It was a big week in Westminster as all eyes turned on parliament awaiting Rachel Reeves’ spending review which would set departmental budgets for the next five years.
Would she take the nation’s financial difficulties seriously, get government spending under control and force the state to finally start living within its means? Or, would she cave to the demands of her cabinet colleagues and backbenchers by turning on the spending taps, throwing good money after bad, and leaving taxpayers with an enormous bill?
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Sadly, the chancellor bottled it, choosing more spending as the answer to the country’s problems.
Departmental budgets are set to grow by 2.3 per cent a year in real terms. The NHS is getting its biggest ever cash injection. There’s more spending on energy and youth training programs. All paid for by you. And all cheered on by Labour MPs joyfully hailing the end of so-called ‘austerity’.
Like a drunkard with a credit card, Rachel Reeves went on a spending spree with no regard for the taxpayers who have got to pick up the tab. The simple truth is, as John O’Connell pointed out, that: “there is going to continue to be harsh austerity for taxpayers as they stare down the barrel of yet more devastating tax hikes in the Autumn, all to fund a profligate, wasteful and bloated public sector.”
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Joining Mike Graham on Talk, Elliot Keck gave the chancellor’s spending plans both barrels, blasting: “What we saw was bribery on a colossal scale from an extremely unpopular government that is scrambling around trying to find a way to improve its popularity.” Spot on!
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While ministers spend like there’s no tomorrow, John used an op-ed in City A.M. to point out something this government seems to have forgotten. While they see more spending as an end of austerity, for taxpayers the harsh reality is less money in their pockets.
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After £40 billion of tax rises in the autumn and £190 billion of extra spending over the parliamentary term announced by the chancellor, John hit the nail on the head in his assessment: “The government is not willing to grasp the challenge of reforming public services so that they achieve better outcomes. It is unwilling to take on vested interests in the public sector, instead assuming they can come back to families and businesses and soak them for ever more cash.”
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As you might expect, there was only one topic for this week’s episode of a nation of taxpayers. Former minister, Steve Baker, joined Duncan Barkes and Darwin Friend in the TPA studio.
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Spending More, Delivering Less
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In a follow up blog post, Darwin took a deep dive into the figures and confirmed what a grim picture it is for hard-working Brits. As public services underperform across the board despite already enormous budgets, Darwin rightly points out that “Throwing more money at broken systems without serious reform won’t fix the problem. It just locks in failure at a higher cost.”
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After drilling through the numbers, Darwin had a stark warning for taxpayers: “Taxpayers are being squeezed harder than ever, but services continue to deteriorate. We were told that austerity is a “destructive choice for our society,” but the alternative of endless expansion without prioritisation is arguably worse. It leads to bloated bureaucracies, wasted billions, and mounting frustration from the very people footing the bill.”
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Someone’s going to have to pay
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There’s a lot of competition for who’s under this Labour government’s cosh most. From farmers and family businesses to pub landlords and pensioners, we’ve all shared in the misery imposed. Well, except those in the public sector anyway. But one group who we’re really going to need to get out of this mess, and who ministers seem to have an extraordinary disdain for, are entrepreneurs.
With news that four in ten entrepreneurs are looking to leave the UK, we’re quite simply haemorrhaging talent.
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In a post for the Chartered Institute of Taxation, Shimeon Lee highlights our recent paper revealing tax on entrepreneurship has hit a whopping 84 per cent. As Shimeon writes: “entrepreneurship is on a decline in the UK with the number of businesses falling since 2020, reversing a decade of growth since 2010. This has a real effect on the economy, with young companies accounting for a disproportionately large share of job creation. Fewer entrepreneurs makes us all worse off. Politicians must stop treating entrepreneurs as an inexhaustible and consequence free source of revenue to be exploited on a budgetary whim. At the most basic level there must be stability in the tax system and a clear vision for the tax environment going forward.”
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A grooming gangs inquiry is long overdue
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On a very different note, Keir Starmer finally saw sense and bowed to demands to hold an inquiry into the grooming gangs scandal. When ministers rejected one at the start of the year it rightly caused outrage.
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While we’ve regularly highlighted the problem of national inquiries running over budget and dragging on for absurd lengths of time (see our latest research into the covid inquiry here), as John wrote in the Critic at the start of the year, an inquiry into the grooming gangs is a moral imperative: “At the TaxPayers’ Alliance, we have long championed the responsible use of public money. But let us be clear: this is a case where money must not be spared. A properly conducted inquiry into grooming gangs is not a luxury, it is a necessity. The cost of such an inquiry is dwarfed by the human and societal cost of failing to act.”
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Benjamin Elks
Grassroots Development Manager
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