Polly Toynbee: This was radicalism disguised as conservatism
Here comes Labour defining itself at last with the biggest tax-raising budget in a lifetime: the £70bn in new spending – with £40bn coming from raised taxation – is big enough to see from space. This should lift the public mood, after the chancellor committed to economic change with her “invest, invest, invest” message. She demolished the Tory legacy after the OBR’s verdict: they had hidden debts – and now they have run for the hills. Her tone of authority rang out to the markets, responding at first by setting their prices in her favour. Then they wavered: will they settle?
The rich got their noses pinched, and were scorched for their private jets, private schools, capital gains and non-dom status, while losing inheritance tax perks on pension pots and farmland. These crowd-pleasers that polled very well would have made the “intensely relaxed about the filthy rich” Blair government faint with shock. How cleverly the stolid Reeves-Starmer show of sober solidity disguised their radicalism in a generally market-calming performance. Mind you, her speech didn’t talk of squeezing the rich till the pips squeak (these were only minor pinches to their wallets). We know now who Labour thinks working people are, protecting them with no rise in fuel tax, 1p off a pint in a pub, and no change to income tax or national insurance thresholds: pretending they might continue freezing those thresholds for working people was a clever pre-budget feint.
The great taxation, the springboard out of austerity, takes most from larger businesses so that small hairdressers or corner shops with four or few employees are saved from higher national insurance contributions. The eye-watering sum raised for the NHS must yield falling waiting lists fast: almost everything for Labour depends on this. Schools get a welcome lift. There’s little for the poor box: wait for that taskforce report in the spring spending review, they say. Then they must remove the two-child cap. For now, change needs to show itself soon to raise the spirits of a glum and cynical public. But everyone now knows the true nature of this government.
Polly Toynbee is a Guardian columnist
Frances Ryan: Forget the election campaign – tax is no longer a dirty word for Labour
It is an age-old truth that the purpose of a Labour government is to clear up the Conservatives’ mess. For the party’s first budget in nearly 15 years, the chancellor, Rachel Reeves, had two dilemmas: how is Labour going to rebuild Britain – and who is going to pay for it?
Forget the tight-lipped election campaign, taxes are no longer a dirty word. They will boost the minimum wage, help the broken special educational needs and disabilities (Send) system and pay for breakfast clubs for kids. The flatlining NHS will get £22bn worth of CPR.
Reeves targeted those with the broadest shoulders through capital gains and inheritance tax changes, while lifting the freeze for middle earners. But she missed the chance to raise cash from a wealth tax. Polling by YouGov before the budget found eight in 10 Britons support raising income tax for the super-rich.
Large-scale investment in infrastructure will be a lifeline for a country that’s crumbling. But meagre 1.5% raises for government departments expose a spending double standard: it’s prudent to fix a road but wasteful to ease child poverty.
Reducing debt repayments from universal credit will be welcomed but knowing that changes to the work capability assessment are to come means an anxious wait for many disabled people.
Much punditry today will focus on whether Reeves has broken Labour’s manifesto tax pledge. But that’s a distraction. The real issue is not the semantics of who is or isn’t a “working person”. It’s what is a fair way to rebuild a broken public realm.
Now the maths is done, Labour will need to sell the narrative it should have started with in the election: tax is not a burden – it’s the price of Tory failure.
Frances Ryan is a Guardian columnist
Jon Moulton: It seems the well-off have become tax targets
The budget contains lots of things that affect bits of the economy and certainly the best that people working in private equity can say is, “It could have been worse…”
Private equity refers to firms that raise money from investors and use this to buy out private and public companies; it also includes venture capital, which is the funding of early-stage companies with growth potential. Private equity workers enjoy a special tax status – the so-called carried interest loophole – but this will now be eroded, and there are threats of more tax to come over the next few years. It seems very likely that within a very few years there will be no special tax position for private equity souls.
You can readily make the argument that these typically very well-paid people should pay the same tax as the rest of the population. However, the UK already gets a lot of tax revenue (of all types) from these people. There is a real issue in that a good proportion of private equity firms could move their people and offices to less taxing jurisdictions (places like Portugal, Italy, Dubai) so the tax take might drop from upping the taxes. The government talks much about growth – some of these firms are important in helping generate growth and you do not want to see them focus elsewhere.
Capital gains tax is also to rise – this means less return for entrepreneurs and must reduce growth. It is the most fiddled with tax and stability is badly overdue. The rise in employer’s national insurance is simply a tax on jobs.
Large commitments for “investment” may, yet again, simply amount to headline-grabbing spending without lasting benefit to the economy. Indeed, if good people are sucked into state-funded, but weak, businesses by large spending the economy will do worse – not better. Ultimately, the feeling that being well-off makes you a tax target under this government is clearly not irrational.
Jon Moulton is a venture capitalist and chair and founder of the Better Capital fund vehicles
Sahil Dutta: A crucial question – who will own this new infrastructure?
Despite progress on public investment, Labour’s budget still reflects a failed status quo. The £40bn increase in tax is needed but falls more on businesses employing people than it does the wealthy hoarding economic resources.
Rejecting broader questions of how money is made in the economy and by who, Labour instead treats infrastructure investment – especially housing, transport and energy – as the ultimate problem to solve. After three decades when Britain has invested less than its G7 partners, it is right to address this. But how investment happens is as important as how much.
Here Labour has shown little sign of changing the current model where critical infrastructure is provided by private firms. Many of these companies have shunned investment for the past three decades, while ramping up dividends, buybacks and executive pay. Rather than confront why, Labour’s priority seems to be sweetening investors and developers with more money available on better terms.
