Fri, 31 March 2023

Newsletter sign-up

Subscribe now
The House Live All
Mission Zero: Why the Skidmore Review can kickstart the nation’s journey to net zero Partner content
New guidance empowers construction clients to help drive up standards, collaboration, innovation and value Partner content
How can the UK turbocharge its ambition to be a science and technology superpower? Partner content
By Chris Hayward
Press releases

Budget must be about the national interest, not Osborne’s leadership ambitions

Budget must be about the national interest, not Osborne’s leadership ambitions
3 min read

Rachel Reeves MP accuses the Chancellor of using the Budget as a 'job application' for next Tory leader.

George Osborne is getting used to making u-turns. 

Last year, he was forced to drop his plan to cut £4.4bn from tax credits. This month, he caved into demands from his own MPs to ditch his proposed pension reforms.

His latest Budget will be the Chancellor’s eighth attempt to get it right at a time when our economy remains dangerously fragile, partly due to his failure to balance the books.

Tax receipts and wage increases are lower then he predicted and Government borrowing is higher than forecast. 

Millions face uncertainty at work with zero-hour contracts and low pay and too many families have given up on the hope of being able to buy or rent an affordable home due to his failure to tackle the housing crisis.

Instead of tackling these priorities for voters, the Chancellor is more concerned about a much smaller electorate – the Tory MPs who will play a key role in who is their next leader.

According to reports, George Osborne plans to raise the level at which people start paying the higher 40p income tax threshold from £42,385 towards £50,0000.   The idea is extremely popular among the Tory audience he is keen to impress.  But it should not be a priority.

The threshold is already set to rise to £43,000 in April and to £43,300 in 2017. But raising the tax threshold for higher earners should not happen at a time when Chancellor is robbing 600,000 disabled people of a portion of their benefits to pay for that tax giveaway.

Such a warped sense of priorities is a world away from David Cameron’s promise after he became PM when he said: "The test of a good society is you look after the elderly, the frail, the vulnerable, the poorest in our society. And that test is even more important in difficult times, when difficult decisions have to be taken, than it is in better times."

Instead of concocting a Budget designed to be a job application for the position of next Tory leader, the Chancellor should put aside his personal ambitions.

He should abandon his unjustified and unfair plan to cut inheritance tax for the wealthy and channel those savings towards universal childcare for working parents.

Instead of being cowed by his own MPs ahead of the Euro referendum, he should take action to boost savings by introducing a new flat rate of pension tax relief to encourage more people to save for their retirements.

He will talk in his Budget about an array of new transport projects – many of which he has already promised in previous Budgets.

But the Chancellor needs to rework his fiscal rules to make sure those schemes actually happen and do not remain pipedreams.

He promotes the Northern Powerhouse, but there has been precious little evidence of the investment needed.

To get the diggers in the ground, he should be treating investment in infrastructure differently from day to day spending.

That will enable the Government to borrow to invest in projects that deliver benefits for the taxpayer and can pay their own way.  

And the Chancellor also needs to do more when it comes to dealing with tax avoidance by major firms.

Instead of boasting about behind-closed-doors tax deals that firms like Google can agree with the government, he should support calls for more financial transparency from these corporate giants.

It’s time he stopped concentrating on internal Tory Party machinations about who will be the next leader and put the national interest above his own.

Rachel Reeves is the LabourMP for Leeds West 

PoliticsHome Newsletters

Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.




Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now