Something Will Turn Up

Ben Wildsmith

When Henry Kissinger asked Zhou Enlai what his opinion was of the French Revolution, the Chinese Premier replied,

‘It is too early to tell.’

Drawing conclusions the day after a budget requires similar caution. In a democracy, budgets are an exercise in small print. With the exception of Liz Truss’s ‘fiscal event’, which laid out her vision in block capitals created with a raw potato and water-based paint, the art of writing one up is in obscuring its true consequences.

So, National Insurance won’t be going up in our pay slips, but our grimacing bosses will be cancelling pay rises and bonuses to ensure their increase does not impact on the viability of golf club bars.

The first budget after an election is a particular minefield for an incoming Chancellor. There is still half a chance that people remember promises made in the manifesto and there have not yet been enough ‘events’ to render it irrelevant.

Vague

This government’s innovation was to run on a manifesto set out in such vague terms that nobody knows what to expect at all. A rare concrete commitment, however, was not to raise taxes on work. So, devolving the reversal of the Tory National Insurance cut on to employers fulfils the letter of the manifesto, if not the implied objective of making workers better off.

Post-Trussian economics is a dreary affair for all involved. The electorate is all excited to meet its new governmental partner, who has promised a bright future, only to find itself in a brutally coercive threesome with the bond market.

‘So, when can we start investing in a green economy, like you promised?’

‘Slight problem, babes, the gilts traders say if we do that they’ll return us to a pre-agrarian economy, not so much net-zero as ‘year zero’.

Vulnerability

The swift market response to Truss’s folly laid bare the vulnerability of a debt-laden democracy to market interference. Parliament may be nominally sovereign in the UK but only within confines laid down by our creditors. For all the stately ritual surrounding budgets, they have become little more than an annual reprioritisation of debt repayments to justify another increase to the credit limit. How much influence our votes have on any of that is a matter of conjecture.

Still, the optics of budgets matter. Whilst sweeping changes are beyond the Chancellor’s remit, Rachel Reeves could, at least, indicate the sort of things she would like to reward and discourage in an economy that wasn’t caught in the jaws of international loan sharks.

So, work has been privileged in her decisions, even if the net result for workers will be negligible. This does, at least, show intent to address the feeling that work is for fools. One could certainly have drawn that conclusion from all those investor-friendly Tory budgets over the last fifteen years.

Likewise, the immediate rise in the minimum wage puts business on notice that a low-wage economy is not compatible with this government’s ambitions. These are small moves within constrained circumstances, but they do represent recognisable Labour values.

Discontent

Rumours of serious discontent within Labour over the two-child cap and winter fuel payments seem to be borne out by this budget. Somebody has reminded them that the UK votes Labour only when it is lying in the gutter with several teeth missing at the end of an abusive decade or two under the Tories.

When even the south-east of England opts for Labour, then we are all hurting. We are not in the mood for ‘get tough’ rhetoric and performative Thatcherite cruelty. Let us hope that lesson has been committed to memory.

So, we’ll see, innit? Wales remains disadvantaged in the national economy and as long as we put up with that, so it will remain. The general decline will, it seems, be managed competently.

Reeves’ hope is that she will be spared tax-raising exercises in the future thanks to returning growth. Let’s hope so, and that Mr Micawber can turn around his fortunes at last.