I would have loved to say that Rachel Reeves took me by surprise and got everything right yesterday. But she didn't. In a budget dominated by her obsession to balance her books she got most things wrong. And that‘s bad news for Labour, the economy, and us all.
As will be obvious to those who follow the link, there is no video of me in this YouTube. I was in a hotel room when I made this, and the hotel's wifi reckoned it would take some time into next week to transfer the video file for editing, so we had to settle for audio alone. Apologies for that.
This is the audio version of this file:
This is the transcript:
Was the budget the one that Rachel Reeves promised? The answer is a very simple and straightforward, no, it wasn't.
Was it a good budget? The answer is a very simple and straightforward, no, it wasn't.
Was this a budget that will go down in history? Well, yes, but if it does, it will be for all the wrong reasons. And in particular, it might go down in Labour history. as the most unfriendly budget towards the employment of young and lower paid people that a Labour Chancellor has ever been responsible for.
Let's just stand back for a moment and look at what this Budget was meant to deliver. Rachel Reeves said that it was going to be about investment, investment, and investment. And the truth is, that yes, there is some additional investment in here, but it is not of spectacular amount.
There is no doubt that the NHS is going to get extra funding and there is no doubt that education is also in line for an increase as well - although the claim that it's going to get a 19 per cent real-term increase that I have seen reported seems to be wildly overinflated because the sum in question is just £6.7 billion and that is most certainly not a 19 per cent real terms increase in investment in education.
There is also some extra spending on housing. £5 billion is forecast. But stand back for a moment and realise that's just 20,000 houses - a tiny proportion of the additional housing that is required in the UK each year at present and hardly making a scratch on the surface of the number who are searching for a genuine home in which they can have a long-term secure future. And so, this is not going to solve the social housing crisis.
In fact, it's fair to say that almost nothing said today by Rachel Reeves will solve the crisis in any government department's budget, including, by the way, the NHS, because the sums offered are not that significant in real terms, when it is known that the real rate of inflation of medical costs is some 4 percent per year, and that is the rate by which the funding must increase just for the NHS to stand still, and this is not going to be met by this budget.
So, in terms of growth what we know is that this budget is not going to deliver. And in fact, the Office for Budget Responsibility has told us that. They have forecast growth for five years, which is about as useful an exercise as forecasting who will be top of the Premier League for the next five years to come, which no one knows. And the answer is that they are saying that the rate of growth in the UK will not exceed 2 per cent in any year and, in fact, will struggle to be much above 1.5 per cent in any year, which in overall terms, if your goal is growth, is pretty disappointing.
In terms of inflation, the forecasts are as disappointing. Only in 2029 will inflation reach 2%, which is the supposed Bank of England target, which Rachel Reeves reconfirmed today, and implicit in that is a code that interest rates are, therefore, going to remain high.
At the time of making this video, I have not had a chance to look at what the Office for Budget Responsibility is forecasting on that issue, and I suspect it's not good.
Let's talk about tax, though, because, overall, most of the announcements in this budget were foretold by Keir Starmer in a speech on Monday this week, but the tax ones weren't. And on tax, this is a very disappointing budget indeed.
It is very friendly towards those on higher incomes overall, in comparison to the way in which those on lower incomes are penalised. Let's have a simple example of that.
I was looking forward to the prospect of having capital gains tax rates equalized for those on low and higher income.
Well, for those on low income, that has almost happened. Their capital gains tax rate has been increased from 10 per cent to 18 per cent, which is now only 2 per cent less than the income tax rate that those who used to pay 10 per cent paid. were paying before this budget. So, equalization has almost happened for those earning less than £50,000 a year in the UK with regard to capital gains tax.
But what happened for those who are earning above £50,000 a year and who have capital gains? The rate has increased from 20 per cent to 24%. So, the increase was lower and the rate of tax that might be paid by people in this situation is 16 per cent less than their top rate of income tax whereas for those on lower levels of income, the differential in capital gains tax and income tax rates is just 2%.
And in fact, that differential could be even higher because for those on 45 per cent rates of tax, the differential is 21 per cent. In other words, this was an incredibly friendly budget to those on high incomes with capital gains. And almost everybody who does have a capital gain happens to be on high income.
What about other areas? The non-domicile rule is going. But we don't know how. The details are still to come. Why haven't they worked that out?
