Labour Government’s Bold Claim to “honesty with voters” Has Unraveled Quickly

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The new government’s bold claim to “honesty with voters” has unraveled quickly, as its first Budget reveals a path fraught with challenges for Britain. In any administration, the first Budget after a prolonged period in opposition is a defining moment, laying out campaign promises as policy and setting a clear direction for the country. Labour’s initial pledge to avoid tax increases and stimulate growth was quickly contradicted, however, with Chancellor Rachel Reeves implementing a substantial £40 billion tax hike—one of the most significant in recent history, despite concerns that it may dampen economic momentum.

 

In addition to this tax increase, Reeves is taking on significant borrowing, which she once promised to avoid in favor of “balancing the books.” The funds are intended for expansive public spending projects, a move that will undoubtedly drive inflation, keep interest rates high, and place additional financial burdens on future generations. Reeves contends that the spending will pay off, suggesting that these costs will be worth it for future generations, who will supposedly benefit from improved infrastructure, science initiatives, transportation, and enhanced educational and housing facilities. However, her most substantial allocation is to the National Health Service (NHS), receiving an additional £22 billion for daily operations without any proposed reforms or productivity goals attached.

 

While Reeves points to a forthcoming “10-year plan” by Health Secretary Wes Streeting, who promises systemic improvements next year, past reforms suggest caution. History has shown that without a fundamental overhaul, the injection of funds into the NHS often fails to yield meaningful improvements, with much of the allocated money absorbed by inefficiencies and administrative costs.

 

Reeves’s Budget has also broken several campaign promises. The government had vowed to leave National Insurance rates untouched and not manipulate fiscal figures to justify borrowing—commitments it quickly abandoned. Labour’s claim of a £22 billion “black hole” in the finances, meant to justify their tax measures, was revealed to be more fiction than fact, lacking support from the Office for Budget Responsibility (OBR). Instead, the OBR’s forecast projects growth to peak at only 2% before dropping, undermining Labour’s growth ambitions and prompting Reeves to reference a vague “long-term growth” projection, which lacks immediate relevance.

 

This cautious economic outlook did little to dampen Labour MPs’ enthusiasm for Reeves, who was celebrated by her peers as she asserted that her policies would stimulate economic growth, portraying herself as a kind of modern-day economic “alchemist.” Despite her optimism, history shows that true growth is more often driven by businesses and entrepreneurs than government policies. Reeves’s approach, however, may stifle that entrepreneurial drive, as her Budget introduces new tax pressures and regulations.

 

Labour’s Budget brings a hefty increase to the National Minimum Wage, including a 16% hike for workers aged 18 to 20. While framed by the Chancellor as a benefit, this cost ultimately falls on businesses. Reeves has also introduced new employee rights, estimated to cost employers £5 billion, while increasing National Insurance rates from 13.8% to 15%. Employers will now also start paying National Insurance at a lower income threshold—reduced from £9,100 to £5,000—adding £615 in National Insurance for every qualifying employee. Known as a “tax on jobs,” these changes will likely limit job creation, leading businesses to reconsider growth plans.

 

This policy has been described by some as a “poll tax on business” that dampens innovation and expansion at a critical moment for the economy. Notably, none of the senior ministers in the current government have direct business experience, raising questions about the administration’s grasp of private sector dynamics. The National Insurance hike alone is expected to raise £25 billion, placing the revenue burden for public spending largely on businesses—the very engines of economic growth.

 

Reeves defends these tax measures, arguing that businesses will ultimately benefit from improved schools, healthcare, and housing. While this may hold some truth, these benefits mean little to companies if they struggle to remain profitable under increased financial obligations. Overseas investors, whom Reeves claims she is keen to attract, may also be dissuaded by the new Capital Gains Tax hike, increased stamp duties, and stricter regulations on non-domiciled residents. Such changes pose significant deterrents for potential investors, who may think twice before bringing capital to the UK under such conditions.

 

During the campaign, Conservatives warned that Labour would revert to its historical trend of tax hikes, increased spending, and heavy borrowing. True to form, the new government has done precisely that, contradicting its earlier promises. Rishi Sunak, the outgoing Opposition leader, summarized the situation succinctly, arguing that Labour’s supposed commitment to integrity and transparency with voters has already been exposed as a façade.

 

Based on a report by Daily Telegraph 2024-11-01

 

 

 

[Theforgotten1]

Not worry the mps will be ok , they’ll fill their pockets ,add an extra on their expenses.

[James105]

Well done Labour.  Well done.   Economically illiterate morons.   

 

Edited 2 hours ago by James105

[RichardColeman]

Only uneducated idiots voted for labour, those with intelligence knew exactly who they were, their experience and what would happen.

 

Same happened in the US with the idiots Biden and Harris. The left cannot run a country. Can but hope the right gets itself kicked out and liebour are a one term disaster

[Denim]

Pouring money into a broken NHS without any serious attempt to scrutinize where all the leaks are is just money down the drain IMO.

 

Hasn't worked until now and so a different result can't be expected.

[Thingamabob]

The UK is in deep trouble.

[jippytum]

 Starmer looks like a deer caught in the headlights.

Millions of shocked voters  hoping for positive change are bitterly dissapointed at the sleaze and broken promises so soon after the election. 

[Chomper Higgot]

Taxes have not gone up for working people.

Funding to the NHS has gone up dramatically, as promised.

Funding to schools has gone up.

 

Unless you are earning considerably more than the national average your taxes have not increased.

 

 

[James105]

1 hour ago, Chomper Higgot said:

Taxes have not gone up for working people.

Funding to the NHS has gone up dramatically, as promised.

Funding to schools has gone up.

 

Unless you are earning considerably more than the national average your taxes have not increased.

 

 

 

Tell me you have never ran a business without telling me you have never run a business.  You are not alone here as literally no-one in the cabinet has ever run a business either and seem to be equally clueless how this will affect "working people".   Her maths is wrong too as she claims it will raise £25bn but the IFS said it will be £10bn instead as of course making it more expensive to employ people will mean businesses employ less people.   So she has effectively created herself a £15bn black hole.   

 

https://www.ftadviser.com/your-industry/2024/10/31/nic-increase-will-not-raise-anything-like-the-25bn-stated-warns-ifs/

[sungod]

NI contributions for employers up equals more operating costs and therefore less chance of a payrise, fewer jobs offered, product prices up.

 

Oh, and dont work hard and save your money in property as a pension plan, they will nick that off you with an increase capital gains. 

 

Best thing to do is sit on your ass with your hand out.

[John Drake]

Looks like the communists lied, because that's what communists do.