๐๐๐๐จ๐ฎ๐ซโ๐ฌ ๐ ๐ข๐ซ๐ฌ๐ญ ๐๐ฎ๐๐ ๐๐ญ - ๐๐ก๐๐ญ ๐๐จ๐๐ฌ ๐๐ญ ๐๐๐๐ง ๐๐จ๐ซ ๐๐๐ฌ๐ญ๐๐จ๐ฎ๐ซ๐ง๐?
Yesterday, Rachel Reeves delivered the first budget for our new Labour Government, in which she announced the single largest round of tax rises of the modern era, with ยฃ40 billion raised largely through increasing National Insurance, along with a re-writing of the governmentโs borrowing rules to allow for an extra ยฃ31 billion a year of debt.
Itโs hard not to see both of these moves as clear breaches of Labourโs manifesto, where they promised โno tax rises on working peopleโ and said their commitment to the UKโs fiscal rules that limited borrowing was โnon-negotiableโ.
The Office for Budget Responsibility (OBR) has said Labourโs measures will lead to lower growth (1.5% PY), higher interest rates (up 0.25%), higher inflation (up 0.8% next year), and will lead to 50,000 job losses.
๐๐ฎ๐ญ ๐ฐ๐ก๐๐ญ ๐๐๐จ๐ฎ๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ฆ๐๐๐ฌ๐ฎ๐ซ๐๐ฌ ๐ญ๐ก๐๐ญ ๐ฐ๐ข๐ฅ๐ฅ ๐ข๐ฆ๐ฉ๐๐๐ญ ๐๐๐ฌ๐ญ๐๐จ๐ฎ๐ซ๐ง๐?
Our ยฃ20m Towns Fund - The last government committed ยฃ20 million over the next 10 years to transform Eastbourne. Labour has suggested they would scrap this, but have now said it will be โretained and reformed into a new regeneration programmeโ - My main concern is that we still receive the full ยฃ20m promised, so letโs hope!
Our new DGH - Eastbourne was due a new build DGH to be built in the early 2030s where the current hospital car park is, with the details for the wider scheme due to have been announced in May had the election not been called. Labour have frozen these plans and said they wonโt fund all of what was previously promised. More news on this was expected yesterday, but the Chancellor has only said announcements will happen โin due courseโ.
Eastbourneโs Levelling Up Scheme - The Chancellor has cancelled new levelling up projects, but has committed to funding plans that are already underway, which should mean that Black Robin Farm and Victoria Place are completed as planned.
Pothole Repairs - There is a very welcome ยฃ500 million of extra cash nationally for pothole repairs. No word yet on how much of this will come to Eastbourne. My real concern here is what will happen to the ยฃ8 billion the last government pledged for potholes from the money saved on partially cancelling HS2 - given Labour are expected to revive HS2โs northern leg, could this money be on the line?
Council Funding - Despite record levels of borrowing for public spending, this budget offered almost nothing for Eastbourne Council. A few increases in a couple of grants will likely be more than offset by the increased costs the Council will face in the form of National Insurance and Minimum Wage increases. It was also very disappointing that Labour are increasing Council spending power by less than the Conservatives did last year.
Bus and rail travel - the ยฃ2 bus fare will be no more, with an increase now to ยฃ3 single fares. Rail fares are also set to increase above inflation by 4.6% and rail cards are going up 17%. These changes will cost commuters approximately ยฃ500 a year. Given the dual benefits of reduced congestion and emissions, I was very surprised Labour have chosen to hit workers in this way.
Eastbourneโs hospitality industry - Our townโs biggest employer, accounting for nearly 30% of jobs, has been the biggest loser of all in the budget, with the industry trade body UKHospitality describing the budget as โThe latest blow for hospitality businesses. Rising taxes, increasing costs, and fragile consumer confidence risk bringing growth to a grinding haltโ. The three key changes that will hurt the industry most are the effective doubling of hospitality business rates, the minimum wage increases of 7% and 16%, and the massive increase in employersโ National Insurance that will equate to a ยฃ944 extra cost for the average Eastbourne worker.
Itโs very easy to welcome a minimum wage increase, but not at the cost of job losses and business closures.
๐๐จ ๐ฐ๐ก๐๐ญ ๐๐จ ๐ฐ๐ ๐ ๐๐ญ ๐๐จ๐ซ ๐๐ฅ๐ฅ ๐ญ๐ก๐ข๐ฌ ๐๐ฑ๐ญ๐ซ๐ ๐ญ๐๐ฑ ๐๐ง๐ ๐๐จ๐ซ๐ซ๐จ๐ฐ๐ข๐ง๐ ?
ยฃ6 billion will be handed out to boost the governments in Scotland, Wales, and Northern Ireland. ยฃ9.4 billion will be spent on public sector pay increases, along with dropping the Conservativesโ plan to reduce the size of the Civil Service, and ยฃ5 billion will be spent on building new housing in an attempt to address the major shortage the UK currently faces.
But by far the largest choice the Chancellor has taken is allocating an extra ยฃ25 billion a year to the NHS.
Iโve always argued that NHS spending in its current form isnโt sustainable for decades to come. People often donโt realise that the last 14 years have seen the government increase the NHS budget above inflation every year. The NHS has seen ยฃ700m of extra spending a week since 2016 and now has record levels of doctors and nurses.
Despite this, clearly our health service isnโt working well. I had hoped that given Labour had 14 years in opposition to come up with a plan and now have 5 years as the government to implement it, we would see a more ambitious proposal to reshape the future of healthcare in the UK, rather than just continuing the last governmentโs approach of throwing money at the problem.
The UK now pays over ยฃ300 billion a year just managing the debt generated by previous governments. To add to this further, for what is ultimately just a quick fix, is nothing more than an extreme example of short-term thinking. Borrowing always needs to be paid for, and it will be todayโs children and grandchildren that will be tasked with picking up the bill.
Counsellor David Small
