Labour insiders are increasingly restive over the ‘dire’ comms plan around the Budget. Reeves’s team cancelled a scheduled TV interview at no notice with GB News and Times Radio – basic poor comms handling. Meanwhile, her major defensive line is that she wouldn’t want to repeat her own budget. Needs some work…
Elsewhere, the financial media has been neglected after a series of ‘curious’ briefing decisions – including a string of denials which subsequently proved to be true when the Budget documents were released. The biggest was HMT spinners getting the expected tax rises wrong by £5 billion…
UPDATE: Reeves has also declined to appear on Martin Lewis’ Money Show this evening to defend her budget.
Tough gig for Rachel Reeves as she attempted to defend the indefensible on the morning media round today. Her record tax-raising budget has been trashed across the board, and the OBR’s verdict is damning: Labour’s big-tax, big-spend approach won’t just stall growth—it will leave the economy weaker in the long run than it would have been under the Tories. Reeves tried to spin the grim figures on Sky News, insisting these “growth numbers are not the summit of my ambition”, promising growth would appear, not now, but in the next parliament. An optimistic bet that Labour will win the next election…
Her well-rehearsed lines last night about “wiping the slate clean” are already falling apart. When pressed by The Sun’s Never Mind the Ballots, Reeves refused to rule out further tax hikes not once, but nine times. Meanwhile, she told the BBC ,”This is not the sort of Budget we would want to repeat.” An admission of guilt…
And now, she’s finally conceded her National Insurance hike for employers could mean “wage increases might be slightly less than they otherwise would have been.” Translation: Labour’s budget will hit the ‘working people’ they promised to support. Labour as the party of “growth” and “working people” is officially for the birds. Shock…
Robber Reeves has announced a £22.6 billion increase in day-to-day NHS spending. More than the now-debunked “black-hole” Labour claim they inherited. And a huge U-turn on a Starmer commitment from just 48 days ago…
Starmer said on 12th September:
“The NHS is at a fork in the road and we have a choice about how it should meet those demands. Don’t act and leave it to die, raise taxes on working people or reform to secure its future. Now working people can’t afford to pay more so it’s reform or die. So let me be clear from the outset what reform does mean. It does not mean just putting more money in…we have to fix the plumbing before turning on the taps. So hear me when I say this. No more money without reform.”
Has the NHS been reformed in those 48 days? Now Reeves is pledging a whopping increase in spending while she unveils the largest tax hiking budget in recorded history. Now, it’s ‘working people’ who will be footing the bill. A cost Starmer promised – whilst in government – Labour wouldn’t impose. Forget pre-election promises – they’re forgetting the ones they made six weeks ago…
The wonks’ verdicts are in for Labour’s budget. They’re not fans…
UK Tax revenue is due to grow to the highest ever recorded level in history as a proportion of GDP. By the end of the decade 38.2p of every single £1 will be paid to HMRC…
Adam Smith Institute Director of Research Maxwell Marlow says: “The tax rises in this Budget will actively hurt working people. An increase in Employers’ National Insurance Contributions, which is a tax on jobs, will suppress wages and job creation. The hike to Capital Gains Tax too will keep productivity and wages low. The Government needs to outline a radical plan to boost growth and wages. This Budget is not it.” Verdict: Bad.
The Institute of Economic Affairs’ Executive Director Tom Clougherty says “the government is putting an awful lot of faith in its ability to choose and deliver public sector capital projects that deliver meaningful economic benefits. Few outside Whitehall will share their optimism… Without a radical, reformist agenda – a focus on the fundamental causes of our economic malaise – this government faces the same fate as its immediate predecessors: getting stuck managing Britain’s relative decline, with no clear plan to break free of it.” Verdict: Bad.
TaxPayer’s Alliance Chief Executive John O’Connell hits out at Labour’s election campaign: “We were consistently told that there was no need for big tax hikes because of a focus on growth, so taxpayers will be disgusted by the whoops and cheers of Labour MPs celebrating the fact that Rachel Reeves has just condemned the country to a record high tax burden. If the government ever wants to regain the trust of taxpayers it will need to rapidly find a way to halt the growing tax burden.” Verdict: Bad.
