Reeves’s tax rises have seen unemployment rates soar to their highest levels for four years as businesses tighten their belts, while millions remain out of the workforce under the ever-expanding umbrella of “mental health” (though you won’t hear her phrase it quite like that).
We’ve been promised the usual half-hearted cuts: cuts to farming subsidies, the Border Agency, that sort of thing, while Labour is also throwing tens of billions at the NHS, social housing and schools. Add in £14.2 billion for the Sizewell C nuclear plant and you’ve got Labour’s budget in a nutshell: a shopping list of crowd-pleasers and little regard for the public bill.
Bond markets, unsurprisingly, aren’t buying it. Long-term borrowing costs are now higher than they were during Kwasi Kwarteng’s brief stint with the mini-Budget. That’s right. The supposed “safe hands” of Labour have managed to look riskier than the fiscal pyrotechnics of a 38-day Tory Chancellor.
The tax burden on working people is now the highest it’s been in 70 years. That’s not a point of pride, it’s a warning light. National Insurance rises alone have helped push 274,000 people off payrolls, and May’s figures show another 109,000 job losses in just one month. But Starmer and Reeves would still have you believe the economy is “improving.”
Previously profitable businesses are now struggling, with two-thirds saying that tax is their biggest concern. And now, with new employment reforms adding another £5billion burden (and that’s just the early estimate), companies are understandably starting to look elsewhere.
The cost of doing business in Britain has never been higher. So what’s Labour’s answer? Raise more taxes, borrow more, and hope no one asks why they’re still pretending to be prudent.
And then there’s the U-turn. Reeves’s reversal on winter fuel payments has made headlines, but it’s less about pensioners than it is about priorities.
The proposed cut would have saved £1.6billion; not life-changing for most, and arguably a sensible recalibration. But instead of finding a middle ground, Labour bottled it. Even with a 174-seat majority and a largely young voting base, they blinked.
Still, let’s be clear: the real scandal is that we’re still forking out billions every year on asylum hotels, legal aid for illegal migrants, and the endless costs of a broken immigration system.
Reeves has promised to end the use of costly hotel stays for migrants, saying it will save £1billion by the end of the next parliament. But if she wants to be taken seriously on the public finances, she must be more clear about where the money is coming from.
And then there’s the looming demographic shift ahead. The dependency ratio is set to rise from 57% to 80% by 2100. The Office for Budget Responsibility says debt could hit 235% of GDP by 2066 unless we take serious action. So yes, tough choices must be made. But instead of confronting the real drain on public funds, Labour’s tinkering around the edges.
Borrowing is already up £200billion compared to the OBR’s forecast from just over a year ago. Labour’s first Budget alone doubled the borrowing for 2024/25. So when Starmer and Reeves say they’ve “fixed the foundations” of the economy, one has to ask: which foundations exactly?
And let’s remember their boasts of “growth” are based on a single quarter’s performance. Q2 may well tell a different story. The supposed US trade deal? Not signed. The jobs in construction needed for Labour’s 1.5 million new homes? Missing, with 40,000 fewer workers than a year ago. Either the plan’s fiction, or Angela Rayner has discovered a miracle in industry productivity.
Rather than tackling the structural issues – an ageing population, strained health and social care, stagnant productivity – Reeves continues to paper over the cracks.
But wishful thinking doesn’t fix economies. Policy does. And this government doesn’t have the stomach for it.