Budget 2025: Has Reeves saved her job?

This is a Global Player Original Podcast. This was Rachel Reeves. I'm really clear. I'm not coming back. mewn gwirionedd, ac mae'n ymwneud â llawer o bwyrrhywyr, ac mae'n ymwneud â llawer o bwyrrhywyr, ac mae'n ymwneud â llawer o bwyrrhywyr, ac mae'n ymwneud â llawer o bwyrrhywyr, ac mae'n ymwneud â llawer o bwyrrhywyr ymwneud â llawer o bwyrrhywyr. And this was Rachel Reeves. Today... Madam Deputy Speaker, to break the cycle of austerity, we need a fair and a sustainable tax system.

One that generates revenues to fund the public services that we all use, and supports investment to grow our economy. That does mean that today I am asking everyone to make a contribution. Yeah. In Labour's manifesto only a year and a half ago they promised tax rises of eight point five billion pounds. So far they have raised£66 billion, including today's budget. Can we now think they're finally done? Or might they be coming back for more? Welcome to the newsagents.

The news agents. It's John. It's Lewis. And we are in Westminster. Well the circus is in full swing on budget day, there are tractors driving around Westminster, the farmers lobby, there are

pro Europeans waving the European flag, wanting us to be back in the European Union. And so it goes on. Every corner, on every street, there's a different kind of lobby group anxious for their own particular thing to be implemented in the budget. But I cannot remember a budget which has seen such a chaotic lead up.

to it with the leaks, with the kites being flown, with all the other things that have happened, particularly on whether they were going to break the manifesto pledge of raising income tax and they backed away from that. They didn't raise the basic rate.

ac yn ymwneud â nhw'n ymwneud â nhw'n ymwneud â nhw'n ymwneud â nhw'n ymwneud â nhw'n ymwneud â nhw This body that kind of grades the government's work and the government makes its assessments on the basis of which should kind of release its full tables.

of what the numbers are for growth and all the rest of it, once the Chancellor has sat down at the end of her budget, released it about forty minutes before she stood up to speak. And it just kind of oh my God, the inability To run a welk stall, as Ken Clark said to you last week.

was on evidence today. Who where are these whelk stores? No, I think that's the thing. Welks and jelly deals. Yeah, yeah. Look, the lead up to it was shambolic. The day was vaguely shambolic. But of course, you know, that's all sort of process.

What obviously matters is what was in it and what was in the budget and this was, perhaps against expectations at some point this year, a very significant budget for lots and lots of reasons. So just to run through some of the things that that Reeves announced. Big headlines Income tax thresholds will be frozen until april twenty thirty one. That is a year longer than expected, extending the the Tory freeze. We'll talk a bit more about what that means in practice in a sec.

There'll be new taxes, a so-called mansion tax on homes worth more than two million and five million pounds, basically adding extra council tax ban. There'll be a mileage charge for electric vehicles. There'll be a tax on pension contributions above two thousand pounds. There'll be changes to ICER rules for savings. The two child benefit cap Which has been occupied a kind of has become a bit of a shibbilet foot for Labour MPs. They've been desperate to reverse this. George Osborne.

era policy which limits benefits for families with more than two children. That will be lifted at a cost of some three billion pounds. Lots of other things as well. The overall big picture Is that the government's tax take will reach an all time high of thirty eight percent of GDP in twenty thirty thirty one. While growth, which of course you will remember, is the thing that said it wanted to

Focus on as a means of getting out this of this kind of like economic doom loop that we find ourselves in to try and grow the size of the economy. Well the OBR have downgraded growth forecasts. for every year apart from this year in the time horizon. So it's a big budget.

Lots and lots of tax rises, one of the most significant tax raising budgets that we have seen, which of course comes on top of one of the most significant tax raising budgets that we've seen, which was Rachel Reeves' last budget. Yes, and if you compare what the Labour government have done to what they promised in the manifesto.

The gap is significant. I think in the manifesto they talked about needing eight billion pounds worth of tax increases. And I think currently on these two budgets we've had sixty six billion pounds just tax increases. Well just on that, John, if if there were an election tomorrow, the Institute for Fiscal Studies say. that there would have been more net tax increases announced in this parliament, which is not even two years old, than any other parliament since at least nineteen seventy.

