Sir Keir Starmer and his unconvincing Chancellor, Rachel Reeves, want to make people’s flesh creep as they prepare us for a Budget that is bound to be a package of unpleasant surprises.
Just in time for Halloween, their briefings have filled the media with the political equivalent of bats, spiders, webs, witches’ hats and the rest.
They are definitely not offering us a treat. Instead, this is plainly a trick.
It is a very old Treasury technique, to leak plans which are even worse than what you actually intend to do. Then, when the day dawns, ministers’ schemes, though dismal and unpleasant, are not as bad as feared.
So let us be careful to stick to what are obviously bad features of the Government’s Budget policy. First, and worst, is the Starmer administration’s undeniable intention (they refuse to deny it) to increase employers’ National Insurance (NI) contributions.
Keir Starmer attends a press conference during the Commonwealth Heads of Government Meeting in Samoa
Chancellor Rachel Reeves at the British Embassy in Washington on October 24
Labour’s election manifesto said quite clearly: ‘We will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT.’
Labour’s defenders claim that NI on employers is not a tax on workers. But there are two things seriously wrong with this wriggling.
The first is that, if they did not mean to include employers’ contributions in the pledge, they had plenty of room to say so.
The 2024 manifesto contained 142 pages, two of them (pages 140 and 141) wholly blank. Perhaps the truth was there, in invisible ink.
The second factor is that, as the Institute for Fiscal Studies convincingly argues, employers tend to pass on increases in their NI contributions to staff – by paying them less.
There is another unfortunate effect of such measures, which is that employers on tight margins reduce staff, so making more people unemployed.
Whatever Ms Reeves’ practical experience is in economics, and it does not seem to be very much, these are not especially unpredictable, bad consequences.
As for the tangle in which ministers find themselves over the term ‘working people’, the generous observer can only laugh. As far as it is possible to work out from Starmer’s attempts to give his own definition, a working person is one who has no savings, or hardly any.
This is deeply absurd. Much of the organising impulse of the British 19th-century Labour movement was based on the desire to save – against illness, old age and funeral costs.