Labour's Budget Declares WAR on Working Class!

Right, so as expected, the first Labour budget of Keir Starmer and Rachel Reeves has been a declaration of war on the working class.
£40bn worth of tax rises and not a single wealth tax in sight to pay for any of it, so naturally the vast majority of the entire tax hike burden is falling on everyone else and that sums up this Labour in name only government. A budget that was delivered with a strong ethos on the choices Rachel Reeves was making and the choices she has made, despite some pantomime kind of giveaways which amount to nothing important are leading to the highest tax burden on ordinary working class people on record, it a war on the working class and worse she couldn’t even be straight about, because where ostensibly the bulk of these tax rises are being put on employers through massive national Insurance hikes, a broken manifesto promise on steroids as that is, the knock on effects will affect employees as well through employment opportunities, pay rises, potential job losses even and all of it completely counter-intuitive to the growth Labour says it wants.
Rachel Reeves made it painfully obvious even as she stated it at the beginning of her budget speech that she was a former Bank of England economist, because she absolutely knows the cost of everything, but the value of nothing.
Right, so one of the biggest budgets in living memory just dropped and its being justifiably shredded for all it is worth as a result of where the burden of tax increases are bring placed and the knock on effect that will have for ordinary working class people up and down the country, which are not immediately obvious, but absolutely are when you dig into the detail just a little.
A 40% increase in the tax burden on this country gave the Tories a field day, the biggest tax hike in a single budget since Black Wednesday in 1993 – the Tories again as that was - not that Sunak’s Tories in all honesty can say much having raised the tax burden to an all time high as they already had, but if Labour wanted to be different, to offer change, to make a mark and really promote growth in this country, in our economy, in practice they’ve done nothing of the sort. Where I could discuss Labour’s spending plans, which are partly responsible for the scale of the tax rises, the big issue, more than half of the tax burden is all in relation to that £22bn fiscal black hole Labour are still claiming to have found, despite not making it immediately clear how that has come about. Reeves claims a breakdown of this is now going to be published, frankly if its taken this long for them to release this detail, in my view its taken them this long to actually spin a yarn, though part of the reason for it she now says, is the cuts to National Insurance the Tories made, with a view towards working towards abolishing national Insurance completely.
Therefore slapping a huge increase in employers National Insurance Contributions was in terms of her speech an easy sell to the country she thinks. This move in and of itself is singularly the biggest disaster for ordinary working class people across the country because whilst it is levied on employers, it will knock on to employees and it is against this background that all other budget pledges to working people that are on the face of it a good thing, must be taken in the context of.
For a start, when Starmer’s Labour and Rachel Reeves say they want growth, say that this is the priority and driving ethos of this parliament, the fact the Office for Budget Responsibility, the OBR are predicting lower growth, ought to immediately tell people that they’re being sold a pup.
Where businesses previously didn’t start paying National Insurance on behalf of employees until earnings passed £9,100, that threshold has now been dropped to £5,000, so that is one heck of a big whack in NI contributions that now must be found.
On top of that, the percentage of those employer NI contributions has just gone up by just over 1% to now stand at 15%, so a percentage rise on top of the threshold for paying employers national Insurance being virtually halved, of that 40% tax rise, this is accounting for some 25% of that.
Now for small businesses, who are entitled to claim small business employment allowance, this previously allowed them to get £5000 knocked off their employers National Insurance bills if they qualified for it. They are now entitled to get more than double the previous level of relief, £10,500 now, however their National Insurance bills will still rise, so how much of an actual saving they will get will have to wait until some economic bod crunches those numbers properly, but the saving will certainly be less than it appears at first glance and will vary business to business.
So how will this end up hitting employees then? Starmer and Reeves in their manifesto promised no VAT Income Tax or National Insurance hikes, but that has been well and truly broken. They’ve since tried to fudge that claim by saying no VAT Income Tax or National Insurance hikes on working people, though this is equally as dishonest since small business owners aren’t all sat on their tod watching someone else make money for them, they are working people themselves, so this is also a lie. But if we look solely at employees for a moment, it’s bad news for them too.
Pay rises will be much reduced, harder to come by or killed off completely as a result of these4 rises and an increase in contributions the more an employee gets paid.
