Rachel Reeves' Budget suggests she has not met the people who are key to growth - Jayne Dowle
Where exactly does Rachel Reeves think ‘growth’ is going to come from? Absolutely no mention in the Budget of incentives for small businesses, entrepreneurs or the self-employed, all important drivers of the economy.
The version of Labour she presented at the Budget last week is so out of touch with the times; it looks backwards, not forwards.
I know that historically, it’s been the Conservatives who support independent traders of all kinds, but Labour can’t afford to treat them as second-class citizens.
Is Reeves really so antipathetic towards the ‘private sector’, under which come the restauranteurs and shopkeepers who might populate High Streets and town centres and take advantage of the paltry ‘permanent’ discount to business rates?
Then there are the builders, joiners and electricians who own small firms or work for themselves and presumably will be needed to contribute their skills to building the 1.5m new homes the government has pledged?
What was in the Budget for them, except a new 3p per mile tax on the electric and hybrid vans they’ve been encouraged to purchase by previous governments banging the drum for net zero? Another cost to factor in, and that’s before they even consider the government’s increase to the minimum wage.
In itself, giving the lowest-paid workers a rise is welcome. But the problem is, it’s not the Chancellor of the Exchequer paying workers out of her own pocket; it’s the companies who employ them. And they’ve received no considerations to offset the extra costs this will incur.
I saw an interview with the owner of a hairdressing salon on the news. She said there was nothing in the Budget for her business, and indeed, she was going to have to lay off staff because of the new minimum wage rules coming in April.
Watching Reeves at the dispatch box last Wednesday, I kept wondering if I’d dreamt her previous Budget, in October 2024, when she committed to growing the economy.
Helen Miller, the new director of respected think tank the Institute for Fiscal Studies (IFS) has reminded Reeves of her broken promises.
“Growth not only makes us richer, it makes almost every problem easier to solve,” she says. “At the last Budget the chancellor said: ‘Every Budget I deliver will be focused on our mission to grow the economy.’ That wasn’t on show yesterday.”
She added that Ms Reeves, like her predecessors, continued to shy away from meaningful tax reform that could move the dial. “This felt mostly like the Budget of a government trying to scrape through,” she added.
Plus, the Budget watchdog, the Office for Budget Responsibility (OBR), also said none of the dozens of measures unveiled last Wednesday would have a “material” effect on growth.
I agree. It also felt like a Budget delivered on behalf of a government that doesn’t really understand the people it governs. There are far too many assumptions made.
Prime Minister Sir Keir Starmer’s mission to eradicate child poverty is noble and much-needed, and his appointment of former New Labour Cabinet minister and social mobility commissioner Alan Milburn to lead a review of NEETS (young people not in education, employment or training) worthy.
Nearly one million young people, approximately one in eight of those aged 16 to 24, are currently NEET.
In addition, the number of young people claiming Universal Credit (UC) health and employment support allowance has increased by more than 50 per cent in the last five years. More than a quarter cite long-term sickness or disability as a barrier to working.
Obviously, it is no good for the country – or the spiralling benefits bill – to have so many young people opting out of earning a living.
The government thinks the answer lies with the £820m Youth Guarantee scheme, offering young people in England aged 18-21 an apprenticeship, training, education, or help to find a job.
Further education colleges are already over-stuffed, so good luck with the training and education aspect. And who will be providing the apprenticeships and jobs? The first missing piece to this particular government-led jigsaw is that without growth, new employment opportunities stutter to a halt.
Small businesses could provide many opportunities here, if only they were given the support they needed to do so. Reeves would no doubt point to her Budget move to get rid of the five per cent part-funding aspect SMEs have been expected to pay towards running apprenticeships. But these companies will still have to find the cash to pay their apprentices’ wages.
The second missing piece is considering young people themselves. The popular narrative, that so many choosing not to work would magically be transformed by a college course, is not the full story.
I run out of fingers to count the under-25s I know, here in Barnsley, who – with no help from anywhere – have set up their own businesses in the last few years. A gardener with ambitions to own a landscaping company. A beautician who already has her own salon. A business selling healthy pet food. A car valeting firm.
They are the future. They are the key to growth. Rachel Reeves and the Prime Minister have clearly never met them.