Ending the two child benefit cap was a plus says Victor Anderson
Labour MPs liked it because the two-child benefit cap is to be lifted and public services are not being slashed. The bond markets liked it because extra government spending is being paid for through taxes rather than increased debt. The newspapers didn’t like it because they are mostly run by right-wing billionaires. And the supporters of the new Corbyn/Sultana party, with only a few days to go to their founding conference, were disappointed because this looks like a Labour Budget rather than a continuity Tory one.
This Budget is neither the launchpad for the new left party nor for a vote of no confidence in Reeves and Starmer. Of course, it does not go far enough for any socialist, but nevertheless, it may mark a turning point after years of Starmer’s movement in a rightward direction. There are some serious centre-left measures here, notably on the two-child benefit cap, the “mansion tax”, and the increased taxes on dividends and rent.
There were also some welcome bits of news from an environmental perspective. After years in which fuel duty for cars was frozen but rail fares allowed to rise along with inflation, the Budget announced that the policy is going to be put into reverse.
A look at the Budget’s small print shows an interesting complication. The Treasury estimate of the money impact of the Budget in the next financial year, 2026/7, a net loss of £9.3 billion of revenue, contrasts sharply with the forecast impact of its measures on the first year after the next general election, 2029/30, which is a net gain of revenue for the Exchequer of £20.5 billion. Basically, the Government is giving away money now, with a plan to recoup it and more three years down the road. They can therefore claim some virtue for their deficit and debt figures, but sadly, in practice, it might be another party in 2029 which has to find that £20.5 billion.