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Budget Resolutions

This was a Budget entirely focused on the electoral prospects of the Conservative party, not the needs of the country or our people. The Chancellor decided that his only chance to get his party through the election was to trumpet so-called tax cuts, but the tax burden is actually going up. He has made an incredible series of assumptions about departmental spending up to five years in the future, and then blown all the money that he saved by making those assumptions on pre-election giveaways. It was obvious from the moment he sat down last November that this early Budget would contain more so-called cuts to personal taxes, albeit against a background of rising taxes. As the OBR confirms in paragraph 1.21 on page 12 of its report, taxes will rise as a percentage of GDP all the way up to 2028-29.

The Chancellor said that he was seeking tax cuts before the OBR had even produced its current forecasts. He said it before the UK’s economic situation deteriorated, leaving our economy in a technical recession and wiping out his expected fiscal headroom, and he hinted at tax cuts before it emerged that our economy is now smaller than when the Prime Minister first walked into Downing Street. In recent days, we have observed the Chancellor and Prime Minister engaged in an unedifying, increasingly frantic search for tax rises and future spending cuts to top up the kitty for personal tax giveaways. They have come up with a vape tax and changes to non-dom status that were proposed by Labour and long ridiculed by the Chancellor himself. Perhaps a Minister will indicate whether those who no longer have non-dom status will pay inheritance tax. We have also had changes to the tax treatment of the holiday lets regime.

While the Conservative party cheered the tax cuts sleight of hand, let us bear in mind some facts. Despite all the Chancellor’s smoke and mirrors, the tax burden at the end of this Parliament will be higher than it has been since the second world war, yet our public services are crumbling around us, with one in 10 local authorities on the verge of bankruptcy, and our infrastructure and public realm falling apart. The cost of living crisis persists, with the UK’s real wage growth the slowest it has been since the Napoleonic wars. No wonder we have a flatlining economy.

The freeze to income tax and national insurance thresholds is due to raise £44 billion in the next five years, as millions of people are dragged into higher-rate tax. The personal tax cuts that the Chancellor is brandishing today are, in other words, completely drowned out by the other huge increases in tax—and the Chancellor and his predecessor have announced even more. The Chancellor has claimed that it is his moral duty to cut taxes, but in reality he has put them up, and just hopes that nobody will notice.