So this so far has been a very significant tax raising parliament. The tax burden, it's a bit of a pejorative term, some people don't like it, but the sort of tax burden for want of a better expression is rising and it is rising rapidly, particularly for middle income workers. And I suppose in the political framing.

of this budget. We know what the government's ambition is in the country and they've said economic growth is the number one mission. And so you've got the audience That is the general public, us voters, and what do we think this is going to do to us?

The second kind of audience are the markets and what happens to Gilts and government the cost of government borrowing. And the third market And one not to be underestimated is the Labour backbenches, where you have got a government that is deeply unpopular, where the backbenchers think

Keir Starmer and Rachel Reeves aren't particularly up to the job and there's all this talk of whether there's going to be a leadership challenge and a mutiny and it's against that backdrop that you have to look at Rachel Reeves' budget. Which of those three audiences?

will feel most happy at the end of today, if any, at all. I would gently say probably Labour-backbenchers. Indeed, I was messaging a a Labour backbencher earlier on, uh, who I think is a pretty good barometer of the kind of mood of the parliamentary Labour Party, which as we know has been sulphurous.

leading up to this budget and there has been so much speculation and actual plotting that has been going on about a potential leadership challenge either maybe some people were even saying this side of Christmas, but certainly perhaps around the elections next year. Nonetheless I think You could see from Labour MPs.

that they will have been pretty happy by much of what was in that budget. I text them saying thoughts on this, and they texted me saying she, that is the Chancellor, lifted half a million children out of poverty, referring to the lifting of the two child benefit cap. That means a lot to Labour MPs. Uh it is sort of almost talismanic for them at this point. Th and and indeed the two we should say the two child benefit cap.

has been a deeply damaging policy for hundreds of thousands of children across the country. It has made their their plight, their living in poverty worse. And there is a powerful moral argument to lift it, in the sense that

Um it hasn't done what it's been intended to do, which was to limit the size of bigger families who are are on benefits. But also, as the Chancellor herself there is a why should it be that children who are growing up in poverty should pay a penalty already starting out at such a disadvantage in life by comparison to their relative peers, perhaps for mistakes that their parents may or may or not have made.

But that is not how the country sees the welfare the two-child benefit limit. Well, let's just play that clip of Rachel Reeves in the budget because I think until that moment The comments had been kind of a lot of hurumping and hurrahing and whatever else, but it was kind of just noise. And so because I am tackling fraud and error in our welfare system.

Rydyn ni'n cael ei wneud yn ymwneud â'r taxau. Rydyn ni'n ymwneud â'r taxau. Rydyn ni'n ymwneud â'r taxau ymwneud â'r taxau ymwneud â'r taxau ymwneud â'r taxau. And you could see a kind of loads of hands up waving order papers in support on the Labour backbenches. And the important thing about this is. Lewis, the the moral arguing you make is sort of, you know, absolutely profound and unarguable.

But in the country, actually, there was no great demand for this particular policy. I think the the two child cap was kind of had enjoyed considerable support. So, you know The old Harold Wilson quote, Labour is a moral crusade or it is nothing.

you could see that there was a bit of the moral crusade there. And the other thing that struck me is, you know, that there was all these talk of all these Blairites going into Downing Street to take up key positions and whether this would be a Blairite kind of new Labour budget. No way. This is as old Labour as they come. And I thought Kevin Baidenok sort of hit the mark when she said, you know, this is a budget for benefits streak.

Today she has announced a new tax rate of twenty six billion pounds. They're all cheering. Household income is down. Spending policies in this budget increase borrowing in every year. That schmogger's board of misery we just heard from her can be summed up in one sentence. Labour are hiking taxes to pay for welfare. This is a budget for Benefit Street, Madam Deputy Speaker, paid for by working people. This budget increases benefits.

for five hundred and sixty thousand families by an average of five thousand pounds. They are hiking taxes on workers, pensioners and savers to pay for handouts to keep their backbenches quiet. I think that is the political danger.

for this budget. Which is look, I think the net result of this budget is that, at least for the short term, I think it will consolidate and shore up Rachel Reeves and Kirstar within the parliamentary Labour Party because the two child benefit cap has come to occupy such a central place in the political interest of so many Labour MPs.

