Lawrie Hooper has launched a blistering attack on the government’s budget, accusing ministers of “looting” public funds and “mortgaging our future to try and win the next election”.
The Liberal Vannin leader told Tynwald that the budget, titled “security, stability and confidence”, was built on “unfunded tax cuts” and “draining the reserves”.
Quoting Hemingway, Mr Hooper said: “How do you go bankrupt? Bill asked. Two ways, Mike said. Gradually, and then suddenly.”
He added: “Honourable members, public finances don’t collapse overnight. They erode one budget at a time until at the last there is nothing left to give.”
Deficit
The Ramsey MHK pointed to Treasury’s own figures, showing the structural deficit forecast for the next two financial years had increased from just over £34 million in the 2023-24 budget to £168 million in the current one – a rise of £133 million.
“That’s 133 million more taken from reserves. That’s 133 million more that has to be found somewhere,” he said.
Mr Hooper accused Treasury of “window dressing” by moving investment returns “above the line” to make the deficit appear smaller.
“Moving the figure above the line to include it in the structural deficit doesn’t change the reality of that deficit. It’s like putting lipstick on a pig,” he said.
Budget
He challenged the Chief Minister’s claim that the structural deficit had halved, pointing to table four of the budget documents which showed it had increased from £64.1 million to £97.8 million.
Mr Hooper claimed the government’s tax cuts – estimated to cost around £24 million a year – would not pay for themselves through economic growth, contrary to ministers’ claims.
“There is no actual, firm evidence that blanket tax cuts do drive economic growth, especially ones that are deficit funded,” he said.
He argued that a full-time minimum wage worker would be £200 a year worse off under this budget compared with previous proposals, and that the changes would disproportionately affect women.
“Women make up 55% of the zero hours workforce and a staggering 70% of the part time workforce,” he said, adding that “roughly 11% of workers in the private sector” would be worse off.
Priorities
Mr Hooper also questioned the government’s priorities, contrasting the tax cuts with a lack of funding for special needs education.
“Does anybody else remember when we were being told there wasn’t the six to eight million pounds a year that was needed for special needs education, but now there’s 25 million pounds a year for tax breaks?” he asked.
He criticised the impact on pensioners, noting that increasing the income tax threshold “doesn’t help people relying on the state pension at all. Not a bit.”
Meanwhile, he said, the changes benefited higher earners: “Whilst this different approach is bad for the lowest earners on the island taking hundreds of pounds out of their pockets, this is a tax break for the highest earners on the island.”
Responsibility
The MHK warned that the government was planning to take £267 million from reserves over the next four years, with “no plans on how to replace it”.
“This budget throws fiscal responsibility out the window purely to try and win some votes in the election,” he said. “But the bill will come to you, honourable members, the public will end up paying for this.”
Mr Hooper raised questions about an additional £22.7 million of funding for the Department of Health and Social Care, saying it had been “slipped in under our noses” and wasn’t mentioned by the Health Minister.
He also criticised the government’s approach to capital projects, describing the new quarterly process as “a complete and utter failure” that had not driven capital delivery.
Strategy
Concluding his speech, Mr Hooper returned to his opening theme: “This budget accelerates the gradually and pretends the suddenly will never come.
“We are told the spending is necessary. We are told growth will cover the difference, but hope is not a fiscal strategy.
“Every pound taken from the reserves has to be paid back by someone, every pound spent is just tax deferred.
“Populism might feel good now, but I can assure you, bankruptcy feels much worse later.”