The government aims to raise £40 billion through spending cuts and tax rises, but meanwhile the prime minister is liked less and less because he has failed to demonstrate that all this pain will be useful
It is a page to be read in the “harsh light of fiscal reality”, the first maneuver of the new British Labor government which will be revealed today after months of speculation and anticipation. But don’t call it austerity: according to the prime minister, it is Keir Starmer and his chancellor Rachel Reevesto heal, rebuild and protect the paychecks of working people. Growth, the great protagonist of the electoral campaign, seems to have slipped into the background and it is certain that the approach of Halloween makes the atmosphere around the first Labor maneuver since 2010 even more spooky. The British are so afraid of what will be announced that it seems they have even stopped drinking these days, giving up their favorite anaesthetic.
Since they won, Starmer&Reeves have been announcing difficult choices, such as cutting heating subsidies for the elderly, with the exception of the very poor, and maintaining the limit on family allowances for the second child. To this today will be added tax increases to finance spending on public services and, as a small consolation, 50 billion in emissions to support investments without weighing on the debt thanks to a redesign of the budget rules. Reeves said that “no working person will have higher taxes”, and since then everyone has been trying to understand what is meant by a working person, especially if the rates for businesses and contributions for workers, equal to £20 billion, with impacts on employment, wages and prices. Another 7 billion will come from the increase in the tax base, which has been stagnant for six years, and 1.5 from the project to impose VAT on private schools, even though it infuriated everyone, even the foreign diplomacies that have to support the families of the staff around the world. The goal is to hire 6,500 new teachers in state schools and invest in public education.
Then there are the measures regarding the taxation of private equity and capital gains, mitigated compared to the initial version, also because abroad they were already called the “Empty London” measures: theThe government cannot fail to declare that those with “broader shoulders” must shoulder a greater burden, given that public opinion, according to polls, also believes that the rich must do their part. The cap on bus tickets, lowered to cope with the high cost of living in recent years, has gone from 2 to 3 pounds (paradoxically not in big cities) and in this maneuver no one really emerges as a winner. Healthcare, which according to Starmer is no longer even on its knees but has actually fallen flat on its face, is about to have quite a bit of funding: 1.5 billion for new surgical hubs and 70 million in radiotherapy instruments, but the medical front welcomed the news with caution, underlining how nice it would be to also have the staff to operate these machines.
In everything the government aims to raise £40 billion through spending cuts and tax risesafter having denounced a 22 billion “hole” left by the previous government and at the center of a controversy with the last Tory chancellor, Jeremy Huntwho accused the Obr, the supervisory authority on fiscal responsibility, of behaving in a “politically” biased manner by having opened an investigation into the shortfall, the results of which will be made known today. Starmer responded by saying “don’t blame the referee” and announcing that the institution will be strengthened so that it is never sidelined again. As proof of its seriousness, the government will give itself another rule according to which tax revenues must cover current spending on public services.
But the atmosphere is fractious, the speaker of the House, Lindsay Hoyle, has criticized the practice of announcing parts of the budget “around the world” without first informing the deputies and Starmer is liked less and less. His popularity is in free fall also because he has so far failed to demonstrate that all this pain will be useful, and not just an attempt to see to what extent a country can be demoralized. The last government had announced a tax increase of 24 billion per year, which was never implemented, and it would have been enough to follow it to avoid having to incur such unpopularity. Growth is slightly better than expected, but remains modest, and is unlikely to cushion the blow, at least initially. But the important thing is not to talk about austerity.