I think it nonetheless may weaken their external political position in the country. And of course the latter will eventually feed into the former because if the polling situation continues to decline, then of course Labour MPs will get nervous. Ultimately there is a real danger, I think that the Labour Party is very easily framed as a result of this budget as the welfare party, which is always a danger for Labour governments.

And I say that for two reasons. Whatever as I say the moral arguments of the two child benefit cap, which I am personally sympathetic to, it is problematic At a moment where two other things are happening. Number one, the welfare bill overall continues in a completely unsustainable way. to explode and to rise and rise and rise. Indeed, the OBR says in this document that their estimate

for the for total welfare spending will be some sixteen billion higher than they thought it would be at the end of the forecast horizon in a few years time, than they thought it would be in March nine months ago. That is the extent to which Spending particularly on health related and disability related welfare spending is continuing to rise and to rise and to rise. This government.

tried to do something about that. They did it in a very cack handed, bad way, but they tried to do something about it and they retreated because the Labour MPs wouldn't tolerate it. So difficult to do it in that circumstance.

And difficult as well to do it at a moment when you are making a substantial set of tax rises on people on modest incomes because they are freezing income tax thresholds. So people who are Perhaps weren't paying tax before or weren't paying the higher rate of tax before, will find themselves in higher tax brackets. And they are basically being asked to pay more tax, partly to pay for a welfare benefits bill which is spiraling out of control. That is such an

It's fodder for Labour opponents. So easy for the Tories and even for the Reform Party as well. And I would be pretty nervous about that if I were a Labour MP. And the other thing that will get a lot of the headlights Tonight and tomorrow is this sort of so called mansion tape.

Which Labour are very proud to say, look, you know and again it's all about redistribution and you know, hitting the rich and benefiting the poor and say, How is it fair that someone in a Uh yeah, whatever, housing estate somewhere or other is paying the same as someone who lives in a ten million pound house. And so They're going to introduce the mansion tax, but it's going to raise a sort of relatively paltry four hundred million pounds, theoretically.

That's before you've tried to implement it and you've had the upgrading of properties and the council tax bans, which will present all sorts of difficulties along the way. And what will get hardly any coverage. tonight, even though it's a ton more significant, is the salary sacrifice changes. to people's pensions, which is going to raise four billion pounds, so ten times the amount of money. But because it's kind of slightly obscure and you ha have to understand the details of it.

People are not going to pay much attention to it, but that is going to hit people really hard in terms of, you know, people who are trying to save for their pensions and their retirement.

And I just wonder whether the the the mansion tax thing it sounds good, but is it actually going to raise a lot of money? Is it worth the effort that it's gonna cost to implement? I suspect that when it finally comes for it to be rolled out that it will potentially be in a situation after it's sort of been consulted and the reforms where it either doesn't get rolled out in the first place or the amount of money that it raises is pretty nugatory.

And we already see that it's only forecast to raise four hundred million, which sounds like a lot of money, but in Treasury terms is isn't very much money at all. Sort of raising. And and again, I suppose this is my sort of wider frustration in a way. You know, I think I mean we've spoken on the show before. I think that there is a you know very strong case.

to move to greater wealth taxation and to reduce income taxation. I think there is a strong case for reform of property taxation in this country. But again, this feels like it's just sort of the classic patch amend way that the Treasury and the governments come along and do and it's

sounds sort of good on the surface, but actually in the end doesn't take you very far and isn't very comprehensive and isn't well very well thought out. I whilst at the same time, as I say, and I do think it is just worth dwelling on it. At the same time, we are moving to a situation where the state, the government, is going to be taking more and more money, not from rich people, I mean it will be doing that.

