It is day three of Labour’s latest strategy: to try to blame Nigel Farage for the forthcoming tax rises in the Budget. After Health Secretary Wes Streeting had a go on Monday, Rachel Reeves this morning has made a similar point. The reason she is looking to raise taxes in the Budget, the Chancellor says, is because of Brexit. ‘There is no doubting that the impact of Brexit is severe and long-lasting,’ she said. Next up, apparently, is Keir Starmer, who at one point is going to tell us that Farage is guilty of campaigning for Brexit and then walking away from its implementation. Given that he wasn’t, and never has been, prime minister or a member of the government, it is hard to see how Farage could have implemented Brexit, but never mind.
The plain truth is that taxes are being forced upwards because no government of any colour has balanced the public books in 23 years
It is easy to understand why Labour should want to sharpen its attack line on Reform which, on its current showing in the polls, is heading for a massive majority at the next election. But trying to blame Farage for tax rises does somewhat open ministers to ridicule. It wasn’t Farage, after all, who put up employers’ National Insurance Contributions, leading to a sharp reversal in job-creation – the Office for National Statistics revealed yesterday that the number of payrolled positions has fallen by 115,000 over the past year. Nor was it Farage who awarded public sector workers fat pay rises without even demanding improvements in productivity in return.
Moreover, Reeves has spent the past few weeks boasting that the UK economy is the second fastest growing in the G7. Surely if we are still being dragged down by Brexit we ought to be down at the bottom, or at least behind France, Germany and Italy. Since Brexit, the UK economy has grown at a similar rate to France and faster than Germany or Italy. The whole of Europe is stuck in a rut, but Brexit Britain is not in the worst position.
Blaming Brexit for tax rises and low economic growth also causes a problem for Starmer, who two weeks ago in Liverpool was boasting about the trade deal he completed with India (after the Conservatives started negotiations). He also went on about how he had negotiated a good deal with Donald Trump, freeing Britain from the worst effects of the US president’s trade war. Yet this was only possible thanks to Brexit. Had we still been in the EU we would have been stuck with the poor deal negotiated with Trump by Ursula von der Leyen.
The plain truth is that taxes are being forced upwards because no government of any colour has balanced the public books in 23 years. The steady accumulation of debt has landed the government with an interest bill this year of over £100 billion, more than we spend on education or defence. We have been living beyond our means for years, but got away with it while interest rates were on the floor. Now they have recovered to more normal levels, the public finances are becoming unsustainable.
Rachel Reeves and Keir Starmer are not to blame for all of this, but they do deserve their share. They cannot seem to find it in themselves to cut public spending, backtracking on even the most modest welfare cuts after protests from backbench MPs. That leaves only tax rises to try to fill the hole – except that Britain seems to be pretty near or over the top of the Laffer Curve, and tax rises are becoming victim to the law of diminishing returns. It is true that Nigel Farage and Reform don’t yet have a credible fiscal policy either – their manifesto last year, with its big tax cuts and spending rises, was in fantasy land. Farage this week distanced himself from immediate tax cuts and said balancing the books was more important. But given he doesn’t – yet, at least – have his hands on Britain’s economic levers it is pathetic to blame him for Labour’s tax rises.
Comments