Centre for Policy Studies’ Director Robert Colvile says: “By hammering the private sector, she has delivered a Budget which – as the Office for Budget Responsibility’s own figures show – will reduce business investment, trade and private sector activity, propping up the economy via higher state spending… The Budget also leaves Britain with staggeringly high – and historically unprecedented – levels of tax and spending, with growth forecasts well below the levels required to sustain even current levels of welfare spending, never mind meet the demands of an ageing population.” Verdict: Bad.
Policy Exchange’s Head of Political Economy James Vitali says: “This Budget tilts resources away from the wealth-creating parts of our economy towards the public sector. It will be the working people of the UK who will suffer in the form of lower wage growth and higher tax bills.” Verdict: Bad.
The Trussite Growth Commission says “the bottom line overall is that less growth will mean an even bigger black hole to be filled in due course.” Verdict: Bad.
Outgoing Institute for Fiscal Studies Director Paul Johnson says: “Looks like what is going on here is short term fiscal loosening is boosting growth immediately. But hindering growth later on. Those later year forecasts are disappointing.” The IFS also accuses Labour of breaking its manifesto promise: “Somebody will pay for the higher taxes – largely working people. The employer NICs rise will further increase the incentive for employers to switch to contracting with the self-employed.” Verdict: Bad.
Tory centrist think tank Onward’s director Seb Payne says: “Rachel Reeves has delivered Labour’s most traditional budget since the 1970s. It ramps up borrowing for a short sugar rush of growth before slumping. Unless there are serious plans for supply side reform – with planning and nuclear power at the top of the pile – this risks being a Budget for stagnation, with living standards heading into decline.” Verdict: Bad.
The OBR isn’t exactly optimistic either…
BONUS REACTION: Kemi and Jenrick, one of whom will be Tory leader in a matter of days, respond:
Badenoch: “Labour had 14 years in Opposition to think about what they should do with the economy and this is what we get: higher taxes, more borrowing, and lower growth. We Conservatives cannot afford to make the same mistake. We need to return to principles and spend our time out of Government building a plan that will rewire the state, bring down taxes and reward the risk-takers and the entrepreneurs who create jobs and fuel economic growth.”
Jenrick: “This budget completes the biggest heist in modern history. Labour promised not to raise taxes, but this £40bn tax hike amounts to a £1,400 bill for every household. The British public are right to be furious that they were brazenly lied to. Forget boom and bust. Rachel Reeves will go down in history as the Gloom-and-Bust Chancellor. Reeves and Starmer conned the public at the General Election and working people are now paying for it with higher taxes and lower growth.”
Verdict: Bad.
The OBR has published its review of the March 2024 forecast for departmental expenditure limits. This is what Reeves was relying on at the start of her budget statement…
“The conclusion reached by the OBR is that, had the information that has since been shared by the Treasury been made available to them at the time of the March Budget,
‘… a materially different judgement about RDEL spending in 2024-25 would have been reached. The underspend assumption of £2.9 billion would very likely have been dropped, and so there would have been a materially higher DEL forecast for 2024-25 in the March 2024 EFO. However, it is not possible to judge now exactly how much higher.’
This is because, without rewriting history on the basis of greater pre-forecast information and challenge, it is not possible to judge how much of the £9.5 billion additional pressures identified from the information provided by the Treasury for this review, as existing at the time of the challenge panel in February, would have been absorbed and offset by other savings. However, the OBR would unquestionably have given more pointed warnings in the EFO about the policy choices that would have to be made.”
So the Treasury itself under Labour identified a £9.5 billion ‘Tory black hole.” Chief Treasury Secretary Darren Jones was on Politics Live right now peddling the “materially different” line “to use the language of the OBR” in justification for the budget’s policies. It is obviously in Labour’s interests to discredit the OBR’s previous forecast in light of its current one…
No sign of a £22 billion black hole as promised. Rows over the OBR’s politicisation are only going to get hotter…
Read the full review below:
Continue reading “OBR Refuses to Support Reeves on £22 Billion ‘Black Hole’”
Sarah Pochin at Reform Scotland’s manifesto launch event: “I really wanted to come on in a Reform tartan burka, but apparently I wasn’t allowed… One day let’s do one of these events not live-streamed. We’ll do all the naughty stuff…”