John Healey had sat alongside the man that made him Chancellor with his perma-grin on as the Prime Minister got through PMQs.
It’s always an odd session – for once on a Parliamentary Wednesday the weekly back and forth between two leaders is not the main event and indeed just the round one appetiser for the Leader of the Opposition who has round two after the Chancellor.
She didn’t bury him but praised him in places, but that made the critique even sharper when she pointed out his backbenchers were less enthusiastic about measures she was welcoming.
Chris Mason the BBC’s Political Editor confirmed what most Westminster watchers have thought for days, that this was not a big, bold Budget, but a holding pattern – we think before deciding whether to go for an election, something Badenoch hinted at twice. Mason’s verdict:
“A flotilla of small measures”
Like Labour’s parliamentary majority it was wide, but thin. But if you were in any doubt about the politics at work Healey took many opportunities to ram it home, this we were told was a Budget full of measures:
“for the British people delivered by this Labour Government”
It got son of a toll maker levels of repetition. Slightly below was just how much “fiscal discipline’ would be applied and at the beginning that this Budget would tackle the big economic challenges facing the country, which he had to wait until he’d finished to discover the Conservatives disagreed. They remembered the last two Reeves Budget’s and felt the big economic problems facing the country could be far better laid at her door than the attempts, still, to pin it all on Liz Truss.
Perhaps that’s why he some got a little barracking for his praise for his predecessor, but it was as he outlined the headwinds his Budget would be delivered within, inflation pushed up by war in Ukraine and Iran, which was loudly heckled when returned to a Starmer claim that Badenoch had wanted to ‘jump with both feet into’ the Iran war.
There’s no doubt inside the Labour camp there are fears of fresh military strikes by the US against Iran in wake of mid-terms which would make any OBR forecasts rapidly out of date.
Healey got a laugh when he referred to predictions about Britian’s economic situation being less reliable than the speculation about who would be Chancellor. I don’t think he looked at his colleagues but a lot of Tories pointed at other names who’d been in the frame including Defence Secretary Wes Streeting.
There’s always a worry when your growth forecasts for years to come start with the words “One per cent” if Britian has the ‘fastest growth in the G7’ that may say more about the G7 than it does about Britian.
The OBR forecast on the strength of the economy was not ideal with GDP expected to expand by 1.2% this year, but next year 1%, a sharp drop from earlier expectations. That would indicate tricky times ahead with a dent to any growth as higher energy prices bite.
In a great – ‘deliberate’? – slip of the tongue the Chancellor claimed the Energy Secretary Miatta Fahnbulleh had opposed the drilling in Jackdaw. He quickly corrected himself and said ‘approved’ but it caused amusement on the opposition benches, who shouted “right the first time” but Healey, who has a slight habit of word mangling – where indeed is Aldershop?- was not put off his stride.
There was a big early focus is on Energy prices, and the huge costs of less than great British energy he announced £100 energy payment for 20 million households to tackle rising bills, as expected standing charges are to go, but it was odd to see money saving pundit Martin Lewis revealing after a breakfast meeting with Chancellor before Healey announced it in the House.
The fuel duty freeze – which was due to end in January – will be extended to help with soaring prices at the pumps. And he flagged the 100 supermarket products where he is reducing the costs. The marmalade and gherkins measure. I love gherkins but they’re not everybody’s favourite.
These small measures, not in and of themselves bad, were being celebrated by Healey’s back benchers with one shouting at one point “they’ve all gone very quiet’ pointing to the Tory benches.
The Hospitality industry will see a removal of business rates, which gambling taxes and vape shops will pay the cost of. The vape shop tax ironically giving the Chancellor another pat phrase:
“Breathing space” for people and “hope for the future” oh and of course … “delivered by this Labour Government” followed after.
HMRC will get more powers to take tax from people who can pay but seem reluctant to, and those who like to watch state over reach may want to see the detail of what that actually means?
Then the Chancellor turned to the Banks. They had all been a bit nervous thinking they might be staring down an 8 percent tax rise. You know a Chancellor is about to levy a banking tax when he sets off praising them. As he did so a chorus of voices shouted “but, but, but but… as he went on to explain he was “asking a bit more of our banks” to support ordinary people.
In a clever bit of politics he pointed out how in 2008 people had helped out the banks, and now it was fair for them to help out people.
To be honest the Banks may not have minded too much, as it wasn’t an 8 per cent rise or even a 5 per cent rise. He went for 3 per cent on top of the 25 per cent corporate tax rate.
The bank surcharge runs for 15 months, starting from next January. Bank share prices actually rose a little after that.
Badenoch welcomed later that he didn’t change Capital Gains Tax and decided to keep the tax free ISA allowance to remain at the £20,000 threshold annually and announced plans with the sector, on a new “Starter ISA” to help make investment more accessible.
After these measures he addressed Badenoch directly
Addressing Badenoch, he says: “I challenge the leader of the opposition, does she support today our support for British families and British firms? And does she back the action we’re taking to pay for it?”
Her answer when her time came was short and sweet: “No”.
Points of interest were the ‘Data Centre Covenant” – a transactional deal to secure safe AI working for the British people he clearly views as important: “nowhere is the necessary role for the state clearer”.
The government, he said must “seize the opportunities and guard against the risks”.
“We are already world leaders in AI safety and security, which today’s Budget backs with an extra half a billion pounds”
He added when the NHS and armed forces use AI, “we want that data here”.
The government knows it needs to win lots of local arguments to try to ensure there isn’t a mass of NIMBY opposition to plans for data centres across the country. The community infrastructure bit of the deal for developers is a way of making them more attractive.
Though there is money for a ‘Misogyny prevention fund’ … nobody is quite clear how that works and what exactly it’s for, but it was announced. Perhaps it was allied to aims of a new scale-up programme to female business founders, where the British business bank will double its commitments to women-led businesses in funds to £200m.
At this stage Healey hadn’t hit the big topics but on welfare – he insisted the Government was committed to bringing down the welfare bill will do so in a ‘Labour way’ which Badenoch suggested meant not cutting spending at all. Any real changes however are already knocked into 2027 with first the Milburn report – with its explicit recommendation of significant upfront spending, then a Government response, then a white paper, and then, and then…
On enterprise Chancellor is launching a new young entrepreneurs allowance, which will cover a year of living costs for young founders “while they turn their ideas into businesses” and keep those people in the UK. He also announced a “founders’ relief”, a 10% rate on lifetime gains up to £10m for the founders of Britain’s most successful firms.
When he got to defence he started on ground he knows the House is broadly onside with announcing he and the Prime Minister had briefed President Zelensky of Ukraine on the Budget measures with a commitment for £10bn in support to help Ukraine “for as long as it takes” – he told MPs Zelensky had said “you’ve made my day”
However the route to 3.5 per cent GDP on defence is like welfare to be set out next year, and Badenoch launched her biggest assault on his plans around this saying ‘today was the date he should have set it out’ that the moment, as former Defence Secretary who’s resigned over the issue was ‘now’.
Healy had boasted the defence budget is £14bn higher than it was in the Conservative’s last year of government and touted the launch of a new innovative defence finance taskforce that will look at how to increase private investment into defence including by public private partnerships.
He suggested blame for failing the first duty of Government – to protect the British people – lay with the Tories for hollowing out the armed forces, conveniently forgetting the last Labour Government was guilty of the same. Again later on, Badenoch was having none of it, “their decisions, their mess”.
We were quietly promised a ‘nothing major’, steady as she goes Budget and that’s what we got. Tinkering and avoiding. The biggest tax rise will be drag so he didn’t mention that.
Badenoch had it right when she said people were entitled to ask, “Is that it?”