Keir Starmer says ‘painful’ Budget is needed for ‘long-term good’
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The mood music of British politics changed overnight. Sir Keir Starmer now says that things are going to get “worse before they get better”. In permanent point-scoring election mode, he wants to make this pain seem inevitable, and he naturally wants to blame this on the Tories. The change in tone from the campaign would be impressive were it not so flagrantly cynical.
Rachel Reeves, too, has very quickly morphed from an unremarkable Shadow Chancellor into perhaps Labour’s most effective manipulator of political narratives. She has spent several weeks giving away billions in taxpayers' money to state employees while asking nothing in return from union bosses.
Top salaried jobs are going to a growing posse of Labour party yes-men and donors, billions are being spent on Ed Miliband’s increasingly absurd green passion project. The writing is on the wall for massive tax rises in the Autumn budget – Starmer has warned it “will be painful”.
The public seems broadly to believe Reeves’ spin that somehow the black hole she just created was the fault of the Tories. They seem broadly willing to put up with cuts to the Winter Fuel Allowance. Perhaps the public haven’t yet realised the long term costs of defunding key economic infrastructure like road-building and restoring railways in order to fund frivolous demands for months of paid holiday, shorter working weeks and a “right to switch off”.
Reeves and Starmer may not want you to notice certain economic factors (Image: PA)
Keir Starmer informed the UK there are tough times ahead (Image: PA)
Yet Labour have thrown away credible measures to save money. The civil service is still massively bloated as it never returned to its pre-Covid size. Reeves has scrapped Tory plans to cut these extra jobs. There are 100,000 more civil servants today than there were in 2016 – a whopping 20 percent larger.
That’s more than ￡3bn a year – more than twice the cost saving on the Winter Fuel Allowance. Labour talk about “tough choices”, but there’s nothing “tough” about handing out pay rises like confetti and refusing to lay off unnecessary staff at the taxpayer’s expense. It’s the same old big-government Labour we knew well in the 1970s.
Reeves will present her tax rises – probably on Capital Gains, Employer National Insurance and Corporation Tax – as not affecting the average working man. But they will. Employer NI increases the costs for your company to employ you. This will come from your future pay rises or companies will be forced to put up prices to pay for it.
Similarly, economists warn that around 63 percent of Corporation Tax is passed straight on to consumers in the form of higher prices. According to YouGov, only five percent of Brits are aware that they’re paying for corporation tax.
This is worlds apart from the Rachel Reeves on the campaign trail two months ago. Rachel Reeves told us she was going to go for growth, cut out the waste. Even if we ignored that strategic funding of ￡1.3bn for AI and supercomputers – the high-value industries of the future, have already been cut, or that housebuilding targets in London are being cut, there’s even more damage yet to come.
If reports are to be believed, Reeves is about to tax investment income and, in Keir’s words, “those with the broadest shoulders” – the wealthy. But compared to last year there are 40 percent more civil servants earning over ￡100k – and Reeves has just confirmed that they’re all getting an inflation-busting pay rise of 5.5 percent to boot. The rich that will actually feel the brunt of these rises are the entrepreneurs and high earners in the private sector. The ones who actually pay into the government rather than drawing their salaries from it.
The sad truth is that just a few short weeks ago, things were looking up for Britain. The Tories left behind a recovering economy – we were the fastest growing in the G7 so far this year, growing twice as fast as France. We had money set aside to invest in leading future tech, plans initiated to cut back the size of the civil service.
Visa numbers dropped massively after Cleverly’s reforms, even if illegal boat crossings remained high. Labour have already ended the government’s “Duty to Remove” illegal migrants – allowing Yvette Cooper to grant them asylum, and removed the retrospective clause, meaning that anyone who arrived illegally from March last year will no longer be deported. Much like their plans go “go for growth”, those promises Labour made to Britain to cut immigration and “stop the boats” were bare-faced lies.
Prof Azeem Ibrahim OBE is the Director of the New Lines Institute and an author