It is amazing how fast budgets unwind. The last time it was this spectacular, Liz Truss sacked her chancellor within days, and then we sacked her shortly after! This time, I suspect, the protagonists will last a lot longer – maybe even five years.
Very few are happy with this budget. Some – pensioners – were offended even before the budget was written. Indeed, is any one happy?
The cornerstone of our national food production has been undermined. Businesses have been given £25 billion of extra costs from national insurance rises. You can add to that another £5 billion to pay for changes in workers’ rights heading their way, and yet more with the rise in minimum wage. The budget was supposed to help the NHS, but GPs, dentists and care providers face a rise in their costs for the same reasons. Entrepreneurs, the lifeblood of our economy who take financial risks to create wealth and jobs, have been wacked.
At the first proper test of the new government, their promise of being a government for growth and wealth creation could not look more hollow. Forecasters have cut their growth projections for our economy. One possible bit of good news is that the Bank of England may have to cut interest rates to help the economy where the government has failed.
Even the Office of Budgetary Responsibility – the de facto auditor of the Chancellor’s budget – has scored her badly. Rachel Reeves claimed half the tax rises were to fill a black hole left by her predecessors, but the OBR says that of the £22 billion claimed, just £9 billion might be possible, but this is down to the normal in-year vagaries of public finances. The remaining £13 billion is because of post-election choices.
One small glimmer of hope is that the Chancellor might have seen some light. She now, apparently, realises that giving public sector pay rises with no condition of improved productivity is a less than optimal decision. With public sector productivity way below pre covid levels, she finally appreciates that conditional pay rises are essential.
How is it that a first budget could be so far from the promises made during the election campaign? Businesses were wooed by the then shadow Chancellor, and now they are furious. Might it have something to do with the fact that not a single member of the new cabinet has ever worked for the private sector, let alone set up and run a business?