Inheritance tax rules are going to change, but some of the details are not yet known. But we know that some of the allowances and reliefs are going to be changed, so that, for example, with regard to agricultural property relief and business property relief, which have been the most extraordinarily generous reliefs to those with very large estates will be cut so that the tax rate on these will kick in when £1 million of relief has been given, but the tax rate will be reduced from 40 per cent to 20%.
In other words, there's still a massive bias towards the wealthy in this system compared to the situation that applies with most estates that actually pay inheritance tax, which are those who tend to be more middle class in their orientation where the property in the estate is very largely made up of a family home. This once more shows Rachel Reeves' clear bias towards wealth.
But this isn't the area that I am most worried about with regard to this Budget. This Budget has done something particularly stupid.
I welcome the fact that Rachel Reeves has increased the minimum wage. That, for most people, has gone up to 12.21 an hour, which is still less than the Living Wage Foundation says it requires to be paid for somebody to be able to live independently. And for young people, it has been increased to £10 an hour. And, of course, I'm pleased that this measure has taken place. This is a move in the right direction.
But, this move, coupled with an increase in national insurance charges for those employers who are in particular employing a lot of people on low wages, will see a massive increase in their tax burden, and that is going to have a serious knock-on effect for the employment of young people and the employment of people on low levels of income.
The fact that national insurance will now be paid at £5,000 of income for a person in a year, pro rata, against the previous level of £9,100 means that £4,100 of their income is now going to come into subject to a national insurance charge. And that means over £600 extra tax will be paid by the employer of a person on a very low level of income each year, which is a massive disincentive to employ young people and those in more marginal employment situations where this is going to be really serious.
The fact that at the same time wages will have gone up and that above the level I'm talking about there will be a 15 per cent charge all means that there will be three reactions.
First of all, some companies are simply going to give up. They will not be able to afford to recover these costs.
So, some young people and others who are on low pay will not be getting the jobs that they want, and that is a disaster, particularly for the young, but frankly for everyone.
And thirdly, the obvious consequence is that in some of the more marginal sectors inside our economy, and here I'm talking about care homes, and nurseries and the hospitality industry in particular - who employ very large numbers of people on minimum wage - will see their wage costs increase significantly.
The consequence of that is glaringly obvious. If those wage costs increase significantly, either costs have to be passed on in the form of higher prices, which means that those payments will be required from people who are very often already stretched to their limits to pay care home fees and nursery fees, or they simply won't be able to afford to go out, which is serious for the whole of the economy, or there will be a reduction in the level of employment.
Either way, this is really bad news for the economy as a whole, and also really bad news on inflation. Supposedly, inflation is going to be under control, according to the Office for Budget Responsibility. Well, I will forecast now that this change will seriously fuel inflation in the UK.
Is there any other good news?
Some minor improvements with regard to transport investment? I agree.
Some improvements with regard to investment in schools and hospitals? I agree.
But again, they are marginal.
And the spending, for example, on education is really weird. £2.1 million, I should correct that, £2.1 billion on repairs amounts to about £70 odd thousand pounds per school. And if you understand how much it costs to maintain a school, and I used to be a chair of governors of a school, that's not a lot to deal with the backlog of repairs that exist in many schools right now.
And £1.4 billion for school building is not, I suspect, going to deal with the whole problem that we have with buildings literally falling down.
The same with hospitals. There isn't enough money being offered.
So, at the end of the day, standing back, it's unsurprising that there's going to be limited growth because Rachel Reeves simply isn't spending enough. And in fact, this is how the markets are going to react to this.
We know that there is going to be an increase in borrowing. She has said so, although according to the forecast, that will be under control before the parliament is over. But the truth is, there's going to be remarkably little to see for that. And this means that it's quite hard to understand what parameters she's put in place.
There's going to be limited growth.
There's going to be limited investment.
So, what is there going to be?
Yes, she's balanced her books. In fact, she's done worse than that. She's actually trumpeting the fact that from a couple of year's time, she is going to run what she calls a current budget surplus. In other words, every year, if we take investment out of account, and we should do, she is actually going to take more out of the economy by way of tax than she is going to spend into the economy by way of government spending to provide us with services. She will in fact be reducing the size of the economy by choice as a consequence of her enormous desire to bring down the level of government debt.
Now, this is crazy. She is choosing to go for recession rather than for growth. And I do mean recession quite wisely because I believe that by the time we take the pressure from continued high interest rates, which the Bank of England are going to maintain on the basis of this budget, and that policy of reducing the amount of money paid into the economy by Rachel Reeves because she plans to run a budget surplus, and the relatively paltry sums that she's putting into investment, I can't see how we are going to avoid recession overall.
