It is with disappointment that I write to update you on last week’s Budget – which I listened to in Parliament, and spoke up against the day after. The Budget raises taxes by £40 billion a year to deliver the highest tax burden in history and on top of that increases borrowing by £30 billion a year.
Now that the Budget Red Book is published, with the impact of each measure set out in a neat table, it has sadly become painfully clear that the Government misled the public about their tax plans during the recent election campaign in order to win.
During the election, Labour said repeatedly that their plans were fully costed and did not require any tax increases beyond a limited number in the manifesto. This has turned out to be totally untrue.
They solemnly pledged in their manifesto that they would not raise national insurance – any national insurance. So, the £25 billion increase in employer’s NI breaks that promise.
On the BBC after the Budget, the Chancellor was forced to admit that working people will be affected as a result of lower wages. The Office for Budget Responsibility (OBR)’s analysis tells us exactly how much of that £25 billion national insurance increase will fall on the shoulders of working people. The OBR says that “76 per cent of the total” will result in “lower real wages” for working people. That is £19 billion a year lower wages as a result of last week’s Budget, or £633 lower wages per worker per year on average.
In addition, the allowable value before Inheritance Tax is paid on any family home or any other asset left to your children or grandchildren has been frozen until 2030, rather than rising with inflation – and inherited pensions are now being brought into Inheritance Tax too. Farmers and small traders with business premises will also be unable to pass on family farms and businesses so that their children can continue farming or running the family business, as many have done for generations, unless they pay huge and unaffordable tax bills. Farms will close as a result, undermining our food security and increasing food prices.
This all comes on top of the Labour Government’s removal of the winter fuel payment from almost all pensioners, including 71% of pensioners who are disabled and 84% of pensioners living in poverty. I personally voted against this measure in Parliament recently, but was outvoted by the very large number of Labour MPs now there.
Sadly for wine and spirits drinkers, alcohol duty on non-draught tipples will increase under last week’s Budget too.
Overall, these £40 billion of tax increases will damage working people across Croydon, damage businesses in our neighbourhood, damage the self-employed and damage entrepreneurs. Jobs will be lost, wages will be lower and some businesses will close or move.
In a BBC radio phone-in recently, I spoke to a man who is closing down his business and leaving the country because of the high taxes and increased regulation proposed by this Government. Another man phoned in to say he was closing his firm down too. This Government is driving businesses to close and making successful people leave the country.
During the election campaign, we warned that Labour’s plans would result in a £2,094 tax increase per working household, and Labour called us “liars”. Sadly we now know the truth: £40 billion a year of tax rises is £2,173 per working household – about £100 more than we warned.
The sad thing is that these choices are unnecessary. The British economy grew at the fastest rate in the G7 earlier this year, we have the second lowest debt as a percentage of GDP in the G7, we left inflation at the target 2% level despite recent global pressures, and unemployment at 4% was half what we inherited in 2010.
Labour Ministers have repeatedly claimed that there was a £22 billion black hole as a pretext for these tax rises. But when the Chancellor asked the OBR to produce a report into this matter, the “Review of the March 2024 forecast for departmental expenditure limits”, which was published last week, nowhere does it mention £22 billion. The OBR report showed that the claimed £22 billion black hole does not exist, and certainly does not justify £40 billion-worth of tax rises.
Sadly, the extra tax and borrowing means that the OBR, in their main Budget document, have actually forecast lower growth over the next five years than under the last Conservative Government’s plans, with inflation higher as well.
There were also no credible plans set out by the Chancellor to continue with public service reform to make services better and more efficient, and there was no reference to continuing reforms to working age benefits to reduce the huge cost to the taxpayer that those impose.
I will oppose the Budget measures that will damage local businesses, working people and families, while standing ready to support genuine moves to reform and improve public services.
Please do get in touch if you are concerned about how the Budget measures affect you.
Best wishes,
Chris
Rt Hon Chris Philp MP
Member of Parliament for Croydon South
