Former prime minister Sir Tony Blair has warned Chancellor Rachel Reeves that any manifesto-breaking tax hikes must be “temporary” and accompanied with action to help businesses left “bruised” by her last Budget. The Tony Blair Institute is also pushing Sir Keir Starmer’s Government to scrap plans to give all employees the right to sue for unfair dismissal from day one rather than after two years of service.
It warns this would hike up employment costs and “discourage firms from recruiting”, and instead calls for a six-month qualifying period. The think tank insists a bold pro-business plan is needed to “end the tax and spend Budget doom loop”. It says the goal of next month’s Budget should be bring “markets, businesses, the party and voters back onside”.
Sir Keir’s team, it says, must “signal a clear change in direction and a move beyond the caution of the Government’s first year in office”. It states Ms Reeves must make clear any increase in income tax or VAT is “temporary and conditional: a short-term measure to stabilise the public finances, not a permanent shift in direction”.
She is warned that a “tax and spend Budget will not break the UK out of its economic stagnation” and the Government is criticised for treating growth as “one objective among many, rather than the core mission needed to restore economic and fiscal strength”.
Sir Tony’s think tank pushes for a raft of reforms, including the introduction of a “Government loan to spread the cost of stamp duty on property transactions over 20 years, with balances waived if households move earlier”. It also wants the abolition of stamp duty on shares and the replacement of business rates with a “commercial-landowner tax”.
The Conservatives have already pledged to abolish stamp duty on main homes.
Laying out the challenge for Ms Reeves, Tom Smith, director of economic policy at the Tony Blair Institute, said: “She cannot satisfy the markets, the party, business and voters all at once. The only way to do so over time is to put Britain back on the path to growth – and that means a new bargain between Government and business. A credible Budget can’t just raise taxes – it must raise Britain’s sights.”
Other proposals include introducing road pricing to replace fuel duty and prepare for the electric era and “tightening eligibility for Personal Independence Payments” and restricting access to restricting the Motability tax relief scheme to adapted vehicles.
Shadow Business Secretary Andrew Griffith warned Labour’s overhaul of rights in the workplace “will be a disaster for our ailing economy, destroying jobs and sending more people to the dole queue”.
He said: “Starmer needs to grow a backbone and stand up to the trade unions who wrote this legislation. It’s time for him to ditch the Employment Rights Bill before it becomes the Unemployment Act.”
A government spokesperson defended the plans to strengthen workers’ rights, saying: “Our reforms to the labour market and employment rights are crucial for our plans to drive economic growth.
“Making basic protection against unfair dismissal a day one right gives financial security to people who don’t have it, and we are ensuring new laws work for businesses while continuing to make the tribunal system more resilient.”