“Labour’s first Budget is a welcome change of direction but there is still much to be done”
By Ian Lavery MP
It is an absolute fact that the Labour Government has been left with a terrible fiscal and economic legacy by the Tories who purposefully created a budgetary mess and then called an early General Election to ensure that Labour had to deal with the consequences. This betrayal of our people for Party advantage should never be forgiven.
It is also a hard truth that a Labour Government has to be very aware of the power that the bond markets have to derail any plans it may wish to make. It is an undemocratic aspect of modern global capitalism that I find unacceptable, but it is a harsh unavoidable reality.
In the face of these great obstacles to the progress we want to see, the Chancellor has announced in her first Budget many policies for which she deserves credit. As the former President of the NUM, I am particularly pleased by the decision to rectify the unjust funding arrangement of the Mineworkers Pension Scheme designed by the Tories in the early 1990s. They deprived former mine workers and their families of billions of pounds. I have fought against this for decades and had to wait for this Labour Government for justice to be achieved.
A Budget that had an inflation busting rise in the National Minimum Wage, which saw a large increase in the amount of money Carers can earn before loosing benefits and that will see the Triple Lock on Pension Increases protected has to be welcomed. Moreover, the massive increase in spending on Health and Education is something we on the Left have demanded for over 14 years and should be celebrated. It will not undo years of Tory negligence overnight, but it’s a good start.
The Chancellor’s Budget was based on avoiding taking money from working class people who have suffered stagnant living standards for far too long. Although, it has been said that the Budget will create problems for some small businesses, we could no longer have an economy based on low tax payer subsidised wages and crumbling public services. I hope as much as possible can be done to help small businesses through this transition, but Rachel Reeves was right to put the UK on a more equitable path.
I support a Budget that aims the essential tax increases at employers and the wealthy and not the working class. The increases in Capital Gains Tax, Inheritance Tax and the abolishing of the Non Dom Tax Status were good, but I have to ask the Labour Government if they were even close to being sufficient to meet the task ahead. The very wealthy have prospered since the 2008-09 financial crisis (which some of them actually caused) whilst working class families have stood still at best. We have reached the grotesque levels of inequality in the UK in which the top 50 families have a worth of £500 billion. It is only just that the super rich pay their fair share for the massive amounts required to save our public services and to build the modern Green infrastructure we need in the face of the Climate Crisis.
As Sharon Graham of Unite has said “The Chancellor’s continued failure to ensure that the super rich pay their fair share is a misstep”. I urge the Government in accordance with the vote at the last Party Conference to implement a Wealth Tax of 1% on the richest 1%, which Unite estimate will raise £25 billion. This would wipe out the so called “fiscal Black Hole” and release much needed money for the rebuilding of everything broken by the Tories since 2010, and even allow more help for the small businesses. Why should they pay relatively more to allow us to escape from the perpetual Tory downward spiral than the very rich who greatly benefited from Tory Neo Liberalism?
I cannot fault an economic approach that strives to “make work pay” and that recognises the need to empower Trade Unions to redress the imbalance in power between workers and their employers that has grown ever more acute since the days of Thatcher. Although not perfect, the Employment Rights Bill is a good first step towards putting this right.
Rachel Reeves’ Budget must also be seen as a positive first step, but nothing more. I honestly do want this Labour Government to succeed and am offering constructive criticism when I say they have made some blunders that need to be addressed. The handling of the withdrawal of the Winter Fuel Allowance was a misstep that could haunt the Labour Government in much the same manner as the tuition fee u-turn permanently damaged the Liberal Democrats during the Coalition Government period. The failure to prioritise the elimination of poverty, especially child poverty, from the outset of this Parliament through removing the two child benefit cap is another bad mistake that has to be put right without delay.
The Budget set us on a much needed new more progressive course, but that course has barely begun. The consequences of this Labour Government failing would be too horrific to contemplate, as the far right are waiting to pounce. I hope to work with the Government to build on the positive aspects of the Budget, but urge it to recognise where it needs strengthening and to put its mistakes behind them. We need more and we need it now.
- Ian Lavery is the MP for Wansbeck and former Chair of the Labour Party, you can follow him on Facebook, Instagram and Twitter/X.
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