged over tax thresholds and the biggest concern is that most of these people currently don’t even know it.

High street businesses and retail are receiving initial support in the package but they too could be dragged back under. The budget failed to materialise an online sales tax which will only weaken the high streets and make the current support they’re receiving an entire waste.

Speaking of dragging in fact, Starmer claims that Sunak was “dragged, kicking and screaming” to keep the £20 weekly top up on universal credit and even still, he’s only extending it until October. Although after the end of the road map, this will interject at a time when furlough draws to a close and unemployment is expected to peak as the winter months approach. That is a blatantly dangerous move since 6 million are currently being kept afloat by universal credit and a further “500,000” could be put into poverty next winter according to the Labour leader if the move goes ahead.

To add insult to injury, there is no extra support announced for the nearly 2 million low income claimants of older disability and unemployment benefits. This matter is sadly exacerbated by perhaps one of the most disappointing parts of the 2021 budget.

The NHS and Social care spending will fall by £30bn as the Covid emergency eases. The true heroes of the pandemic are being neglected quite literally, since this spending fall wasn’t even mentioned during the speech of the Chancellor. The NHS will need the funding to contend with the backlog of surgery and increased mental illness, since the measly 1% increase in NHS staff wages isn’t going to help anyone either, but they aren’t getting it. What’s more, the British Medical Association estimate that the freezing of the lifetime pensions allowance will push doctors to take retirement earlier; something which will render a terrible situation, a whole lot worse.

Is their a brighter and greener side to the budget though?

Fortunately, there’s a bit of hope. The Bank of England’s remit has been changed to include a duty to support the government’s net zero ambition. Although this bears no immediate tangible benefit, it will promote far greener investment and place climate at the heart of the British economy. This will be aided by the £22bn national infrastructure bank in Leeds; a fine demonstration that power doesn’t have to always be exercised at Westminster. This move may in fact make finance for sustainable development more easily accessible.

The government isn’t devolving all its climate saving power either. The issuance of green gilts totalling at least £15bn has been announced enthusiastically, if not a little overdue might I add. Current take up of gilts is at a good level which bodes well for their green counterparts provided the government can invest where it counts. By and large, the Chancellor implied he did have the capability to do so; the £4.8m for a hydrogen hub in Holyhead to pilot the creation of hydrogen using renewable energy for zero emission HGV fuel, alongside the Humberside project to attract investment in offshore wind manufacturing were examples of this. These aren’t wildly expensive endeavours but when it comes to net zero, they’ll provide the bang for their buck.

So why have Caroline Lucas, Ed Davey and Keir Starmer particularly denounced the blue party’s green initiatives? It in part comes back to the idea of ‘papering over the cracks’. The Tony Bair Institute for Global Change Thinktank believes that the new infrastructure bank would invest less than the European Investment banks before Brexit. The problem with this observation is that it fails to take into account the time consuming bureaucracy involved with the European Commission and that sustainable development is becoming more cost effective and higher green premiums don’t necessarily equate to more effective climate solutions.

What is more disconcerting, are the eight new free ports. The coastal free ports will damage coastal habitats whilst all eight will exacerbate noise and traffic pollution. The renewing of the latent eight sites needs to be done so as not to leave a huge carbon footprint behind. Unfortunately, where tax incentives are high, the lid is kept on fuel duty and the Environmental Impact Assessment (EIA) is being circumvented, the possibility of a green re-construction program dwindles quickly. The anger of the environmentalists is understandable, not least following on from the Conservative coal mine escapade in Cumbria.

Yet at some point Rishi had to balance priorities. Saving the climate is essential, but so is growing business. These free ports facilitate a much healthier business climate and are a welcome carrot after the stick of a corporation tax rise. Moves such as the 130% super deduction and the Help to Grow programs will ultimately stimulate investment. Admittedly, not all that investment will be green but I’d be willing to hope that some of it will. In any case, it’s better than austerity.

Sunak has likewise recognised the migratory backlash associated with Brexit and taken the right decision to fast track talented immigrants through elite points based visas, innovator visas and others. This will add a diverse and fresh dimension to the economy, pleasing both those GDP growth lovers and the more agnostic greener ones amongst us.

Indeed, an increased National Living Wage could make all the difference to lives of workers up and down the country. That must not be overlooked.  It’s similarly impossible to expect everyone to start a more sustainable future, when they don’t have the necessary funds for the present.

“We will recover,” said Rishi near the start of his speech and I can’t help but agree with him. He rose well to the daunting Covid challenge in March of last year and he’s not faltered in 2021. The Office for Budget Responsibility confesses that the Chancellor’s actions have limited unemployment and recession had he not introduced what he did, when he did.

So yes there will be rising debt, but who wants austerity?

And yes there will be rising tax, but someone has to pay.

And of course unemployment will rise for a while longer, but what goes up must come down.

Admittedly, within this budget there is a huge gaping whole in NHS and social care spending and a question mark around the futures of universal credit claimants. This needs to be changed without question. Yet Sunak has delivered when it comes to pulling through this pandemic. He has delivered when it comes to boosting business. And more importantly for all our futures, he has delivered a chance to catch up to the net zero target. All that remains, is for us to take it.

Starmer wasn’t necessarily wrong when he criticised parts of the budget, but it’s naïve to think of Sunak’s red briefcase as “papering over the cracks”. This budget provides a foundation for now and the future. When the unrivalled furlough scheme fades away, we’ll need to be ready to work and innovate. There’ll be levelling up, free ports, infrastructure banks, modernising small businesses, developing cities and investment galore.

The chancellor’s delivered, it’s time for us to do the same.

Elliot Wood