It’s Budget week in Westminster. Over three months after Keir Starmer triumphed in the general election, his Chancellor Rachel Reeves will this week set out the direction of the Labour government for the coming years in her first ever Budget. It’s fair to say that expectations are relatively low – with the Prime Minister himself warning of painful decisions ahead. Meanwhile, Treasury sources are keen to play down talk of any Budget rabbits, suggesting a mix of the measures currently being discussed in the media.
Starmer will be trying to offer a narrative as to why tough decisions need to be taken
The one confirmed Budget measure is a change to the fiscal rules to allow Reeves to borrow more for infrastructure spending. When it comes to what is expected but unconfirmed, a rise to employer national insurance, an increase to capital gains tax and the freezing of tax allowances until 2030 are all viewed as likely. Other mooted measures such as a rise to fuel duty are dividing opinion within the party on how seriously they should be taken. ‘A 6p rise would be madness,’ says a Labour figure.
Will the public wear it? A poll for today’s i paper will make for uncomfortable reading for Labour aides, finding trust has declined since the general election. It doesn’t help that Reeves is looking to raise £35 billion through tax rises when the party spent much of the campaign suggesting their sums added up (Labour, of course, blames the Tories for leaving them a ‘fiscal black hole’).
In a bid to get voters on side, Starmer is due to give a speech later this morning in the Midlands. The Prime Minister will attempt to give the public a reality check of how dire the public finances are while blaming it on the Tories. He will say the country is tired of ‘slow growth, stagnant living standards and crumbling public services’ while also insisting there will be no return to austerity:
Politics is always a choice. It’s time to choose a clear path, and embrace the harsh light of fiscal reality so we can come together behind a credible, long-term plan. It’s time we ran towards the tough decisions, because ignoring them set us on the path of decline.
So, Starmer will be trying to offer a narrative as to why tough decisions need to be taken on Wednesday. Within Labour circles, most just want to get through the week. They will count the Budget as a political success if they avoid a voter backlash and Labour MPs publicly criticising it. The second test is whether it actually improves the state of the country – if Reeves borrows more but fails to boost growth, there will be plenty more difficult Budgets to stomach.
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