Labour intends to break its promises and hike taxes. Will it ever fulfil its promise of enough growth to fund its lavish spending?
Daily it seems a new idea is dripped into the public arena for taxation of certain sections of the British populace so that the Government can finance increased spending. That spending has increased so far by £100 billion per year under this Government according to the office of Budget Responsibility. There are few signs of the UK’s leaders wishing to address the real unaffordable commitments which beleaguer the country. There are many signs that they will also blame others for the failure to stabilise the economy, even Brexit, which by now we surely should be living with not harking back. Their inability to take responsibility is a sure sign of weakness and incompetence.
The person in charge of these finances is of course the Prime Minister but his sidekick, Chancellor Rachel Reeves, is entrusted with the detail. She is proven to be accident prone at least, incompetent perhaps to be kind, or a liar to take a cynical view. It is inexplicable that the media seem to have excused her overstatement of her economic credentials in her CV, and an honest mistake can perhaps be forgiven. Her criminal act of failing to have the required licence for her rented out home is, she alleges, her husband’s fault, and she was unaware of the error. As Rod Liddle in the Sunday Times observed “… imagine if the sexes were reversed in this little scenario and a male cabinet minister blamed his missus for failing to carry out some clerical domestic task which resulted in him breaking the law. “I’m afraid my wife completely forgot! Bless her, she’s a feisty mare and scrubs up well but, frankly, if she had a brain she’d be dangerous!” I think you can imagine what the commentariat’s reaction to such an excuse might be. Hell, there might even be allegations of sexism. But ponder this for a while: there is no greater love than to shove your husband under a bus at the first sign of a threat to your truly bloody awful career. And if the husband isn’t sufficient, blame the letting agency.” She promised that her massive tax hit on certain people last year was a one off, a cleaning out of the economic Aegean stables, but it has become it seems accepted that such promise will be broken. Another error, but again perhaps forgivable if one believes that none of the economic malaise the country is enduring is of her making. But does anyone except her and the PM believe that? The new £100 billion annual spend is of course her responsibility. And now what might be proposed as a new black hole of tens of billions has appeared on their watch?
TORTURING THEIR ENEMIES
Starmer and Reeves constantly declare that they are looking after working people. The tax threats are being dripped out like a torture on those they regard as unimportant which includes people who are working but who’s crime is being successful and taking responsibility for themselves and their families. They are people who do not qualify in their definition of working people. Pensioners also do not qualify which ignores the fact that most pensioners are people who worked hard their whole adult lives bothering to save if they could look after themselves in older age, not depending solely on the State. A huge insult. Some of the reported 100 possible new tax hikes range roughly as follows:
People who are financially reasonably successful but who are fed up with the tax attacks made on them, if they choose to leave the UK, may be hit by an exit tax, or a “settling up” tax, as if they have stolen what is not theirs and must return it: a bizarre idea when they are being driven away. Pensioners may be hit with some form of wealth tax if they have meaningful assets, perhaps a mansion tax on the property they acquired through hard work, and maybe that would also hit people of any age who have a valuable property asset. Perhaps also these enemies of the working people will be hit with a new council tax band, unclear if that is on top of other taxes. And maybe if a dead person’s nice home is left to their children they will be hit with a new capital gains tax on the sale of the house with the gain accruing from when it was bought not from the time of parent’s death. Landlords, again who Starmer and Reeves clearly regard as all bad people, may be in the frame again. And limited partnerships which lawyers and accountants legitimately use to do business, may attract a new tax.
VAT could be made payable on things now exempt. Savers may lose pension savings relief. Of course, none or all of these may happen but to the extent they don’t perhaps it will be because these paragons of virtue in charge of finance decide to increase income tax, in breach of a basic promise made to get elected. If they do, will it affect “working people”? That cannot be as they are the class who they are sworn to protect. So, who will the burden fall on? Presumably those who pay the most tax already. When considering tax, it should always be remembered that, after netting out benefits, about half the working population pay no tax.
But we are told that it is morally correct that new tax pain falls on the “broadest shoulders”, as always. They say too that fairness will govern their decisions. The imploring of moral duty by Starmer is a hallmark, because he clearly believes he is the guardian angel of the UK’s morality, especially because he is after all a lawyer and a human rights lawyer at that, the features which seem to define his approach. Maybe this would be morally ok if it is clear these top leaders were driven to act in the country’s interests. But they are not as their prior actions demonstrate.
WHAT SHOULD HAPPEN?
Would fairness in this context mean that if the better off are to bear yet more pain to pay for the country’s bills, then the other side of this social bargain requires Government wisely and determinedly to keep the bills to a minimum, saving wherever possible.
Starmer and Reeves recognised that the country cannot afford the welfare bill and that there will be a number of claimants who should not get benefits and that it is in the country’s interests to reduce the benefits bill. They had proposed a meagre reduction of £5 billion, nowhere near enough. And later they withdrew this one act which they know is in the country’s interests, bowing to the pressure of Labour dogma. Likewise, they withdrew their proposed reduction of energy subsidy due to similar pressure. And so, the broadest shoulders must shell out more because our leaders lack any courage or even moral fibre to do what they know is right. Then they invoke fairness, surely demonstrating a warped hypocrisy.
It seems that almost every economic commentator suggests the Government must cut spending. The 2 big ways to do that are in relation to the NHS and welfare. And some areas such as defence and education need big increases, and so cuts are not just needed to meet deficits but also to reallocate money to meet those increases.
It is rumoured that maybe the Motability scheme which finances cars for those on PIP, including those who do not work because of anxiety, may be changed, removing the expensive cars from the scheme such as BMW and Mercedes – a disgrace that they are in the scheme at all. But this will raise peanuts.
The welfare bill needs to come down by tens of billions, perhaps with a redefinition of who is eligible and in what circumstances. This is obvious to any person who considers what benefits were properly intended for, with all recipients expected to make a contribution to society.
Public sector worker pensions are unaffordable and unfair. They are defined benefit schemes and could be moved over time to contribution schemes. The current system is unfair on private sector workers, including those who qualify as working people who Starmer and Reeves serve. They have contribution-based schemes now as the private sector recognised the unaffordability of defined benefit. Billions could be saved. And the triple lock on pensions, unaffordable, and again unfair on those who are working to fund pensions, could be altered to, say, the same rise as wages.
And then productivity. It is commonly accepted that public sector productivity is far too low. Reeves promises to remove bureaucracy and unnecessary regulation to the benefit of business in sums of billions of pounds. She needs to deliver but there is little so far from this promise. The Government’s announced Public Sector Productivity Programme envisages cutting running costs by 15% in this Parliament . They seek 5% reductions in all Departments, as if one size fits all. But two thirds of savings, the IFS suggests, must come from the NHS. The NHS in early 2025 has improved productivity from a low base and Wes Streeting is committed to continue, but more recently that has stalled. AI offers hope but there is no sign Unions will play ball with job cuts, the Civil Service being at its fattest for 20 years with 517,000 people . Are other Departments as committed? They need to be. Poor implementation of all decisions in the public arena could beset this programme as it has in the past. And platitudes of dogma must stop, such as Starmer’s insistence that their new employment legislation will improve productivity when perhaps all commentators say the opposite.
Finally, Starmer needs to keep his promise that all decisions will be driven by the growth purpose, and his undertaking that security of the country is his first priority. His track record makes for scepticism but is it not his moral duty to abide by his promises? And if his Labour party members of Parliament will not support him and Reeves in acting in the country’s interests, is it a moral duty to resign? Sadly the bench of substitutes looks thin.