And that will be fuelled by her increase in the cost of employing large numbers of people in the economy in low and marginal employments in situations where it will be all too easy for employers to give up, such as in the hospitality industry.
Does this, therefore, create the foundation for growth, which she claimed her first budget would do? No.
Is this a transformational budget? No.
Is this going to provide the long-term vision for Britain that she said she would deliver? No.
Is this, therefore, an epic budget? No.
Is it a fail, as far as I can see? Yes.
And let's mention some other areas where it fails.
Oh, she did just about mention carbon capture and storage when it came to the environment, but otherwise, this appears to be a non-issue. She has no concern for it. And carbon capture and storage is not an environmental policy. It is a policy for the maintenance of carbon emissions and, therefore, a fail again.
Was there any significant mention of devolution of funds to the countries of the UK? No, she said she was going to talk to them. That's not enough. There was no indication that there was going to be a real devolution of powers.
Is there anything, therefore, to celebrate in this? Look, I wish there was. I really, really would love to be able to say Labour's done something right, but I'm afraid to say I just don't get that feeling from this budget. I believe this is all going to unwind horribly, and national insurance charges are going to be where it's going to unwind horribly most of all. Because as for the rest of it, look, the rich will moan, and they always do, but they've done really well. Everybody else will feel aggrieved about the fact that she appears to be incredibly in favour of supporting the rich and is not delivering for everybody else.
And this will mean that Labour is actually helping to divide our society. Nothing in here solves any problem that we face at all. And nothing in here will actually deliver improved public services when overall, she's looking for savings from most government departments, which she claims will be covered by AI and other technology improvements, which is a load of nonsense because that is not how things work in the real world.
Rachel Reeves and the real world are apparently unrelated to each other, and this budget proved it.
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Richard I have to disagree with you regarding agricultural relief. Farmers might be asset rich but are not wealthy in the traditional sense of the word. The changes mean that someone with a relatively small farm will now have to pay the tax and therefore land will have to be sold – making farms unviable. And who is going to buy the bits sold off? We are not talking about large estates here.
If as I believe we do we need to restrict levels of wealth then the solution is have a maximum amount of land that anyone (including a company), can own and tax beneficiaries on the levels above that. We also need to prevent the super rich from buying up land to use as a means of paying less tax.
Most small farmers are tenants
I really do not see this making a real change
The bulk of the tax rises – £25 billion out of £40 billion – comes from higher employer NIC.
Employers will be paying 15% NIC on very low incomes – at £96 per week, not only below the primary threshold of £242pw when the employee starts to pay employee NIC, that is even below the lower earnings limit of £125pw when the employee is credited in the NI record (counting for pensions benefits, largely).
This is just a jobs tax. It breaks a manifesto promise. And it will affect low paid employees.
Agreed
And this from a supposed Labour government
Hi Richard, I am a daily listener/reader of your blogs, and they are quite fantastic. I often want to ask why someone like you can’t be chancellor – but maybe that’s a question for another day.
Quick question in regard to your comment about why the increase in CGT on the lowest paid is not fair. On face value, I do agree. However, could it a be a way to make sure the super rich business owners, who ‘pay themselves a low salary’ to avoid high income tax, who give themselves dividends (shares) and then sell them and receive the low rate of tax, actually pay a fair share of tax and avoid this loophole?
I am not an expert in this area so apologies if the question is naive. Thanks
Thanks
I assure you, I would really rather not be an MP. I realised by the time I was 21 that I would not enjoy, or be suited to, life as a politician. I am not good at lying, for a start.
As for the CGT – I am not sure that is their reasoning, at all. I think they just gave in to the rich, as they always seem to do.
Rachel Reeves was interviewed this morning in BBC Radio Scotland GMS. She was surprisingly ineffective in defending her Budget. Challenged on the failure to deliver real growth over the planning period (2% in 1st year, c1.6% thereafter), her response was to say it was stronger than the European G7, and she was ambitious. Clearly she didn’t want to address directly all the countervailing reasons growth was weak; not just timing on long-term investment delivery of both projects and their returns (which they may be handing to the next election’s Conservative STP government), but the unsustained nature of her investment commitments, the prospect interest rates will not now fall post-Budget, or the capacity constraints in the economy, or the effects of her own Budget policies (the implication that the big NI increase affects not just employers, but on employees); all of which end in one outcome effect; failure to deliver growth. The argument over the £22Bn ‘blackhole’ that the OBR said is in fact £9.5Bn, Rachel Reeves still refuses to accept.