But actually, the focus actually on this budget really in terms of the of eventual in terms of income taxation at least, it's not really touching the sort of poorest that much. In terms of income taxation, it's not

targeting the richest very much, although there are some other things that hammer that sort of target the rich. This is if you're in the sort of middle third in that sort of middle middle group, then this is, you know, pretty damaging for you over the long long term. And what I'd say is is that The fiscal creep that we've seen. the changes to income tax thresholds, and just to explain what that means, basically if you don't increase with inflation

the threshold at which you start to pay income tax, but your wages do go up with inflation, then you find yourself paying higher rates of tax than you otherwise would have done. And what Rachel Reeves announced today is an extension by several years of those thresholds which started under the Conservatives and this is basically gonna go on for ten years now, more or less. Those thresholds are not gonna go up. And that basically is maybe the biggest

tax increase from a single policy that we've seen in history. It's gonna transform our tax base. If you think about just to sort of illustrate it, you only have to go back to about twenty fifteen or so to find that The higher rate of tax was only being paid by about eight to nine percent of people. That is forecast to go up to nearly twenty percent of people.

When it was first introduced the high rate of tax, the forty P and the pound by Nigel Austin in the the late eighties, when it was reduced to forty P, only about three percent of people in the country were paying. i.e. the higher rate of tax used to be a rate of tax for really quite rich people. It will now be being paid by people on pretty relatively modest income.

And that is a transformation in our tax system, which is here to stay. As I say, it started under the Tories, but Rachel Reeves has embedded it, expanded it and consolidated it today. I do think that this budget

You've talked about the dangers for Labour as being seen as the sort of welfare stake party. I do think this creates an opportunity for the Conservative Party in terms of, you know, big government versus small government. I think that, you know, Paul Johnson, former head of the IFS, said, you know, look, this is a historic change to the size of the state, what is being announced. Today. And you can see that on the Conservative Party's right you've got reform.

But reform quite like welfare. They've turned into a bit of a welfare loving party where they want to have all these benefits and all these state handouts for everyone. And so you've got Reform liking big welfare spending, you've got Labour liking a lot of welfare spending. You could see the reinvention of the Tories as a Thatcherite party and say we have got To stop the ballooning size of the state, the amount of money that we are taking from taxpayers to fund these big projects.

And we've got a fundamental reform. And I think that Kevin Badenok has got a space now where people were saying, Well, what's she for? And what is the Tory argument? I think their argument gets stronger. As a result of today. Look, it is true that in fairness to the Chancellor. That the OBR.

came back and said that as a result of things that happened before their time Because of Brexit being a sort of economic disaster, because of COVID, because of the war in Ukraine, you know, this has had a bigger, more scarring impact on our economy.

And that has fed through into tax receipts, it's fed through into productivity and so on. The notorious should be held account for all of those things. And it's very easy for them now, they're sort of going around and saying this is all Ree's fault. It's clearly, clearly not true. But as a result of that, and as a result of that scarring, it is actually even more incumbent on this government to chart and to plot a real growth plan.

The problem with this budget, and it's fine as far as it goes, and it's and it does do sort of Labour things, it's it's redistributive, you know, it's focusing on the low-paid, and I can see why lots of Labour MPs will like it. But that only takes you so far. Because if you're only just reapportioning, The bits of the pie in different directions. And not growing the pie. then all it means is is you that just perpetuates the doom loop that we've been in.

And it makes politics harsher, it makes the economy harsher, and in the end, everyone gets poorer from the top income decile to the bottom income desile, right? So what you need partly as a result of the Tories kind of economic mismanagement. Is an aggressive, imaginative growth plan that guarantees prosperity. Prosperity isn't an optional extra for social democracy, it is a prerequisite for social democracy. And not just a growth plan.

But a sense of how the state needs to be reengineered and to be refashioned, and having a theory of the state. Not just to just allow it to sort of continue to expand and not get the productivity gains from it that you need in order to justify that expansion. I mean you know, it just made me

It makes me laugh just thinking about the kind of change in kind of rhetoric we've seen on this. It wasn't so long ago that Keir Starmer was s telling this show in an interview that he wanted the state to be smaller. Just listen to this. Do you think that's a good thing?

Simply that the state should be smaller by the end of this Parliament. Fewer people should be working for it. Yes, I think it should be smaller, more agile. It should be active. There's a Mae'n ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r ymwneud â'r And unfortunately, in terms of this budget at least, it's a very good idea.

