There was a mixed reaction in Westminster on Thursday to the budget presented by chancellor of the exchequer Rachel Reeves as the dust settled on her proposals a day after she stunned the House of Commons with Britain’s biggest tax rises for 30 years.
The cost of government borrowing rose on Thursday on the back of the huge spending and debt plans outlined by Reeves in the budget. Business groups raised concerns about the scale of the tax rises, while a row also broke out over the chancellor’s plans to hike taxes on farm inheritances.
The left wing of the Labour Party was jubilant, however. Reeves announced heavy spending packages for housing, transport and also health – England’s National Health Service will get increased funding of £26.7 billion (€31.6bn), most of it to cover day-to-day expenditure such as wage deals for doctors and nurses.
“That was a proper social democratic budget,” a Labour source, who had been in direct contact with Reeves in the days leading up to the budget, told The Irish Times. “I was surprised by how bold she was – explicit tax and spend. In purely political terms she has landed it for now.”
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Independent analysts in Westminster were more circumspect, however. Paul Johnson, a widely-respected director of the Institute for Fiscal Studies, praised the chancellor’s decision to ramp up long-term investment in infrastructure with pay-offs that would come only beyond the political cycle.
However, he criticised her for playing the same “silly games” as her Tory predecessors by front-loading her extra spending plans, which, he said, ran the risk of leading to cuts further down the line due to the “implausibly low” spending plans for later years.
While many Tories spent Thursday howling “we told you so” about Labour’s first big tax-and-spend budget, Liberal Democrat leader Ed Davey was gentler in his criticisms in a lunch with Westminster journalists in the Churchill Room in the bowels of the House of Commons.
He praised her for increasing the carer’s allowance on the back of representations made to Labour by the Lib Dem leader, a carer for his disabled son. But he said her £40 billion of tax rises were “damaging” as he singled out her farm tax proposals, which he said showed a “huge lack of understanding” as to how rural Britain works.
Meanwhile, it was revealed at the lunch that Davey was approached by MI6, Britain’s secret intelligence service that conducts espionage overseas, when he was at Oxford University in his youth. He said nothing further about it, preferring instead to move on to other topics such as the Tory leadership race that finishes this weekend.
Kemi Badenoch is seen by many as the favourite to beat fellow right winger Robert Jenrick in Tory member voting, which ended on Thursday. However, the unpredictability of the party’s core base, who voted enthusiastically for Liz Truss in 2022, could yet be a factor.
Davey said he did not care who won the Tory leadership challenge, although he had a warning for Badenoch should she emerge victorious. He said Lib Dem internal polling showed that the Tories had in recent years lost swathes of woman voters aged from their 30s to their 50s. He said it was not a “good message” to those women from Badenoch to criticise the UK’s level of maternity pay, which she appeared to do during the leadership campaign before rowing back on it.
Asked if he would accept defectors from the Tories’ moderate wing after one of the right wing contenders takes over as leader, Davey said he didn’t know if any would want to join.
The new Tory leader will be announced on Saturday.
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