More generally, the sense of an underlying economic ineffectiveness when Chancellors pull the usual levers, or even pulling some harder ignores the sad old, decaying corpse of the elephant still lying in the centre of the room: Brexit cost us 4% of Rachel Reeves needed GDP, and growth – and it isn’t coming back in this UK; and a pre-Johnson-Truss-Sunak immigration policy that had certainly worked better than the alternative (certainly for Scotland).
We are living in a bizarre fantasy world in which the STP and the electorate will not even discuss the economic suicide pill the whole of British politics; Parties, politics and electorate have swallowed whole because they think it is a cure-all, and will not even allow the central problem to be discussed. Given the mounting evidence of Britain’s fumbling inadequacy and economic sickness, this is insane.
In Scotland Rachel Reeves made much of the £3.4Bn increase in resources for the Scottish Government in 2025; and rejected the claim this did not account for an increase of £0.5Bn in NI; but this appears still not to be a settled issue.
Thanks
Hmmm………….agreed.
All I see is a budget aimed at collecting under-spends to be whipped out her pocket come closer to the next election.
To keep her party in power – stage managed – of course.
Details concerning treatment of the domicile rule appeared yesterday here: https://www.gov.uk/government/publications/spring-budget-2024-non-uk-domiciled-individuals-policy-summary
This is Hunt’s proposal
It did not happen
We do not know what Reeves is planing
Oh, you’re right, I should have spotted that the document name included “spring-budget” !
There is all of this: https://www.gov.uk/government/collections/changes-to-the-taxation-of-non-uk-domiciled-individuals
I have now seen this – although have not read it all.
I am also seeinmg people saying the inheritance tax change – bringing in the charge after 10 years rather than 16 of old will be driving people away
I think this absurd: those who came here permanently always faced such a charge. This change might hasten the departure of a few who never intended to stay beyond 16 years but have beenm here more than 10 (so, maybe 100 families, or so, in all likelihhod), but that change is really not that big. I would still call this regime generous. But the wealthy are never satisfied.
Thank you Richard, & welcome back. I hope yesterday’s albeit sad time with friends was restorative.
I’ve read your 3 contributions today, and the things that stand out for me as capable of sustaining useful omnibus conversations (because I think I sort of understand them) are:
1. The combination of employer’s NI increases & minimum wage increases, and how it will affect youth employment (allied with a failure to harvest more NI from high earners). Two sectors that will be directly affected are health and social care. Not to mention the £10/wk rise in their flat-fare bus commute costs.
2. The way the shift towards equalising CGT & income tax rates targets those earning under £50k but is not followed through at higher income levels. Both 1 & 2 reveal a bias towards the wealthy.
3. Fiscal drag – the way freezing income tax thresholds drags low income earners into tax, and how politically damaging that is because it is so noticeable when it happens to an individual.
Moving to the macroeconomics…
4. That she plans to be running a surplus by 2029, withholding and extracting money from circulation, which means we are in for recession or worse.
4. That interest rates are clearly going to be above inflation for even longer, and no one can explain to me why that’s a good thing, but it is easy to see how it discourages SME investment & puts up mortgages/rents.
5. She clearly hasn’t heard about the climate emergency.
6. She appears not to have noticed how many local authorities are on the edge financially and how serious that is for omnibus passengers who depend on local authority-provided services.
Those are the things I can remember off the top of my head, and feel capable of discussing on the omnibus, when I next hear the question, “What did you think of the budget then?”.
(Thank God no-one mentioned the bond markets…)
Thanks
All noted
A useful sumnmary
I spoke too soon!
Someone DID mention the bond markets – the markets are selling 10yr gilts, whose yields are rising…?
https://www.theguardian.com/business/live/2024/oct/31/imf-reeves-sustainable-tax-rises-budget-shift-cuts-resolution-foundation-shell-boj-ifs-business-live
HELP!
What does THAT mean then, I’m floundering!
The only gilts I understand, squeal & have curly tails.
