British companies now face uphill struggle after budget of more tax, more borrowing and more spending
More tax, more borrowing, more spending. This was a big budget by every measure, but will loom largest for businesses that will bear the brunt of the revenue raising.
Around £25bn of those tax rises will come from the 1.2 percentage point increase in employer national insurance contributions to 15%. This is a muscular hike even if it is in the middle of the speculated 1 percentage point to 2 percentage point range under consideration, and so could have been worse.
Accompanied by a 6% rise in the minimum wage and new employment rights legislation forecast to add £5bn to costs, businesses will be doing much of the heavy lifting demanded by Labour’s economic plan.
By contrast, there are no direct changes to personal taxes, and even a measure of good news, if that can be defined by the absence of the bad.
Money latest: What the budget means for you
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Today’s budget marks Labour’s first since 2010
Tax thresholds will once more rise in line with inflation from 2028, after the chancellor decided not to extend the freeze for two years, forgoing the £9bn in the process.
Conversely, fuel duty remains frozen, and discounted. Rachel Reeves may be the first female chancellor, but she is just the latest to blink first when confronted by the motoring lobby.
None of which means that “working people”, or taxpayers who happen to be employees if you prefer, will feel no pain from this budget.
Businesses large and small have warned they will have to find some of a projected 2% rise in payroll costs from staff, either from lower pay settlements, profits or fewer hires.
The Office for Budget Responsibility (OBR) concludes it will be all three, stating: “We assume this lowers real wages and profits, and workers and firms reduce labour supply and demand in response, reducing labour supply by around 50,000 average-hours equivalents.”
The OBR forecasts that growth will also slow from its March budget assessment, levelling off at 1.6% in five years’ time, below the pre-financial crisis long-term average and probably not enough to satisfy Sir Keir Starmer’s mission to be the fastest growing economy in the G7.
Read more from the budget:
The key announcements
Chancellor looks to raise £40bn in taxes
Minimum wages to go up by almost 7%
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‘It’s a definitively Labour budget in terms of big tax and big spend,’ Rigby says
Labour’s promise for this budget extends beyond the five-year single election cycle, however. They argue the extra borrowing for investment, and improvement in public services that will come from extra spending, should be judged over the longer-term.
The dividends from today’s pain will be felt in improved public services, a healthier and better-paid workforce, including those returning to employment.
If that sounds fanciful on a day for the cold judgment of Treasury spreadsheets, it should be said Labour’s plan reflects economic orthodoxy.
From the greybeards advising Ms Reeves, including former Bank of England governor Mark Carney, to the IMF annual meeting in Washington last week, there is a consensus.
Public investment is a priority of boosting productivity and thus lifting the UK and a dozen developed nations like it out of stagnation.
The price of securing the market confidence necessary to deliver it is higher taxes and spending restraint, visible in the still-tight 1.5% settlements announced for the public sector.
Ms Reeves has swallowed that orthodoxy whole, and the UK is now set on a profoundly different economic course to that of the last 14 years.
UK
UK sanctions Russian military officer accused of Salisbury novichok poisoning in crackdown on Kremlin
The UK has sanctioned a Russian military officer accused of helping poison former double agent Sergei Skripal with novichok in Salisbury.
The Foreign Office has imposed 56 new sanctions on people and entities linked to Russia, including those in the Wagner mercenary group that operates unofficially on Vladimir Putin’s behalf, and companies based in China, Turkey and central Asia supplying parts to Russia.
Denis Sergeev, who the Met Police charged over the attempted murder of double agent Mr Skripal, has been sanctioned under the chemical weapons sanctions regime.
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“Sergeev provided support in the preparation and use of the chemical weapon novichok in Salisbury…and provided a coordinating role in London on the weekend of the attack,” the Foreign Office said.
Sergei Skripal and Yulia Skripal were poisoned with novichok. Pic: Shutterstock
Mr Skripal and his daughter Yulia were found unconscious on a bench in Salisbury, Wiltshire, in March 2018.
Police said nerve agent novichok was applied to the front door of his home.
Three Russians, who police said are GRU military intelligence officers, have been charged in absentia over the incident.
