Political opinion with John Milne MP: Labour’s Budget puts Horsham pubs in last-chance saloon
Last week, the Chancellor, Rachel Reeves, presented us with her ‘Smorgasbord Budget’. A seemingly random blizzard of tax increases to fill a black hole in the finances that turned out not to be there in the first place. Confused? So were many in the Chamber that day.
Let’s start with a big item that was missing - and that is help for our beleaguered hospitality industry. Beforehand, the government promised that most "typical independent pubs" would be £4,800 per year better off. They are not.
UK Hospitality estimates an average pub will pay £12,900 extra over the next three years, while an average hotel will pay £205,200 more. Businesses were already on the edge following the disastrous Employers' NICs increase. These are the kind of new demands that could tip some into outright closure.
The Lib Dems are pushing for a 5% cut in the VAT rate for hospitality because the crisis in the sector is now very great. It’s also a big reason why youth unemployment is rising so sharply, because hospitality plays a key role in providing a handy first job for someone leaving education.
The Budget was designed to meet two objectives: to reassure the markets that the government could pay its bills, and to stop disgruntled Labour backbenchers from launching a leadership challenge. This is not what we need our government to be focusing on.
To placate backbenchers, the government is lifting the 2-child benefit cap. Contrary to what you might read in the Mail and Telegraph, most of this will go to help parents in work, not pure benefits claimants. Nor does the cap seem to have much effect on people’s decision to have more children one way or the other.
But the biggest missing link in this Budget is that there is no strategy for growth. It’s all short-term stuff, aimed at Labour backbenchers. The government has raised over £70 billion in extra taxes since coming to power. If that had been used primarily for investment in services that have been crippled by 14 years of Tory mismanagement, I think the public would have accepted it. But most of that money has instead been frittered away in day-to-day spending.
Now the Budget’s credibility has been further undermined by recent revelations about the state of public finances. Chancellor Rachel Reeves has been accused of misleading the public on the fiscal situation she inherited. This raises serious questions about Labour's transparency with the British people.
This was a one-off opportunity, and it was wasted. The next government’s task has therefore been made that much harder.