The movement is part of a global upward trend
Ignore it. Reeves had no influence in rising Germany and US rates today
Trump might have
Richard, I find it hard to manage a bank account, let alone the economy, but this has been really interesting. I understood the points, and the comment which was disappointing as they look bleak but what I can’t find, from and expert, is an alternative that has no political addenda. Is there a budget (utopian, best guess shadow I guess) that is politically neutral and would ‘propose’ changes that would cover the issues you and your commentators want ‘fixed’. I, for one, would be really interested in what the ‘experts’ independently though a ‘good budget’ would look like. It could use the extant figures and show how the increase in wealth could cover the social and environmental need.
Thanks PS – I have never voted so have no political DNA in my body, just interested to see if anyone could compose what good looks like?
The problem is that all budgets are about choices and all choices are political because competing influences and demands exist and as such what you ask for is not possible.
@ JonD – politics is unavoidable. Politics is about where the money goes, about who lives here, about who gets health or social care, about who gets punished for what crimes, about how fast you can drive past a busy school gate, or how much houses cost to rent or buy, how many get built and where, or what goes into your food or drink and how much you pay for them, where your clothes come from, or who gets killed in what war, it’s about who can say what on this blog or whether you will get arrested for it and locked up, or what riots will take place next weekend. There is no neutral opt-out from these choices – no way of not being responsible for what happens around us. There is no such thing as a “good budget” independent of politics. If there wasn’t a climate emergency we wouldn’t need a green new deal. If there wasn’t a social care crisis we wouldn’t need a policy on paying for social care. If millions weren’t getting obesity/diabetes, then we wouldn’t need measures on sugar, ultra processed food and primary health care. If there were no waiting lists for operations then we wouldn’t need a policy on hospital resources. The budget during Covid was very different from one AFTER Covid – during Covid, government ignored their arbitrary self-made “rules” about creating money and spending it – and lo – the economic sky didn’t fall in, despite all those frightening peaks in Richard’s graphs. AFTER Covid, the Treasury suddenly decided the politics of monetarism were back in fashion, so gave us more austerity/recession, inequality. Those were political choices.
We ALL have responsibility for the shape our society and planet are in, and not voting or opting out of politics does not absolve us of that responsibility. We are just letting other people make the decisions. At the very least, I believe every citizen who has a vote should make an informed effort to use it, even if that amounts to completing a spoiled ballot, and making our views known to elected representatives by the various means available to us. I’m finding politics very frustrating at the moment, and feel very unrepresented, with no main political parties offering something that I feel able to endorse, and I hate having to vote for the “least bad”, or voting to send a message, even though no one is listening. But my conscience won’t let me opt out, because – “my neighbour”.
The political system is far from perfect, and it’s in a bad way right now – but it’s OUR society, OUR planet, OUR neighbourhood and OUR neighbours (and I don’t just mean the ones next door, some of them live thousands of miles away, and our choices ruin their lives) who are affected by it. When ordinary decent people don’t get involved, then very BAD people step in. It’s happened in the past, and it is happening again, and the results will be far far worse than what we have now. Sorry, sermon over…
Many people do try to communicate with their MPs and with government, there are many petitions and open letters circulating and polls are taken and submitted to govt. The failure here isn’t the electorate, it is the govt that isn’t listening to those appeals. It is also more broad than that, which you point to – the oxymoron at the heart of the system: we have political parties with manifestoes and visions, yet they’re supposed to represent the people? That doesn’t add up. If I’m being represented, I want an advocate not a visionary with a manifesto. I agree we each have responsibility, but we actually abrogate much of it by voting, and if we don’t vote, it’s taken anyway. Then we’re blamed for the actions of others. For instance, I can’t recall the last time I was invited to help shape directly any govt decisions that affect my life, and until that happens I need to be clear about my sphere of influence. If this govt, as with the Tories, continues along the path to destruction, I won’t be accepting responsibility for their decisions, that’s on them. Personally, I’m more than happy to have my responsibility returned to me and fully participate in shared decision-making. I certainly, as you do, question anyone who seeks to shirk that responsibility by giving it away to elected officials, it’s deeply problematic. If we’re to be genuinely responsible, however, we need a system that enables us to take that responsibility. The UK does not have such a system, as we centralise power into the hands of a few in a cabinet. Taking responsibility is about making decisions directly, not asking someone else to do so.
It’s worse than that David. One man – Rishi Sunak – took the decision to cancel the northern leg of HS2. A project that had cross-party support, has been ongoing for many years, involving hundreds if not thousands of people, and costing many billions, ditched by a prime minister with no long term vision in the hope of winning over voters in the short term.