Sergeev was the last to be charged after police said he was acting under the alias Sergey Fedotov.
Dawn Sturgess died after picking up a sample perfume bottle with novichok in
A public inquiry into the death of Dawn Sturgess, a woman unwittingly killed after coming across a sample perfume bottle containing novichok, heard Mr Skripal believed Mr Putin had ordered the attack on him.
Moscow has repeatedly rejected British accusations the Kremlin was involved.
The inquiry heard the amount of novichok in the perfume bottle was enough to kill thousands of people.
Also included in the latest sanctions round are companies supplying Russia with military equipment being used in its war against Ukraine.
Ten companies based in China, and a handful from Turkey, Estonia, Kazakhstan and Uzbekistan, are on the list for supplying and producing machine tools, microelectronics and components for drones used by Russia in Ukraine.
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North Korean troops near Ukrainian border
Russian-based mercenary groups operating in sub-Saharan Africa with links to the Kremlin are also on the list.
The Foreign Office said they have threatened peace and security in Libya, Mali and the Central African Republic, and have committed widespread human rights abuses across Africa.
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Foreign Secretary David Lammy said: “Today’s measures will continue to push back on the Kremlin’s corrosive foreign policy, undermining Russia’s attempts to foster instability across Africa and disrupting the supply of vital equipment for Putin’s war machine.
“And smashing the illicit international networks that Russia has worked so hard to forge.
“Putin is nearly 1,000 days into a war he thought would only take a few. He will fail and I will continue to bear down on the Kremlin and support the Ukrainian people in their fight for freedom.”
Police have made a direct appeal to those involved in the murder of a teenager to finally bring her family closure, exactly 30 years after she disappeared.
Lindsay Rimer, 13, went out to buy a box of Corn Flakes late in the evening on 7 November 1994 and never returned home. Her body was found in a canal close to her home six months later.
Lindsay’s family have also marked this year’s anniversary with a renewed appeal for information from the public, particularly in the town of Hebden Bridge in West Yorkshire where Lindsay lived and died.
“This person should be in prison, not us because that’s where we feel we’ve been for the last 30 years,” her sister Kate Rimer told Sky News.
Juliet Rimer was just one when her sister was killed but has recently been reading letters and diaries to gain a better understanding of a life cut short.
“It’s just, it’s a bit of a horror film that we have to do this,” she said. “The fact that I had a sister that I never knew who was murdered, I just can’t wrap my head around that. It’s had a massive impact on me.”
Lindsay months before her death
Kate, who played the part of her sister in a police reconstruction a year after her disappearance, says the family believes someone has information that could lead to her killer’s arrest.
“It’s usually been my mum who does this but the emotional toll it’s taken on my parents means that they just can’t do this anymore.
“It’s incredibly emotional, it opens everything up, and it reflects back over 30 years ago and everything that we lived through then. And just the horror of a loved family member, a child being murdered, is a really bizarre situation. You live your normal life around that and then we’re opening up again to bring murder and death back into our family.”
In the years since Lindsay’s disappearance, police have spoken to more than 5,000 people and examined 1,200 vehicles. Two men were arrested and later released.
A new sighting of Lindsay after she left the convenience shop on the night she disappeared has been confirmed and police believe those in the community have vital information.
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Juliet, left, and Kate Rimer speak to Sky News this month
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Detective Chief Inspector James Entwistle of West Yorkshire Police made a direct appeal to those who were involved in killing and disposing of her body.
“Has this been on your conscience for thirty years?” he said.
“It’s perfectly possible there’s more than one person involved, its perfectly possible there’s a vehicle involved. Maybe you didn’t murder Lindsay but you know exactly who did because you were there and that’s sat on your conscience for 30 years.
“Now is the time to come and talk to us, now is the time to draw a line under this and bring that closure for Lindsay’s family.”
New posters featuring Lindsay’s picture have gone up around Hebden Bridge as part of the appeal for information and an increased police presence will be in the town.
Juliet said: “It has been 30 years but Lindsey didn’t deserve this and we owe it to her as her family to keep doing this.”
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