In nearly sixty years of studying and teaching economics I have always felt attitudes to the UK’s annual budget to be over-hyped. In earlier time MPs honoured it by wearing top hats, chancellors of the exchequer stimulated themselves with mysterious drinks, Disraeli’s budget speech lasted five hours but this wasn’t a record as he took a break in the middle, Gladstone once managed four hours non-stop.
Rachel Reeves’s budget probably wins the record for the longest and most misleading deluge of pre-event speculation around (deliberately leaked?) predictions.
These annual budgets have very little effect on the quality of the day to day lives of the vast majority of the population. The very poorest may benefit by a little more income or a better chance of getting a job. The lives of the comfortable and rich are hardly affected at all.
Similarly whatever the government does to try to affect the over-all level of economic activity, presently the desperate quest for economic growth, is often far overshadowed by external events: Donald Trump's tariff wars, the price of oil, the Ukraine war, a stock exchange crash, to name but some.
That said, I watched most of the speech and M/s Reeves sounded confident and I felt made a good case. She kept within her self-imposed fiscal rules and pre-election promise, found enough money to abolished the two-child benefit limit, taxed gambling and EV cars, and introduced an additional council tax on very expensive houses. (Will that stay with the councils or go to the central government for re-distribution from the rich to poorer authorities?)
I was sorry to see the Lower Thames Crossing confirmed as that is just a pointless prestige project, (ditto the largest of the London Airport expansion schemes) and the overhauling of the planning system which will further over-centralise our inefficient government.
In summary, the budget raises taxes in order to marginally improve the public realm and the plight of the poorest. The Tories regard that as a criticism: Labour should be “out and proud.”
I have three major criticisms.
1.The whole hooligan atmosphere of the budget debate does our democracy little credit. Despite the reservations expressed above, the budget is a serious business, especially for the poorest, and should be treated as such, not for jah-boo behaviour which would disgrace a football crowd
2.The approach is “muddling through.” The extra “add on “ of council tax for expensive houses is simply to make an unfair and ineffective tax just a little bit less unfair and ineffective. For real change we need a root and branch revision of the purpose of local government and how to finance it.
3. We need lots more “green” measures. Why is the “accelerator” on fuel duty still in place, and no duty all or aviation fuel, why no taxes on pollution, congestion other “bads.?”
As to the political effect, I suspect both M/s Reeves and Sir Keir Starmer (who was very confident at PMQs) have saved their jobs.
Now let’s hope the Labour Party will stop fighting itself and get round to governing the county efficiently and with vision.
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