I don't see any extra measures for growth. I just see moving pieces around the board. I just see reapportioning bits of the pie. And that's problematic. It's not just me saying that by the way. The OBR in their own document say that there is nothing material in this budget that is prompting them to reevaluate any of their growth forecasts. I.e., there is nothing new for growth in this budget. And this is something that Rachel Reeves and Keir Starmer said was their top priority.

Well, let's speak in a moment to Torsten Belt, the Treasury Minister, who helped frame today's budget for Rachel Reeves. We'll be back in a moment. Reporting from the heart of Your life. Player app or the new LBC app. LBC, leading Britain's conversation.

The news agents. Well we're joined in the studio now by Torsten Bell, Treasury Minister and who played a key role in the preparations for this budget. We'll come on to the detail in a second. But I honestly cannot remember a more shambolic kind of lead up to a budget in terms of kites flown, kites brought down, U turns on U turns.

Taxes were going to go up, you were going to break the manifesto, you're not going to break the manifesto. And then culminating today, and I know it's not your fault, in the OBR leaking all the vital details before Rachel Reeves stands up. Would you agree it has been shambolic?

Well, it's lucky for you that you can now get on with discussing the substance of what's in the budget, John, because if you found that you know I can understand people have found some of that um difficult and it's the OBR will need to look seriously at what happened with their location earlier.

It has been confusing, it has been misleading, it has been dispiriting f in terms of investment for this country. No, I wouldn't accept that. John B as I say the chances now laid out our budget, so let's get on with discussing what's in it. Okay. Key proposal I want to discuss with you. Welfare spending by twenty nine thirty is going to be sixteen billion pounds higher than was forecast in March. Whatever happened to welfare reform? Well lots is happening.

John, we've already set out plans to change universal credit to deal with the problem the Tories left, which they built a welfare system.

that wrote millions off as too sick to work and we're already reforming that and if you look at what the Office of Budget Responsibility say today, they say tens of thousands of people will move in to work as a result. We're also setting out plans for a job guarantee so that young people will be offered a job, but they cannot stay on benefits if they choose Changes to the tax fee for the motorbility scheme who are also removing expensive vehicles you used to be able to under consultation.

Eleven point two percent of GDP. Uh n no John, right. So the reason why there are challenges in the welfare system is because the Tories built a welfare system.

that left wrote millions offers too sick to work and left children too poor to eat. And we are getting on with changing it. I'm not defending the welfare system that exists. We're getting on with changing it. I've given you some of the things we've done there. We've also have a review of personal independence payments being done by my colleague in the Department for Work and Pensions, the welfare system does need to change.

We cannot have children growing up in poverty in the rates we have, but we also can't have as many being written off as too sick to work. The truth is Tolsten, isn't it, that actually the reason you're not Reforming the welfare system with greater speed and greater enthusiasm is simply because you're too afraid of your own backbenchers who don't want it to happen. No, I've set out some of the changes we're already making. As I say, look in the Office of Budget Responsibilities document.

today and it sets out that many people more will be going into work because we've started to reform the system. sixteen billion a year higher since March. That's what the forecast is saying. So given that the Cost is clearly spiralling out of control quickly because it's only been eight to nine months since March. Don't you need to start to reform welfare on a more substantial basis now? Well let me deal with a few of those points. So first of all we are starting to reform.

Uh the system already. But if you're saying to me will there be more to done to be done, yes there You're waiting for the second, you've asked a question. I'm going to give you the answer to your question. You just said that welfare spending is spiralling. Actually, the number of people coming on to claim personal independence has fallen this year compared to last year. Look at the Office of Budget Responsibilities.

Forecast for incapacity benefits, it shows that the growth in that spending is actually falling by three quarters compared to the growth under the Conservatives over the last Parliament. So I know that's the con what the Conservatives want to say, and it's fair enough to be a good thing. But the OBR said that the welfare spending forecast will be sixteen billion higher a year to what you thought it would be. What the Office of Budget Responsibility say is that welfare spending under this

Parliament is actually flat as a share of GDP, having gone up significantly under the Conservatives. That's what it says. But if you're asking me, Do we have a failing welfare system? The answer is yes, and that is why we're changing it. But just to Lewis's point. about you're scared of your backbenches. You tried welfare reform in the summer. You have a huge majority and you could not get it through.

