The Tories lied! That was the thrust of Rachel Reeves’s first Budget today. She was very specific about the falsehoods. At the time of the spring financial forecast, she said, ‘they hid the reality of their public spending plans.’ Parliament and the public were the victims of ‘a cover up’ about pressures on our economy. The cunning Tories even duped the Office for Budget Responsibility by failing to provide ‘all the information’. But hang on. The OBR is staffed by the brainiest economists in the country, if not the world. Is possible that this synod of geniuses were duped by a few Tory wonks armed with dodgy spreadsheets? Reeves appears not to have asked why the OBR were so easy to swindle. She simply accepted their account of the fiddle.
‘Had they known about these undisclosed pressures,’ she droned, ‘then their forecasts would have been materially different.’
Well no wonder she didn’t probe them too closely. The Chancellor seems to accept that her role is merely to regurgitate the OBR’s wishes. They effectively run Britain’s fiscal policy. And they treat the Chancellor as their personal mouthpiece. It’s a shame they can’t hire a parrot with a bit more pizzazz.
Reeves appears to be short of self-confidence. And she’s clearly been rehearsing her ‘unexpected-item-in-bagging-area’ delivery for weeks. She bashes out every word in a steady-eddy, slow-motion rata-tat-tat voice. No warmth or human feeling lightens her metronomic recital. She sounds like a council worker in a yellow hat trying to explain the fire-drill to a group of bored migrants who can’t speak English.
Yet the Labour members cheered with joy at everything she said. Even when it didn’t make sense. ‘No return to austerity,’ she squawked. And in the next breath, ‘we cannot tax and spend our way to prosperity.’ But her Budget is set to snaffle £40 billion in extra taxes as part of her ‘growth strategy’ over the next five years. As for the Tories, she concedes that their policies were prudent.
‘Under the plans I inherited, public investment was due to fall from 2.7 per cent to 1.7 per cent of GDP.’
Maybe she should leave the public finances alone. Even the OBR admits that their ‘growth strategy’ will be sluggish. After five years of revving up the engines, Reeves estimates that the economy will expand by just 1.6 per cent in 2029. And by even less, 1.5 per cent, in the preceding year. Lichen on a tombstone grows faster.
The buoyant Labour benches cheered all her billionaire-bashing taxes. She’ll hike air passenger duty by 50 per cent for private aircraft. And she steered that announcement towards Rishi Sunak.
‘£450 for a private jet to, say, California,’ she quipped.
Some of her happy tidings appeared to disintegrate on closer inspection. She announced a drop of 1.7 per cent in duty on beer. And her colleagues roared with delight as she croaked out the surprise tax cut. ‘A penny off the pint in the pub,’ she said. Which is unlikely to get people dancing in the streets of London. Instead of £6.99 a pint you’ll pay £6.98. Or, to translate it into a retail bonus, you’ll earn a free pint for every 700 pints you buy.
Private education came into the spotlight. Labour’s plan to add VAT to fees is likely to price out the middle-classes and make public schools the reserve of the super-wealthy. Reeves struggled to present this as a revenue-raising measure so she indulged in some inventive book-keeping in the subject of tax avoidance.
She’s clearly been rehearsing her ‘unexpected-item-in-bagging-area’ delivery for weeks
Without explaining why, she added the VAT yield on private school fees to a speculative sum to be raised by closing tax loopholes. Adding these results together, she delivered a magical figure. Then another magical figure. The first was £8.5 billion. And the second was ‘over £9 billion to support public services.’ But she pretended that the total included a chunk of revenue from VAT on fees. This trickery will be helpful to Labour MPs in the TV studios. They can argue that opposing VAT on fees is the same as crushing people who rely on welfare. But reading between the lines, it seems that the fiscal assault on private schools may raise precisely zilch for the Treasury.
Military spending is up as well. Not just in Britain but in eastern Europe. The MoD can expect to get an ‘£2.9 billion extra,’ Reeves announced, ‘ensuring that we comfortably exceed our Nato commitment.’ But defending Britain isn’t Labour’s true priority as her next pledge make clear.
‘[We’ll offer] support to Ukraine of £3 billion a year for as long as it takes.’
Well, that’s great isn’t? No strings attached? And no time limit? President Zelensky gets £3 billion of our money, every year.
This may be the only part of the growth strategy that works. The growth of war.
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