My First Labour Budget
Head of Editorial Edmund Greaves muses on the first ever Labour Budget he’s covered professionally and what it could contain.
There’s one date to rule them all coming up in October: Rachel Reeves delivers her first budget on 30 October.
It will be the first Labour Budget I’ve ever covered in my professional life in financial media. Indeed, it’s my first as an actual working adult (if we don’t count the odd jobs I did while I was a student).
The last Labour Budget was delivered on 24 March 2010, by the, recently sadly passed, former Chancellor Alistair Darling. Let’s conduct some budgetary history and see what was inside:
- A one-off “bank payroll tax” on bankers’ bonus payments, projected to be worth £2 billion
- £11 billion of Ispending cuts across Government and £5 billion in ‘savings’ from targeted spending
- Introduction of the right to open a basic bank account
- Threshold for stamp duty raised from £125,000 to £250,000 for first-time buyers for two years, and increased stamp duty on homes over £1,000,000 to 5%
- Pledge of an increase in future ISA savings limits to keep pace with inflation, and confirmed previously announced increase in ISA savings limits
Most of these ideas are largely dead and buried. Bankers’ bonuses are back, austerity is very much not fashionable, and fuel duty has been frozen for 14 years.
Interestingly the ISA savings limit has been frozen at £20,000 since 2017 while the stamp duty threshold has sat at £250,000 for all this time. Fiscal drag really is a way of life, isn’t it?
The indications this time round are for a rather different set of circumstances. The grapevine is all capital gains tax, inheritance tax, pensions tax relief (might actually be for real this time!) and maybe if we’re lucky some council tax reforms.
Echoing back to Darling’s last Budget, Reeves could also take aim at stamp duty, although how is unclear. There’s also a fair sense that she might put fuel duty rises back on the menu, particularly as this chimes with Labour’s tougher net zero stances.
The counterpoint to this is the Government has a real issue to solve with fuel duty because, as more drivers are forced to adopt electric vehicles by the 2030 new petrol and diesel car ban, it is not going to be the money spinner it once was. One of the principal solutions to this issue has been the creation of pay-per-mile road pricing.
Having covered many, many past Budgets from Hammond through to Hunt (I just missed Osborne!) – excluding the extraordinary Sunak Covid years – one never got much more than a sense of tinkering at the margins.
The exception that proves this rule is the now-infamous Truss/Kwarteng Mini Budget (anything but mini in reality). But that Budget took days to unravel and never actually saw its contents implemented.
Reeves will do doubt have rabbits aplenty, and now is the time for a new Government to impose its toughest decisions, when the next election is far away, political capital is still in hand, and you can spend the next four years tweaking to make things a bit easier (to make yourself look good).
It is going to be a momentous day, and I am very much looking forward to it. A small spoiler alert – Mouthy Money (and yours truly) are planning to do a Budget 2024 live reaction podcast. Keep an eye out for updates on where/how to catch that!
What’s coming up in October
Aside from the Budget dominating the month ahead’s agenda, what have we got in store?
Ofgem’s latest updates to the energy price cap comes into effect on 1 October. Interestingly enough 1 October is also the day that for the first time in 142 years Britain will stop using coal to generate electricity.
We have ONS monthly GDP estimates on 11 October, while labour market data falls on 15 October and inflation on 16 October. There is no Bank of England rate decision in October.
UK Finance releases its latest UK financial fraud figures on 25 October, always bearing some interesting insights.
All the best – and wishing you an exciting Budget – from all of us here at MRM and Mouthy Money!