Byddwn yn unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw unrhyw just today. And the idea that this is a government ducking the difficult decisions. Look w look what has been announced on tax today. Wait a second, look at the decisions announced announced by the Chancellor. today. Many of the big reforms to the tax system that everybody has known needed to happen

announced under this Chancellor and as a result that what we have to ask ordinary workers to contribute is kept as low as possible. What the Conservatives who are opposing today's budget Are defending is a property tax system that lets somebody in a normal terraced house in Blackpool pay higher property taxes than someone in a£10 million house.

in Westminster. So we are delivering the big reforms that are necessary and we're doing it so that we can make sure we've got public services that are functioning Once again. Remember, disastrous austerity, waiting list going through the roof, potholes not being filled in are not just bad for the communities over the last fifteen years, they have undermined our economy too. So we are not going to go back.

to austerity, we are going to make the necessary and fair choices to mean that we can get energy bills down, get waiting lists down, and get borrowing down every single year. Who said that fiscal drag hurt

working people because it takes more money out of their pay slips. What the Chancellor has done today is be very clear that we are asking everybody to make a contribution. But the difference in her choices are that we can keep that contribution as low as possible because we are making big reforms to the tax system. that mean that we can make those with the broader shoulders contribute more. Would you say that fiscal drag does hurt or does make cost of living pressures worse?

Well the dec the the the freezes to the tax thresholds that are happening this year and next year and the year after were put in place by the last Conservative government. In fact seventy five in fact seventy five percent

of the revenue being raised by tax freezes follows from the Conservative Party's policy. If you're asking me to be honest with the British people that there are we are asking them to make a contribution, then the answer is yes. Towards the end of this Parliament we are extending the freeze And that will make cost of living pressures worse.

Well no, what will make cost of m living pressures better right now is that we're cutting energy bills by one hundred and fifty pounds for everybody and rising to three hundred pounds for some of the poorest people in this country. And what will make the cost of living pressure for poor families, remember, who are majority working is getting rid of the terrible two child limit. that has plunged hundreds of thousands of children into poverty and as a result of those decisions today

This Parliament is set to see the biggest fall in child poverty of any parliament on record. And what it also means is that we are going to see one of the most profound restructuring of our tax base and tax system that we have ever seen. Something that the Conservatives started, you criticized in opposition.

And are now extending and embedding. As a result of what you've announced today, seven hundred and eighty thousand more people will be basic rate taxpayers. Those are people who are not paying income tax.

before. How are you helping their cost of living pressures? You're making them pay tax for the first time. No, we're setting out plans to extend the freeze at the end of this decade and what we're setting out is fairer reforms of the tax system that mean we can minimize the contribution from ordinary

workers and we're also setting out measures to provide real help with the cost of living right now. That's happening on energy bills, it's also happening on rail fares with the first threes in thirty years. We're freezing prescription charges as well. We're pushing back the we are extending the five P temporary cut to fuel duty. That will save people forty nine pounds of their petrol price.

that she would not need to come back with more tax rises, a sort of budget that she did last year. That is precisely what she has just done, and she is asking ordinary people to pay for it. To pay for her failure to control welfare spending, to control spending overall, and to get growth going in this economy, which is what you said you would do. And we have.

We've beaten the forecast on growth. Well growth, wait a second, wait a second, because you keep repeating that. I've heard you say that on the show before, and it's factually inaccurate. Growth this year was forecast to be one percent.