I understand that those who earn 5000k will not pay NI contributions but their employer now will. My wife who is in her 60s is really worried about this as she has a part time job which pays her just over 5k a year. As she has already paid the maximum contributions for her state pension this won’t benefit her. Can employees ask their employer to pay this amount towards a pension scheme (which she does not have)? Or is this new contribution simply one sided for the government? Thank you
Remember the first £5,000 is NIC free for the employer – so the additional cost for her employer will be small. It’s not worth making arrangements for small sums, I suggest, and it should not alter her employment situation: the problem will be for those full time, in the main.
You have to ask whether some of the small businesses that claim they cannot absorb these extra costs – particularly the increase in the minimum wage – are in fact viable businesses. If their margins are so thin they are barely profitable they probably shouldn’t exist anyway.
Almost no small businesses are viable in the sense that they make a profit. They pay their owners a wage. That’s it. But if you cut that wage for the owner by imposing costs like this something has to give. But let’s not pretend small businesses are viable. They simply make enough to keep their owners doing an activity they want to do which happens to be of benefit to others. You cannot apply microeconomic theory to a lot of that. It does not understand it.
Would you say some more about this, particularly about microeconomic theory not being useful here, as I didn’t understand that?
I will, but not today
Osborne and Sunak raised taxes so that they could reduce the national debt. Reeves raised taxes to limit the cuts in current government spending that her 1st fiscal rule implied. It would have been better had she ditched that rule. She redefined national debt in her 2nd fiscal rule and can now significantly increase government investment spending. Again it would have been better if she had ditched that rule too since her investment spending is still limited by that rule. Perhaps it was always her intention to redefine debt when she signed up to her original 2nd fiscal rule. If so, it was a clever move. Certainly the Tories are fuming at how she got out of the trap into which they thought they had put her.
Her budget has ‘found the money’ that did not need to be found. Now Reeves must move on to the real problem of finding the resources required to implement government policies. It remains to be seen whether she has the ability to do that.
Re inflation, I did have to laugh yesterday when Reeves went through all those projected CPI inflation figures at around 2% per year for the next five years.
Back to the real world.
Rents/mortgage costs.
Council tax
Water rates
Gas and electricity
Food (although some prices are falling now after plenty of greedflation was eaten)
Even broadband/telecoms – now a need for everyone. They are all CPI or RPI + 3.6% now. A right con.
Try telling me where you can find a 2% increase on all the things we need? Does Reeves even know about real inflation? The reality of what is really going on?
And we all know who gets hurt the most from real inflation, and it’s not the rich.
And the biggest cheer yesterday? A 1p, yes, one almighty pence saving, on a pint of beer!
Whoopdidoo, put the flags out, we are saved.
Tory or Labour, they just don’t get it.
Richard will tell you that inflation is falling and at or close to target so that rates should be coming down sooner. You’re telling us that inflation is much higher than expected, which would point towards interest rates being higher or at least staying at their current level for longer – you can’t both be correct?
You simply display your ignorance of inflation, Jim
If you knew anything about the subject you would know both statements can both be entirely true
Jim, Richard Dawkins is talking about ‘real inflation’, price increases on the goods ordinary people have to buy in order to live. Inflation on that is usually quite high. The Chancellor and Richard Murphy are talking about CPI or RPI or one of those other sets of initials that are used to mean a defined ‘basket’ of goods that ,ayu or may not bear any real relation to the lives people live. That kind of inflation is what is around 2%.
Richard, has anyone ever compared which inflation measure is used for what? I get the impression that the government uses RPI to increase the amount of money they will receive and CPI when they are increasing the amount they spend.
Starmer ” well done Reevesy”
“Yes, we got away with it”
Starmer ” you played a blinder, I am over the moon”
“Yes Boss, we have kept the bankers, city, markets, hedge funds, rich, press on side”
Starmer ” They are all happy and we have shown how tough Labour is”
“Absolutely. We have really annoyed the majority of the population though”
Starmer ” true, but we don’t have to worry about them. Anyway they can’t hurt us until the election in 2029 when we will throw them a few pieces of cake to keep them quiet”.