Also, when you get employed, your employers have to think about how employing you will affect them. The wage they must obviously pay you, but also those higher National Insurance contributions, pension contributions and other odds and sods. With National Insurance rising, that’s less money in their budget for further pay rises, so they may be smaller, or you may not get one at all and your boss can blame this tax hike by the government on them as to blame for that. Could also mean employers just employ less people, may even let people go. It’s not business friendly and its not worker friendly either. National Insurance contributions are functionally a stealth tax in and of themselves. For a government that says it wants growth, this will have the complete opposite effect as reflected in those OBR forecasts. Businesses won’t invest, won’t take on people, you won’t have more cash in your pocket to spend, which is the biggest contributor to economic growth, all contributing to an economic hit. Not a budget for working people at all, it is an attack on them to and if Labour thinks we won’t notice well they are very wrong.
At this point, I need to mention the minimum wage rise, which of course will now be an enforced wage hike upon employers who pay it.
The minimum wage is going up to £12.21 for employees over 21 and up to £10 per hour for those aged 18-20. That always sounds great, but is in fact just a wage hike of 70p. Not much but it still puts that bit more pressure on a smaller employer more likely to be paying minimum wage.
Then of course against this background is the attack on welfare, the crackdown on all of that 0.2% of fraud or error found amongst disability benefits and the only slightly higher rate of it in Universal Credit, the top up for an awful lot of people on low wages as that is and for those who are not working the added emphasis to drive them back to work when there is likely to be less jobs available following the National Insurance hike can’t be ignored either and during all of this stress the government will be spying on your bank account looking for any sign of cash they might be able to claw back.
Carers allowance is worthy of a mention, as this is going up to the equivalent of 16 hours work a week on the minimum wage, therefore in theory you can work that much and not lose your money, but there is still no sign of a taper, it’s still the sharp cut off and again, it’s finding the work when employers might not be offering as many work opportunities when you’ve suddenly become a lot more expensive to employ.
Fuel duty being frozen was some4what unexpected, that’ll help you drive to work, but is hardly a green policy when we should be trying to encourage more public transport use, but then you look at bus fares and the cap on those is going up 50% to £3 for a single fare from £2. Just to rub in how stupid an idea that was, Manchester Metro Mayor, Labour’s Andy Burnham has already said he’s mitigating it and keeping it at £2, for everyone catching the bus to work though, it is the equivalent of a 4% income tax hike, a commuter tax, punishing you for going green. The same really goes for the 50% increase in air passenger duty which, for those who use such travel in their work are likely on wages where they won’t bat an eyelid at this, but again, not a green way to go to deal with climate change.
£10m boost for the NHS might sound great, but given the NHS employs 1.6m people, those National Insurance increases will wipe off £3.3bn of that leaving a mere extra 3% of the whole NHS budget, therefore a rise only just above inflation. So much for the party of the NHS protecting it.
Corporation tax, for the big businesses remains unchanged at 25%, still the lowest in Europe, so there was wiggle room to charge more there.
Changes to capital gains tax are too timid and remain at a lower rate than income tax for people who work, so so much for siding with working people, 20% is the lower rate of income tax, 18% for capital gains, its wrong, it’s absurd and Reeves has given up raising an additional £15bn by not equalising income tax and capital gains tax.
There was no sign of a wealth tax anywhere, the easiest choice Reeves should have been able to make she didn’t and shows who’s side Labour is really on, the donor class. There was no mention of the winter fuel allowance so 10m people are still losing it, there was no mention of the two child benefit cap, so poor families still lose out due to that as well. Alcohol duty being cut in the pub is a policy being heavily promoted by Labour online, but basically equates to one pence off a pint.
No doubt more issues that all fundamentally come back to those massive employer national insurance tax hikes will be identified in the coming days, it always takes time to pull apart a budget and this one was huge, but it’s also absolutely awful for ordinary working class people. Keir Starmer and Rachel Reeves have well and truly turned the Labour Party into just another bunch of Tories.
For more on how badly those at the mercy of the Department for Work and Pensions will have it, I went into more detail on the specifics of those policies in this video recommendation here from the other week as your suggested next watch and I’ll hopefully catch you on the next vid. Cheers folks.