And today it is forecast to be one. I'm going to come onto the forecasts but let's focus on the facts of what's actually happened in our country. Over the last year, growth has been much faster than people expected. It's now been confirmed by the OBR that they expect it to be one point five percent

for this year. I'm going to answer the question, um one percent uh compared to one percent back in March. It is true that the Office of Budget Responsibility have said that their longer term productivity forecasts have been downgraded and look at why they say that has happened. Because of the disastrous legacy of a Tory government that saw growth flatline year after year after year. So in the years where you can see the actual impact of a Labour government

Growth is up. In which case If you're saying to me, do we need to double down on our measures to support growth because of the downgrade on productivity? Absolutely. Indeed, so absolutely, and that's why we're announcing measures today to help start up firms in Britain to scale up further. It's why we haven't raised Corporation tax, sticking to our promise to keep it at the lowest level in the GPS. So why does the OBR say that this budget doesn't do anything for growth?

No, the OBR says has a technical comment there, but it's for governments to defend the other. have a sufficiently material impact to justify adjusting our post measures potential output forecast. I.e., there is nothing in this budget that does anything new for growth, and on top of that, they're not even assessing yet the impact of the employment rights bill, which they do predict is likely to have a deleterious impact on growth in the years ahead. No, no, no. No, they don't say that.

Okay, so what's the last budget? Let's focus on the substance uh let's do what it does for growth. We've kept corporation tax at its current though. We're bringing down borrowing every single year. We are cutting inflation directly next year to help the Bank of England, which has already cut interest rates by five percentage points, keep them falling. And that will bring down mortgage costs

For households, but it also will give businesses the confidence to invest. We have also done what previous Chancellors never did, which is to protect. Capital investment, which the OBR last year said was driving growth significantly, one hundred and twenty billion extra over the course of these five years, to make sure that we do not make the future growth of Britain the thing that is sacrificed in the face of difficult circumstances.

putting up a very, you know, trenchant defence of the government as we would expect you to do. Look, everyone knows that this is a really tough budget, that taxes are going up. You promised last year that it would be a one off. One and done. That's what Rachel Reeves came and said to us on the news agents and you've come back for a massive increase more.

Rather than just sitting here and saying how well it's all going and how well you're doing, don't you think there is a need for some humility in all of this, which we're not here? Um There is a need for um humility from the whole political class after the disastrous fifteen years. We've we've held look come on. We when we get Tories in here, we hold them to account and we hold their feet to the flames over their record. Your record now is that it was one and done last year.

I can't see the significant world shattering event that's taken place in the last year. Rachel Reeves promised it was one and done and you've come back for a massive amount more and people are thinking, well maybe next year she'll do the same again. Well you're right to say that it was a budget last year. Since then we've seen growth come in stronger. But if you're asking me have we learned

over the course of the the the sixteen months of this government that delivering change is harder than everyone would like. Yes. But what are we doing today? Setting up that we are committed to delivering that change immediately. So in the longer term, yes, you see the benefits to growth for that capital investment I mentioned

earlier. But right now we are gonna be reducing the cost of living, bringing down energy bills in March,'cause people do need to see that the change we promised is happening. It's why we have to keep waiting lists

falling because people need to see public services that work and they need to see that not just because it's the right thing for our society but because it's the right thing for our economy. If you have a collapsing NHS then workers can't go to work. If you do not provide decent neighbourhood police, then supermarkets end up paying more to have uh security guards on their door. Can you probably come back with another one?

Look, what we've set out today what look is a fair question to ask why are taxes going up. And the answer is because the British public have had enough of public services that are collapsing. And we cannot carry on like that. So let me ask you this simple question. Should the average worker Having listened to this Feel better off. Oh, what's up?

780,000 more taxpayers with the basic rate, 920,000 more taxpayers will pay the higher rate. Well you're referring to changes driven mainly by the Conservative Party's previous number of the government. Let me ask answer the straight question, which is quite simple. Are people better off?

Or worse off as a result of this budget? Well wages have actually risen by more in the first year of this government than the first ten years of the Conservatives. All of the fall And then you'll be taxing them more. Oh come on. All of the fall in household incomes. in the last parliament, a completely unprecedented fall has already been wiped out by rising incomes under this government. But if you're saying is there are a lot more to do,

Absolutely. No one is pretending there is not. And we are we are doing that. That is why energy bills are being cut. That is why prescription charges are being frozen. Would you come back with another budget like this? Well we're talking about the budget we're actually doing today. Earlier your colleague was complaining about the level of pre budget speculation. Is there any excuse not to discuss the actual

No, no, no, we've discussed it I'm not I'm not talking about future budgets, I'm talking about the Well Rachel Reeves promised that she wouldn't come back with one and then she did, so I'm just wondering whether you're going to rule out coming back with one. What we are doing is making sure that we are doubling down on growth, but also making sure that we're cutting borrowing every single year and doubling the

the headroom against our fiscal rules to provide stability to the public finance. One one very quick last thing. Do you think the OBR needs to be reformed given what we've seen today? Is it time to change the way it operates? The OBR is going to have to think very seriously about what happened today.

