Rachel Reeves claimed that Jeremy Hunt’s budget was “unravelling before our eyes” as Labour criticised the chancellor for handing a tax cut to the wealthiest with his pension changes.
In a 20-minute speech in the Commons, the shadow chancellor accused Hunt of offering “a huge handout to the richest 1% of pensions savers” while doing little to alleviate what is forecast to be the biggest living standards crunch since records began.
Speaking during the second day of the budget debate, Reeves said the pension changes, which will eliminate the higher tax rate on pension savings for people who have saved more than £1m, were “the wrong priority, at the wrong time, for the wrong people”.
“Yet again, working people and businesses, the key to our economic success, have been put at the bottom of the pile,” she said. She promised that Labour would reverse the measure if it won the next election.
While Reeves reserved her most vociferous criticism for the pension savings tax cut, she spent much of her time focusing on the Conservatives’ economic legacy after 13 years in government.
“Is anything in Britain working better today than it did when the Conservatives came to office? The answer … is a resounding no,” she said. “This is a government that is struggling to paper over the cracks after their 13 years of neglect and shoddy workmanship.”
Mel Stride, the work and pensions secretary, defended the budget and specifically the pensions savings tax break, arguing that it was the quickest way to make sure doctors were incentivised to stay in their jobs rather than retiring early.
“This policy will mean that thousands upon thousands of additional highly skilled people working in the National Health Service will stay in the National Health Service where we need them as a consequence.”
He highlighted many of the budget proposals that were designed to encourage people back to work, including more support for childcare and changes to benefits to help people with disabilities work more hours.
On Wednesday the government scrapped the work capability assessment, which assesses whether a disabled person is fit to work, in a move that Hunt said would make it easier for disabled people to seek employment.
“We on this side will never forget the power of work to change lives, to give to each and every one of us. That vital chance, that gift that employment brings,” Stride said.
Stride defended the budget in a way that the former prime minister Liz Truss presumably would not have done, telling MPs: “Those in the lowest income deciles proportionately benefit the most from the measures in this budget. It is thoroughly progressive.”
That remark drew jeers from the opposition benches, but it also marked a reversal in Tory economic policy, with Truss previously having rejected the idea that a budget should be assessed by its relative effect on each section of the population.
A more free-market defence of the budget came from Jackie Doyle-Price, who was a minister in Truss’s government. She told MPs: “When we make a change to the pension tax regime, we’re not giving money away to the rich, we’re letting them keep more of what they earn, and that’s the right thing to do.”
Other Truss allies had spoken in the budget debate on Wednesday, focusing their criticism on the rise in corporation tax in particular. But on Thursday one Tory MP attacked the budget measures from a very different angle.
George Eustice, the former environment secretary, told the Commons he regretted the focus on boosting subsidies for childcare because it was likely to keep mothers away from their young children.
“The truth is that many mothers and parents return to work because they can’t afford not to, because there is a relentless cultural pressure that suggests they must,” he said. “I think it is actually a sorry state of affairs that our society does not value motherhood more than it does, and that the term ‘stay-at-home mother’ is today almost a derogatory term.”