If Reeves’ financial statements are as crooked as her political ones, we are on deep trouble. When patronising the Scottish people and its government this morning with the 3.7 billion which is no more than the alleged results of the Barnett formula, she claimed that “you know, frankly, the performance of the NHS in Scotland under the SNP is worse than in any part of the United Kingdom.” This is not gaslighting – it is simply a lie. The reverse is the case by measure after measure. More doctors per head, more nurses per head, better (and more honestly measured) ‘waiting times’ – especially in A&E, better records on bed blocking etc. etc. I have also watched and experienced both systems and could not be more relieved that my own conditions are dealt with under a proper, i.e. real, Scottish NHS, which has – specifically under the SNP years – turned away from the privatising commercialised model increasingly adopted by NHS England under Labour, Tory LibDem coalition, Tory and now Starmerite governments. This Scottish NHS has reformed and developed itself as a genuine NHS drawing on the original intentions of its foundation. What it now needs is the freedom of a Scottish Government with the full powers of an independent state with its own fiat powers over its own economy – not patronage , crumbs and falsehoods from a government sunk by Streeting in attachment to private heath interests.
There are some very mean aspects of the budget which I hoped you would mention. A measly 1.7% increase in benefits for a start. The miserable, and retrogressive raising of bus fares, which will impact poor and rural communities very much, not to mention the environmental impact. Why do that? The change from universal benefit claimants to losing 15% if they are in debt, from 25% -trumpeted as progress, who can live on these amounts which are lower than the minimal essential to survive? It’s hardly generous or adequate. A failure to raise the benefit cap, terrorising the sick and disabled with punitve new unspecified measures, and of course the winter fuel allowance cut. As you have said ‘working people’ seems to only mean those actually in work. Pensioners, children, the disabled and their carers, have been abandonned.
Apologies
I have ahd to pick highlights around attending a funeral and seeing my friend who wife died
I did my best in circumstances
I am sure there is more I have missed
Just to support the assertion by Richard that £70,000 per school is not enough – in my school alone the IT infrastructure is falling apart and the cost of repair and upgrading is £400,000. The £30,000 allocated from the school budget isn’t enough to replace burnt-out nodes. The IT guy (no wage for 2nd IT person any more) went off sick two weeks ago with stress issues. Oh, and the 6th form area roof (CLASP construction) still leaks.
That’s about it, I know
My mother-in-law is in a care home in SW London, they always put the fees up by around 7 or 8% per year and will presumably increase them even more to cover the NIC increase. The fees are £2000 a week, as things stand that’s £400 going to the care home every week which would otherwise be due later in inheritance tax. The more the fees go up, the less inheritance tax the government will get later.
I’m trying to reconcile Richard’s very helpful budget comments with a letter from Peter Riddle in The Guardian, which said: “The Treasury impact statement that accompanied the budget, however, offers some mitigating reassurances. It demonstrates that the lowest-income households benefit the most from increased investment in health and education, and that the proposed changes in taxation mean the poorest households stand to gain the most and the wealthiest households will pay the most.”
I looked up the Treasury report: Autumn Budget 2024 – HC 295.
It says for example:
2.30 In addition, the government is helping low-income households on UC by allowing them to pay off their debts over a longer timeframe and keep more of their UC each month. The government is creating a new Fair Repayment Rate which caps debt repayments made through UC at 15% of the standard allowance. This will benefit around 1.2 million households as they will keep more of their UC award each month, with households expected to be better off by £420 a year on average. Around 700,000 of the poorest families with children will benefit as a result of this change, supporting the government’s ambition to tackle child poverty.6
2.32 The government is committed to delivering a welfare system that provides a safety net for when people need it and supports living standards for those on the lowest incomes. The government will therefore uprate all working age benefits for 2025-26 in full, by the September 2024 CPI rate of 1.7%. This will provide 5.7 million families on UC with an average annual increase of £150 in 2025-26.67
Box 2.A Impact on households
Increases in spending on public services, such as health and education, benefit households on lower incomes the most. The distributional analysis published alongside the Budget shows that on average, households in the lowest income deciles in 2025-26 will benefit most from the policy decisions as a percentage of net income and increases in tax will be concentrated on the highest income households. Overall, on average, all but the richest 10% of households will benefit as a percentage of income from policy decisions in 2025-26
I did search in vain for anything I could identify as a ‘wealth’ tax. Am I being hoodwinked? Does this not confirm Peter Riddle’s notion of mitigating assurances? What am I missing?
If you ignore all the impacts of NIC incrteases that everyone is in fact talking about – and of which the Treasuery was unaware – you come to the conclusion noted. If you suspend you disbelief almost anything can be made to be what you want. That is what they did.