Watching some of the reaction from specialist journalists to Reeves’ budget, you’d think for a moment that Jeremy Corbyn was back leading the Labour Party. Beth Rigby on Sky was beside herself, outraged that Labour had the temerity to draw up one of the biggest tax-raising budgets in history without including the details in its election manifesto. She seems to think the main political fallout will be the controversy over whether deception was involved or whether the black hole left by the Tories had been exaggerated. Yet these so-called experts barely discuss whether our public services need the increased spending these taxes would fund. Labour’s leadership, echoing their stance during the election, insisted they were not adopting a tax-and-spend approach. Blair had already accepted the low-tax narrative established by Thatcher in the 1980s, moving away from the social democratic ideal of taxing to invest and redistribute wealth for a fairer society. Labour’s failure to be bolder and more explicit during the campaign is now haunting the party in the backlash to the budget.
This is a moment of choice. pic.twitter.com/geVSNlvn4f
— Rachel Reeves (@RachelReevesMP) October 30, 2024
“Growth is the keyword in their strategy, not redistribution. They believe in trickledown economics.”
Construction of an Anti-Taxation Narrative
Since Thatcher’s era, the corporate mass media have promoted an anti-taxation stance, portraying taxation as harmful to society. At the same time, they sold the idea that private ownership is inherently more efficient than public ownership—unsurprisingly, since supporting these policies benefits corporate owners. Hence, the outcry over a budget that raises over £40 billion in taxes, borrows billions more, and plans to spend £70 billion. Only Norman Lamont in 1993 came close to this scale, following the Black Wednesday crisis.
In the media discussions, there was just one throwaway remark that, even after this budget, Britain remains one of the lowest-taxed European countries. Indeed, Reeves proudly emphasised that by not increasing corporation tax, Britain retains one of the most competitive (i.e., lowest) tax rates for big business. However, small businesses will be affected by the increase in Employer National Insurance Contributions, just as large companies will.
When Blair came to power in 1997, he and Brown strictly adhered to Tory spending plans for their first two years, resulting in cuts like those for single-parent benefits. Public services weren’t as run-down as they are now, but today’s crisis is markedly different from Blair’s time. Starmer and Reeves refuse to associate this budget with any kind of redistribution from the few to the many, justifying it almost solely as a means of addressing Tory economic mismanagement and ‘fixing the foundations’.
The Growth Delusion
Growth is the centrepiece of their strategy, not redistribution. They believe in trickledown economics: that public investment, in partnership with big business (especially tech), will drive growth and yield higher tax receipts, ultimately funding improvements in public services like schools and the NHS. As James Meadway noted on Novara Media, every percentage point of additional growth provides roughly £24 billion in tax receipts. Meadway estimates that restoring public services and infrastructure, given an ageing population, will require about £140 billion annually up to 2030. With the latest OBR growth forecasts barely hitting 2% in the coming years, there’s a glaring contradiction in Labour’s plans.
“Starmer and Reeves dare not link this budget to any sort of redistribution from the few to the many.”
Some Positive Measures
Socialists welcome additional funding for:
- Cutting NHS waiting times
- Raising the minimum wage (although still below the national living wage)
- Hiring more teachers and expanding breakfast clubs
- Rebuilding or repairing crumbling schools
- Providing £1 billion for Special Educational Needs
- Investing £300 million in Higher Education
- Funding rail transport improvements, including the Transpennine upgrade
- Allocating extra resources to local government (£1.3 billion, plus £600 million for social care)
- Supporting affordable and social housing
- Ending the stealth tax of frozen tax thresholds (in 2028)
- Raising the tax on sugary drinks and increasing tobacco and vape taxes by 2% above the retail price index
- Funding Great British Energy and £3.4 billion for the warm homes plan
- Increasing departmental spending by 1.5% in real terms
- Raising taxes on short-haul flights and significantly more on private jet travel
We’re backing working people.
— HM Treasury (@hmtreasury) October 30, 2024
From April 2025, the National Living Wage will rise to £12.21, a £1,400 boost a year for full-time eligible workers. pic.twitter.com/ZBp3hpzNfD
Socialists also back taxing the wealthy with higher inheritance tax, capital gains, private equity managers’ deferred interest, and a levy on non-doms. They support the increase and expansion of the oil profits levy.
Reeves’ Attacks on Benefits and Environmental Failures
Despite these positive measures, they don’t add up to what previous Labour manifestos described as an ‘irreversible shift in resources to working people’. Several policy decisions directly impact people’s living standards and environmental goals:
- Refusing to lift the two-child benefit cap
- Ending the winter fuel allowance for most pensioners
- Increasing the bus fare cap by 50% to £3, which affects the poorest and discourages eco-friendly transport
- Maintaining Tory restrictions on support for long-term sick or disabled people through the Work Capability Assessment
- Leaving fuel duty unchanged
- Abandoning the requirement for solar panels in new homes
Does It Change Much for Workers from Thursday?
The day after the budget, we still see more foodbanks than McDonald’s outlets. Homelessness and the rising numbers in emergency housing won’t change overnight, as housing programmes take time. Asylum seekers will remain barred from work. The minimum wage increase (which doesn’t cost the government) won’t help those in the gig economy or unregulated work. Britain’s position near the top of the inequality league remains, despite small tax increases for the wealthy. Welfare benefits aren’t being raised enough to make foodbanks unnecessary, and high rents and house prices persist. Corporate tax rates are still lower than in other European nations.
Most of the modest benefits in the £70 billion spending injection will take time to materialise. For instance, the NHS waiting list reduction will take years. The extra teachers won’t translate to one in every school, and the funds for SEND and social care barely scratch the surface of the growing demand.
However, this isn’t a Tory budget; Sunak’s spending plans were significantly lower. Imagine Sunak moderately taxing the rich as Labour has—he rejected the entire package. Those on the left who claimed there’s no difference between a Tory and Labour government may find it challenging to explain this budget.
“Even in its limitations, the budget shows that the state can intervene, tax the rich, and implement progressive policies.”
Why It’s Not the Budget the Left Would Propose
This isn’t a budget the left would champion. Its growth strategy relies on a junior partnership with sectors of capital that see underfunded infrastructure, education, and healthcare as impediments to investment and profit. The Tories, overly aligned with hedge funds and certain financial sectors, resist paying more tax to improve transport or skills training. Meanwhile, Labour’s partners have no less capitalist motives. Their interest in increased NHS funding is more about labour supply than people’s wellbeing. They’re also eager to profit from the privatisation of public sector services. Each time Starmer or Streeting mentions digital tech improving and economising service delivery, big tech stands to benefit. Recall Horizon and the Post Office scandal.
Still, the budget does show the state can intervene, tax the wealthy, and implement progressive policies. Yet, Reeves only opens the door slightly to what could be a much greater transformation. If spending dries up under pressure from their partners, or if growth fails to materialise, people’s anger could shift from the Tories to the right.
We need to say that we can tax and spend to promote fairness. We should also control more of Britain’s resources, like water and energy, so that profits benefit the common good, not shareholders. Labour has set strict limits on how far it’s willing to go in this direction. Labour dissident MP Richard Burgon’s campaign for a wealth tax exemplifies this need for change, as does the upcoming demonstration on November 3rd for the right to clean, affordable water. Bringing water back into public ownership is essential. While it may be difficult to rally support within a firmly Starmerite Labour Party, the trade unions offer a platform for more radical policies, as evidenced by the union-backed motion opposing the leadership at the Labour Party conference.
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