Rachel Reeves’ Budget ignored this one reality about Britain

There was a lot of talk ahead of this Budget about it being the most significant financial statement for decades, a Budget that would set the course of our country for years to come. 

After 14 years of underfunding which has left our public services in crisis, we needed a vision. What we got was a patchwork of promises, some of them positive but barely delivering on the long-term change that people voted for in July.  

Indeed, after a rush of spending over the next year, the increase in funding slows to a crawl. A growth in real terms spending on public services of 1.5% a year after next year will barely touch the sides when you consider the need after 14 years during which public services have been brought to their knees.   

This doesn’t feel like a plan for long-term transformation to build the economy of the future. 

Don’t get me wrong: there was much to welcome. It was right that money is set aside to compensate the victims of the infected blood scandal and the Post Office horizon scandal. It was right too that the Chancellor changed the self-imposed fiscal rules to allow more borrowing to invest in our economy.  

But this was a Budget which too often gave with one hand and took away with the other. While there is welcome and substantial investment in the NHS, mainly for diagnostic services, it comes in the wake of the withdrawal of winter fuel allowance for millions of pensioners which will leave them colder and sicker. The money in the Budget for social care will barely touch the sides – hardly an example of joined-up thinking. 

The funding for schools is also welcome and a recognition of the dangerous state of many school buildings, which were constructed with dangerous concrete. I was also pleased to see the Chancellor recognise the huge un-met need of families with SEND children with a £1 billion increase in funding.  

But let’s not forget that this Government also chose not to lift the two-child benefit cap which condemns 300,000 children to living in poverty.  

The minimum wage is going up but raising employers’ national insurance and lowering the threshold at which they have to pay it places a huge burden on small and medium-sized businesses who form the backbone of our economy and provide more than 16 million jobs. The rise in bus fares will also make it more expensive for the worst-off to get to work. 

Then there is the vital green transition to a thriving, sustainable economy. In the past seven Conservative budgets, the word “climate” was mentioned barely at all and then only in passing. Rachel Reeves continued that shameful tradition. The climate and nature crises have been virtually ignored – despite the huge impact they will have on our economy in the coming years.  

Worse, the money to deal with some of the biggest impacts of climate breakdown – flooding – is to be reviewed and quite possibly cut, along with the budget for farming. As an MP for a rural constituency which is regularly affected by flooding, this is deeply worrying. 

Rachel Reeves also showed political cowardice by following previous Conservative chancellors in freezing the fuel duty raise. This is not only costing the public purse £3 billion a year, it has also increased our carbon emissions by seven percent over the past 15 years.   

The Chancellor is planning to spend a lot of money, particularly in the coming year, and our public services desperately need it.  

But she has ignored the reality of where the wealth lies in Britain. The wealthiest 10 percent of the population own around half of all wealth, much of which is taxed at a much lower rate than the income of ordinary working people. The Chancellor seems to run scared of all the talk about millionaires and billionaires leaving the country, rather than looking to them to pay their fair share of tax so everyone can benefit from improved public services.  

Yes, capital gains tax is going up but there is still a yawning gap between income from work and income from wealth. The rise in employers’ national insurance contributions means the money to fund the increase in public spending is coming from taxes on work, not wealth.   

Rachel Reeves said there would be no return to austerity and “people must feel that”. Based on her plans, I’m not sure they will.