Yesterday the Chancellor delivered the first Labour Budget in nearly 15 years.
Rachel Reeves announced a big investment in the NHS (an extra £22.6 billion), as well as money for other public services.
This is a welcome downpayment to start fixing public services, but more needs to be done.
Fixing the NHS
Our first reaction to the Budget was a sense of cautious optimism.
It was great to hear that the government will invest a serious amount to help rebuild the NHS.
After a decade of austerity our health service is in a critical state – the money the Chancellor announced will help to cut waiting lists and improve many peoples’ lives.
This is a step in the right direction, but they’ll have to come up with a lot more money in future Budgets to fix our other public services. This is what our executive director Robert Palmer told LBC this morning, giving his roundup of the Budget.
The Chancellor announced very little extra money for public services other than the NHS, housing and schools. Many government departments will be under huge pressure over coming years. This isn’t sustainable.
It’s also unclear whether the Budget will improve people’s living standards. The Joseph Rowntree Foundation, a leading anti-poverty group, said that people will potentially be worse off by the time of the next election.
Where’s the money coming from
Tax is about choices. Yesterday, to better fund the NHS, the Chancellor chose to raise taxes on some and not others.
The biggest single tax rise will fall on employers, who will pay higher national insurance contributions. The government says this will generate £25 billion a year. If we were designing the Budget, it wouldn’t have been our first choice to raise the bulk of revenue for extra public spending.
Some of the National Insurance rise will be passed on to workers and consumers through lower wages and higher prices.
There were many better paths open to the Chancellor to raise large sums of money. In short, by taxing wealth more.
In this area there were some changes in the Budget – and some wins for our campaign – but the government could have gone further.
They closed tax loopholes
Reeves closed Inheritance Tax loopholes. This is a big win for our campaign – it means super rich families sheltering wealth in agricultural and business property will no longer be able to avoid the tax.
Five years ago our executive director Robert spoke to the BBC’s Countryfile about this loophole, so it’s great to see how the pressure we’ve built together has resulted in a win.
The non-dom status was also finally abolished. This is another big win for us – as we’ve been campaigning on it for years.
One more win from the Budget – air passenger duty on private jets was significantly increased. This is a great way to raise more revenue from the richest (and most polluting) in our society.
These were timid steps
However, it’s fair to say that some of the other measures to increase taxes on the wealthiest were pretty timid.
Rachel Reeves made small tweaks to Capital Gains Tax, but these reforms don’t go far enough.
Raising the higher rate to just 24% puts the UK’s Capital Gains Tax rate at the lowest in the G7 – something Britain’s crumbling public services cannot afford.
The Chancellor’s reforms will raise only £1.5 billion next year, while a full package of reform could have raised £14bn a year and helped to grow the economy, according to CenTax.
We also saw small moves to increase taxes paid by private equity bosses, with the promise of further consultation. As I told the Guardian, this was a big climbdown in the face of intensive lobbying from some of the richest people in the UK.
The changes mean that those who get their income from wealth will still pay a much lower rate of tax than those who work for a living.
The UK is home to some of the world’s richest people. It’s on these broad shoulders – those of the super rich – that the biggest tax rises should have fallen.
We will keep up the pressure on the government to tax the super-richmore. The money raised could be the investment our public services so desperately need.
A wealth tax – on those who own fortunes of £10m or more – is closer than ever. We’ll keep up the pressure on this Labour government: in the media, in parliament and with our growing movement of partners.