This is what drives Rachel Reeves’s new “investment rule”. That an accounting tweak can suddenly release £50bn for public investment shows how political “economic realities” really are, but the updated framework still restricts extra fiscal capacity to subsidising capital projects.
By excluding “day-to-day” spending, Labour has undervalued our social infrastructure. Work in sectors such as healthcare, childcare, education and adult social care is as vital for a functioning economy as new train lines and energy plants. What use are new machines in the NHS when hospitals are filled with elderly patients needing community care? Though these essential services have gained today, their forecasted budgets are very tight.
It is telling that many of these essential services – staffed by Britain’s 21st-century working class – will scrap for support while the big business suppliers of capital infrastructure projects can look forward to more subsidies. If the budget is a window into where power lies in the country, this shows how far Labour has to go.
Sahil Jai Dutta is a lecturer in political economy and co-author of Unprecedented: How Covid-19 Revealed the Politics of Our Economy
John Redwood: The intentions are good, but can Starmer and Reeves deliver?
Many of us welcome and support the main budget aims of securing more growth, making good investments and helping more people into work. The question is: will the many tax rises and spending increases achieve the desired results?
In order to achieve the government’s growth ambitions through increased investment there needs to be a big uplift in private sector investment, alongside new government projects. That, in turn, requires a competitive tax regime as the UK seeks to attract crucial investment from around the world. It also needs a way of taxing the wealthy and successful to ensure, as now, they pay substantial tax without setting rates and rules that lead to many of them leaving the country. Ahead of the budget, we read that many very rich non-doms left, taking their businesses and spending power with them. We cannot afford to lose too many from our talent pool.
The strategy based on a big expansion of public sector investment needs to be carefully planned and executed. Doubtless more AI and computers could raise standards and reduce costs, but we do not need another very expensive computerisation scheme like the Post Office one, which landed the taxpayer with huge bills for compensation. The idea that the state should put £19bn into carbon capture and storage worries true green campaigners, and leaves the rest of us concerned that this will not be an investment that will pay a return. Trying to rescue HS2 as a new link to the north could prove to be costly and difficult, as it has defeated the well-paid management so far to deliver it on time and anywhere near the original large budget.
Many of the projects the government brings forward will be familiar: the announced improvements to schools and new hospitals (which the last government said it wanted but did not get done) are presumably there with some advanced plans. I wish them well in trying to get us more energy, better schools and hospitals, and a rail system that pleases the passengers; but Keir Starmer and Rachel Reeves are going to need new thinking on how to manage these matters, and some better public sector managers to carry them through.
John Redwood was the Conservative MP for Wokingham from 1987 to 2024
Sharon Graham: It’s disappointing Labour didn’t adopt our proposal for a wealth tax
There are some positive announcements, no doubt. For instance, the increases in government spending, a decent increase to the minimum wage, and a loosening of the fiscal rules – a move I have been calling for these past months – so we can borrow to invest. But for everyday people to feel change, a much clearer timeline of concrete action will be needed.
Here is the real challenge this government faces. How does it deliver a serious industrial strategy that creates jobs and supports communities? On investment, the chancellor still left the fundamental question unanswered. Where are the 650,000 green jobs? Too much is left unknown.
Investment can’t end up being a handout for multinational banks and corporations, with no job guarantees attached. That doesn’t work. It isn’t working with the PetroChina and Ineos oil refinery at Grangemouth.
That’s the cold, hard truth about the world we now live in. A world in which billionaires and global markets have the whip hand. They couldn’t care less about UK infrastructure, about our jobs and communities.
But governments should and could do more. They can use the resources they have to take stakes and drive investment – to lead, not just follow, the market.
On public services, this budget marked the beginning of a long path towards renewal. Substantial investment in education and our NHS is to be welcomed. But we need to make sure that the investment is in people, not just technology. Scanners without staff are of no use.
The government chose not to bite the bullet and adopt our proposal for a wealth tax. Instead of raising corporation tax to 28%, as we had proposed (and as Kamala Harris is proposing for the US), the government has gone for the backdoor option of a company NI rise, knowing that many employers will pass it on to their workers.
What workers expect from a Labour government is to use all the power it has to fight their corner and truly be their voice. That’s the test Labour faced in this budget, and that’s the test it will face through the next five years. They may only have one shot. They need to make it count.
• Sharon Graham is the general secretary of Unite
Brian: There’s nowhere near enough help for people living in poverty
Today’s autumn budget was an opportunity for the new Labour government to show it is determined to help and support people living on low incomes. Far from that, the focus on “working people” excluded and alienated disabled people, and those unable to work due to health conditions, who already are living on benefits that are inadequate. As a single parent unable to work, and claiming universal credit, I know how difficult it is to try to make these payments stretch while living in poverty.
While the announcement of lowering the maximum debt deductions from universal credit – going from 25% to 15% – is welcome, this is still far too much for people living on the lowest incomes. Similarly, raising the earnings threshold for carer’s allowance and extending the household support fund are positive steps, but they do not tackle the core issues of inadequacy within our social security system. Clear opportunities were missed: the removal of the two-child limit policy, if carried out, would lift more than 500,000 children out of poverty.
If the government intends to invest in the future of this country, it should start by helping struggling families like mine. Announcements like the increase of 50% on the bus fare cap does the opposite: hitting people on low incomes hardest.
Brian is a parent taking part in Changing Realities, a collaboration between parents and carers living on a low income, researchers at the University of York and Child Poverty Action Group
