Autumn budget response

Labour was elected on a promise of tackling the cost of living crisis & growing the economy - and this is the second budget that has disappointed on both fronts. For millions of people & businesses struggling with higher bills, all this budget really offers is higher taxes. The chaos around the Budget also gives a concerning insight into what’s happening behind the scenes in Government, many potential announcements raised and killed off in the press, with the OBR leak, the resignation of its chair and now accusations of the Chancellor dissembling in order to raise taxes and government spending further.

The most damning indictment of the budget comes from the OBR who have now downgraded medium-term productivity growth from 1.3% to 1.0% in its wake. There is also clear evidence of becalmed living standards, with the OBR predicting disposable incomes will increase by no more than 0.25% a year, far below historic norms. According to the Institute for Fiscal Studies (IFS) think tank Britain's households are facing a "truly dismal" increase in their disposable income over the lifetime of this current government.

I welcome the decision to remove the two child benefit cap and increase taxes on online gambling companies.  After over a decade of flatlining rail passenger numbers I was also pleased the Chancellor heeded my call over the summer, when I was Lib Dem Transport Shadow, for the government to grow rail revenue not by further increasing ticket prices, but by driving up custom, via a rail fare freeze.

It is all too easy for opposition politicians to glibly call for more spending but less tax and I will not descend to that level. However, with the overall tax burden now set to be the highest it’s been since the Second World War, I am concerned alternatives, such as applying a windfall tax on the banks, was not considered. UK banking is on course to make an additional £80 Billion profit, as an unplanned by-product of the government’s pandemic-era quantitative easing policy, but is yet again shielded by a Chancellor who seems to favour glowing testimonies, over growing tax receipts, from a sector making vast additional profits that it’s done absolutely nothing to earn.

Those receipts could have been used to support our struggling hospitality sector, who welcomed the Lib Dems’ call for a VAT reduction in line with most of Europe. Admittedly the Chancellor has granted some hospitality businesses a 5p cut to their business rates bill. However, changes elsewhere on taxes for these businesses including the removal of business rates relief means most hospitality businesses will be paying significantly more from April. With increasing energy & commodity inflation and national insurance & minimum wage rises, I know, as a small bar owner myself, that hospitality is facing an existential crisis. The government has also chosen the wrong time to give cities the right to introduce ‘tourist taxes’, which will push up the price of holidays for UK & foreign tourists, further damaging the hospitality market.

Local government finance is in a crisis the proposed ‘Mansion tax’ will do nothing to solve it. It is no more than a piece of red meat to ‘prove’ to the red wall the red flag is still flying in Downing Street. The measure is expected to net no more than £400 million (for the treasury not local government) and will further distort the housing market in constituencies like ours. It also plays to the narrative that those living in London and the South East profit from high house prices, ignoring the fact that a greater amount of income is consequently expended on rent or mortgage payments and the plight of the asset rich but cash poor.

There is no doubt that property taxes including CGT, stamp duty, council tax and business rates urgently need comprehensive reform but this piecemeal and empty gesture is the wrong solution to the wrong problem. And one in which our constituency will be one of the areas hardest hit. The accounting trick, by which the Chancellor has moved the £6 Billion SEND deficit, from Local Government’s balance sheet onto the Government’s, has likewise done nothing to find the money or address the underlying problem.

The Prime Minister has told us he’d always put country before party. His Chancellor has done the exact opposite, producing a budget that pandered to Labour backbenchers & activists but according to the OBR did nothing to promote growth. It is also clear it ignored the elephant in the room - the mess left by Brexit. As my party has said repeatedly we must negotiate a new Customs Union with the EU, to grow our economy and bring in tens of billions of pounds for the Exchequer, not fiddling whilst Rome (and the other capitals across Europe) look pityingly on, as our economic prospects continue to burn!