This afternoon, Rachel Reeves delivered the first Budget of a Labour Government in 15 years, and the first ever delivered by a female Chancellor.
There were few surprises in her statement from the Dispatch Box. Every member of the Cabinet – and indeed every single Labour MP – has worked hard since the Election to set the tone for what has been labelled one of the largest tax-raising Budgets in living memory.
There were no rabbits pulled from the Chancellor’s hat, no headline secret giveaways kept from the media to be revealed in the Chancellor’s time of need. There were, instead, a flurry of the lines we’ve grown accustomed to hearing from Labour frontbenchers in the last four months – these are ‘tough decisions’ being made today for the benefit of tomorrow; the reality of the situation the Government find themselves in is a direct result of the ‘blackhole’ left in the UK’s finances by the Conservative Government; and the tax hikes detailed in the Budget are the only way to protect ‘workers’ pay slips’.
These are lines we also heard from the final iteration of the previous Government, but in reality, this Budget is the polar opposite of that delivered by Truss and Kwarteng just 2 years ago. Where Truss and Kwarteng notoriously ignored the offer of (clearly needed) OBR help, Reeves has submitted her measures to the full ten-week scrutiny.
The Treasury have been clear that they want to get this right, and that part of doing so is being honest with the public about the mess we find ourselves in. The grown-ups may well be back in charge – and that may well be welcome – but that doesn’t mean that we don’t, at some level, long for the bliss of ignorance.
The Chancellor began her statement by doubling down on the context which Labour have been so keen to ensure the public can’t forget. She said the Government had been elected on a promise of change, and with that election victory, had a mandate to restore stability to the UK economy. She said that in order to secure the decade of renewal promised to voters at the Election, economic growth must be the number one priority. And to make that priority a reality, three things were needed; ‘Investment, Investment, Investment’.
This context is important, but so too is the gloomy impact that repeating these lines has on the psyche of the UK electorate, and our economy itself.
Reeves went on to list the measures which Labour have already taken to drive this investment – reforming skills provision and pathways through Skills England; transforming the way we finance renewable energy and major infrastructure projects through GB Energy and the National Wealth Fund; securing record-breaking investment and securing 38,000 jobs at this month’s International Investment Summit.
Long-trailed announcements on the minimum wage, more funding for schools and the NHS, employment rights, the triple lock, and carers allowance followed, with those on most sides of the Chamber celebrating progress. This was the crux of the Statement, a tax and spend, Social Democrat Budget – through these measures, a lot of poorer people stand to be a lot better off and the passion with which Reeves delivered this section of the Budget gave an insight as to how much that means for her personally.
But the Chancellor couldn’t only focus on the good, and soon followed with a bit of the bad and a touch of the ugly. Increased employer NI contributions, increases on Capital Gains, the introduction of a Vape Tax, increased Alcohol Duty (although not on draught beer), and a modest increase on Air Passenger Duty will be felt hard across the electorate.
In his response, the Leader of the Opposition – on the same day as his final appearance at PMQs ahead of the conclusion of the Conservative Leadership Election this weekend – accused the Chancellor of going back on her manifesto commitment not to raise taxes. He said the Budget proved what he and his party had warned, that the Prime Minister and the Chancellor had ‘not been straight with the British People’. Sunak said the Government had always intended to ‘borrow more, tax more, and spend more’ and accused the Chancellor of having ‘shameless political motivations’ in ‘cooking up a false justification for agenda’.
Sunak closed his response by stating that the Government can’t conjure economic growth on its own, and instead must work with investors, business, and workers to create the necessary environment – an environment Sunak claimed was put in jeopardy by the raising of taxes, and dishonesty shown from the Treasury.
Today was, as the Prime Minister labelled it, a ‘huge day’ for Britain. A female Chancellor delivering the first Budget of a new regime, intent on providing a lifeline for our public services, whilst protecting household incomes. Today was also about the personal politics of many of the Cabinet, with clear efforts made to tax those who are better off, in the name of providing more breathing room for those who are not. Only four of Sir Keir’s Cabinet attended a private school, and there were more than a few wry smiles on the Front Bench as Reeves confirmed the 20% VAT on school fees would come into place from next year.
Poorer people will be better off because of the measures introduced today, and because of the Chancellor’s gamble of backing investment and borrowing over austerity.
But today also serves to mark the beginning of the next phase of this government’s project. The last milestone of the ‘new’ Labour Government, who – now their first 100 days and the speculation surrounding the Budget are over – can focus on delivering on their decade of renewal.
The ambition is evident, even amidst the backdrop of gloomy forecasts and negative narrative. And it may even be the case that this constant negativity and modest growth forecasts from the Treasury are paving the way for a giveaway Budget at the end of the Parliament. But that’s a long way off, and a lot needs to happen before we can congratulate Labour on delivering.
But this is what mission-led government is all about; setting the vision, creating the right conditions for success, and then hoping you can deliver.
Only time will tell if they can.