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It’s the day after the budget before and Britain’s political ecosystem is still digesting the proposals outlined by Rachel Reeves in her statement on Wednesday — the first Labour budget in almost fifteen years.
And the reviews, emanating from across the political spectrum and Westminster’s various wonk hubs, are mixed.
Conducting the post-budget broadcast round this morning, Reeves insisted her inaugural budget “fixed the foundations and wiped the slate clean.”
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“It was a big budget”, the chancellor told Sky News, “it was a significant budget but we have now brought out into the open things that were covered up by the previous government and swept under the carpet.”
She added: “Because of the action that we took yesterday our public finances are now on a firm footing. The debt and the deficit are now more sustainable and on a stable path and so as a result of what we have done we are not going to have to come back and ever do a budget like this again because we have brought everything out into the open”
Keir Starmer, at a Q&A with NHS staff in the West Midlands, said the budget was a “downpayment” on the future of the health service. The prime minister said his “driving mission” is to “pick up the NHS” — but added that the health service’s workload is “likely to go up, not down” in the near term.
Starmer said: “Look, I’m not going to pretend that by next week it will all be fixed, because too many politicians have done that.
“It is going to take time, but what we did in the Budget yesterday is the first step, the down payment if you like, down that road, to make sure that you can do your jobs better and we can have the NHS that we need.”
At the budget yesterday, the chancellor confirmed the NHS will receive a significant boost of £22.6 billion in day-to-day spending, and £3.1 billion for its capital budget this year and next.
On the other side of the aisle, Conservative leadership candidate Robert Jenrick has accused the chancellor of acting “like a compulsive liar” over the government’s tax promises.
Speaking to Sky News, the former immigration minister said Reeves has been “telling packs of lies for months”.
Jenrick’s rival in the Conservative leadership contest, Kemi Badenoch, said the budget would be “terrible” for businesses. “What they have done on employers’ NI is going to destroy jobs”, she told GB News, “It is going to lower wages. People will not see pay rises. Employment, disposable income, and salaries are all going to be lower than [they were] under the Conservatives.”
Voting in the Conservative leadership contest closes at 17.00 today. Jenrick is thought to be behind in the race — which may well explain his especially pugnacious comments this morning. The winner and next Tory leader will be declared on Saturday.
Meanwhile, the Institute for Fiscal Studies held its budget briefing this morning, having pored over Labour’s proposals and Office for Budget Responsibility’s evaluation of them.
IFS director Paul Johnson said that Reeves’ current plans mean a 4.3 per cent jump in spending next year, 2.6 per cent the year after and then 1.3 per cent in each of the following years.
Johnson said: “I’m afraid this looks like the same silly games playing as we got used to with the last lot. Pencil in implausibly low spending increases for the future in order to make the fiscal arithmetic balance.”
He went on: “It sounds like it was hard enough to get agreement from departmental ministers to relatively generous settlements in the short term. When it comes to settling with departments for the period after 2025-26 keeping within that 1.3 per cent envelope will be extremely challenging.”
“[Reeves] is meeting her borrowing target only by repeating the same silly manoeuvres as her predecessors used to make it look as if the books will balance.”
The Resolution Foundation, another economic think tank, claimed Reeves’ £100 billion boost to government investment will not be enough to turn the tide on the UK’s stagnant growth in living standards.
In its overnight analysis of the chancellor’s first budget, the Foundation said that real household disposable income per person will grow on average by 0.5 per cent a year across this parliament, the worst for any Labour government in history.
Mike Brewer, the Resolution Foundation interim chief executive, said: “With Britain finally turning the page on its longstanding failure to invest thanks to a £100 billion boost to public capital spending, the hope is that this short-term pain will eventually turn into a long-term living standards gain.
“But if it doesn’t, future budgets won’t be any easier to deliver, especially if further tax rises are needed.”
Lunchtime briefing
Lunchtime soundbite
‘At least Liz Truss wanted to grow the economy!’
— Asked if he preferred Rachel Reeves’ budget or Liz Truss’ “mini-budget”, former chancellor Jeremy Hunt tells the House of Commons: “I actually like neither.”
Now try this…
‘“There will be consequences”: budget may mean smaller pay rises, says Reeves’
Via The Guardian.
‘Government’s public spending plans are “silly games”, warns top economist‘
PoliticsHome reports.
‘Rachel Reeves’s class-conscious Budget’
The chancellor’s redistributive statement drew a sharp contrast between work and wealth, writes The New Statesman’s George Eaton. (Paywall)
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