Ministers are in denial over the Budget’s impact on jobs and growth
Well, that didn’t last long. Barely 48 hours after the Chancellor told the CBI conference that the tax-hiking Budget was definitely a one-off, Keir Starmer declined to echo her comments and instead left the door wide open to another round of tax increases and borrowing.
We ought to have some sympathy; no Prime Minister can put their hand on their heart and promise never to raise taxes again.
Having said that, this one put his hand on his heart just a few months ago and swore his government wouldn’t hit ‘working people’ with new taxes, before doing exactly that via a £25bn raid on the private sector.
The Chancellor’s “we promise not to do it again” defence of the Budget certainly sounded odd in the room, but the PM’s refusal to repeat her pledge makes the whole thing odder still. Perhaps Starmer is just being mindful of the warning issued by the Institute of Fiscal Studies immediately following the Budget, that unless ministers “get lucky on growth” they’ll almost certainly have to come back again with a fresh round of revenue raisers.
The unfortunate truth for all of us is that luck has nothing to do with it. Economic growth comes from private sector confidence, expressed through investment decisions, appetite for risk and inclination to hire. The government has undermined all three of these growth drivers. For how much longer can ministers keep their heads in the sand?
On the day of the CBI conference the lobby group published data showing that businesses are pulling back on investment and job creation as a direct result of the Budget, and yet Reeves told the room that the Budget will be “good for growth and good for jobs.”
Meanwhile, the award for the most tin-eared foray into economic policy goes to Health Secretary Wes Streeting, who this week announced that the government has decided not to ban smoking in pub beer gardens. He championed this u-turn by acknowledging that the “hospitality industry has been through an absolutely torrid time (and) it’s not in the national interest to see our high streets further suffer.”
He’s right about that, but seems blissfully unaware of the fact that pretty much every pub operator in the country has slammed his government’s recent tax hikes, warning that the hospitality sector will now have to raise prices, cancel investment and lay off staff.
And now, thanks to Starmer’s moment of honesty, they live with the fear of being clobbered again in future Budgets.