Bluntly put, there isn’t a lot more that could have gone wrong with last week’s Budget. The pound had its sharpest fall in 18 months. Gilt yields moved a full percentage point higher than Liz Truss achieved in her KamiKwarzi budget debacle. The IFS pointed out the Budget would deliver lower growth and higher taxes on “working people”, the opposite of what Labour set out to achieve. Rachel Reeves cancelled interviews all over the place. The Tories achieved their first poll lead in years just when Starmer should be in his post-General Election honeymoon poll bounce purple patch. Pensioners are in uproar after their winter fuel payments have been pickpocketed from them. Farmers are revolting, planning to bring their tractors to Westminster later this month in protest. The UK has become almost the only major western country to tax education and have no effective non-dom policy, with allegedly 9500 millionaires leaving the country since the General Election. Once Reeves sat down, all happy after her big moment, organisations literally queued up to launch their legal challenges: parents of SEND children, the Independent Schools Council, armed forces families, even Unite the Union is at it. And Labour MPs got it in their necks from all sides in their constituencies this weekend. All in all, Reeves delivered an ‘omnishambles Budget’. It’s just that our media doesn’t want to report it that way. Yet.
How did the politics of the Budget go so wrong?
It is an obvious point that after 14 years in opposition the Labour frontbench is missing almost any government experience.
But it's deeper than that. For the first time in history, we have a government where no cabinet minister has actually run a successful private sector business. Instead, we have seven career politicians, seven lawyers, four union workers, two charity workers, two academics, one accountant and one journalist (if you count Yvette Cooper's two years in-between being a career politician). It turns out that, after the journalistic sleuths have been hard at it, Rachel Reeves much vaunted ‘Bank of England economist’ experience amounts to little more than a handful of years as a very junior BoE administrator followed by three years in the former HBoS complaints department. What could possibly go wrong?
But again, it’s deeper than that too. We live in an era where student politicians find themselves quickly becoming MPs and then cabinet ministers. A case in point is our illustrious Foreign Secretary, David Lammy, who went almost straight from university to being an elected MP, hailed at the time as the youngest member of the House of Commons, as if that is ever a good thing.
But yet again, it goes much deeper than that. We have across all parties a generation of politicians who are utter third raters with almost no significant achievements in the real world before becoming politicians. And why is that? Because we have made politics such a toxic place. What leading, highly experienced and well remunerated business professional would want to submit themselves to 24/7 internet trolling, media harassment and daily party whips’ bullying, for comparatively not a huge amount of money?
This in turn leads to really dumb stuff. It leads to ideology trumping facts. It leads to the views of your ideological soulmates drowning out impartial evidence. It leads to fashionable opinions crowding out obvious truths.
In simple terms, if the Government (in round numbers) earns £800 billion each year but is spending £1.2 trillion, no amount of tax is going to solve that problem. And if your debt pile is now an eye-watering £2.7 trillion, then £140 billion more debt isn’t going to help.
When governments run out of money, they fiddle the rules and invent new ‘window taxes’. And that is where Rachel Reeves is at. Successive governments of all political shades across the whole western world are just addicted to debt fuelled spending. JM Keynes is surely spinning in his grave.
Who is the biggest political loser from this Budget? It’s actually Sir Tony of Blair. Why so? Because he has spent an entire political career trying to forge ‘the third way’ where Labour is at one with business, “intensely relaxed about people getting filthy rich” as Lord Mandelson once said. Instead, via a flirtation with old style Marxism courtesy of Jeremy Corbyn, the Labour Party has lurched back to 1970s tax and spend. The REC chairman is old enough to have lived through that. It did not go well, he recalls.
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