And do you think it should be reformed in the case? The OBR is going to need to think very seriously about what happened today. That was an incredibly serious breach of uh the budget process. Is the Chancellor angry about it? No, look, the Chancellor is getting on with delivering our budget. Thank you very much indeed.

The news agents. Inevitably on a big budget day like today, there's gonna be a lot of criticism, a lot of critique, including on on this show. I suppose it was worth thinking about kind of what's the if you're sat in number 11 or the treasury. What's the really positive case? What do they think might have gone well? And of course we might not know that today because budgets often unravel on

day two or day three, or in this what case day minus three or day day minus four. But I think, you know, the best case scenario I think for this budget is to say we've we've already uh alluded to one. they shore up their internal position, which ain't nothing, right? You if you're if you're a politician you can't secure the future for your government if you're no longer in government and that has been looking less and less certain.

They have, as I say, done labour things that the good labour things they can sell, you know, they're increasing state pension, they're increasing minimum wage. Business won't like that, but you know, Labour MPs will and it's something that they can sell on on the doorstep. There is a two-child benefit cap as we say. They're maintaining investment in the NHS.

which is again something that they can sell. You can see the outlines of a sharper political message, focusing on waiting lists, focusing on bringing debt down, focusing on living standards and so on. And, you know, She has, and I think this is probably the thing that won't get much attention, but I think is wise from her point of view. She has left herself more fiscal headroom, so called, i.e. more room to play with in future budgets, twenty two billion, doubling where she was before.

She could have chosen not to do that so she could sort of leaven the pain in this budget, but she's clearly made a decision to do that. Partly because I think she knows she doesn't want to go through this process.

again, she wants the markets to know and there's another positive thing, the markets have responded reasonably well, like um she wants the markets to know she's got headroom, she wants Labour and Peace to know she's got headroom and there's the possibility that the OBR in future budgets, particularly as we get closer to the election

might do what they actually did in this budget, which is actually say things aren't quite as bad as as we thought on the tax receipts front, and she actually ends up with a really quite sizable spending pot that she could perhaps use for a few little sweeteners and giveaways as we get closer to budgets in the future and getting closer to the general election.

So I listened to Kemi Batenock at Prime Minister's questions and then in response to the budget and I think w we were both saying that she's got a lot better as a commons performer. But she went over the top and she said that Rachel Reeves is going to go down as the worst. Chancellor in history. Well, no. The reaction to this budget is nothing like what happened when Liz Truss was the Prime Minister and the Kamakwazi budget of Quasi Quatek.

that was infinitely worse and the reaction of the markets was infinitely worse. I've been speaking to a couple of senior people and they've been talking about 1981. The Geoffrey Howe budget of nineteen eighty one. When the Tories had been in power for two years, Thatcher was the Prime Minister, and they came in with a tax raising budget at a time which flew in the face of Keynesian Orthodoxy, which was at a time of recession you don't raise taxes, you want to stimulate growth.

And of course the economy now there was a Falklands War that came a year later, which helped Margaret Thatcher enormously. But the idea That you do tough things now and maybe there may be a pot of gold a bit later on, I think is what is in the minds of an awful lot

treasury people who've got long memories and kind of you know, a sense of history about these things, that this is something that yeah, it's uncomfortable today. Yeah, the headlines are not going to be pretty tomorrow. But maybe when Labour is coming to fight the next election Things will feel a good deal better than they do right now. And we'll see what happens on day two. We'll be back tomorrow. We'll see you then. Bye bye. Bye bye. This has been a Global Player Original Production.