By, Trevor Abrahmsohn, Glentree International
We should have known better. When ‘two tier’ Kier Starmer, bare facedly, nicked over £100,000 of freebees and when questioned, reluctantly gave back a paltry £6000 with a look of distain and indignancy, we should have known that this wooden headed solicitor, who didn’t cover himself in glory at the CPS, was duplicitous in the extreme.
Pensioner’s Winter Fuel Allowance, no contrition
This was quickly followed by the unforgivable grab by Rachel ‘Thieves’ of the pensioner’s Winter Fuel Allowance, without a hint of contrition. The early signs were all there in plain sight.
Lest we forget, during the Election campaign we were all hoodwinked into believing that the Labour Party had changed and their old ideological, socialistically inspired instincts had been ditched, since all expenditure was ‘costed’.
Greatest tax raising, spending, and borrowing Budget since 1948
We now see the reality of this misconceived impression. The Chancellor has made the greatest tax raising, spending, and borrowing Budget since 1948 and this will inevitably inflict pain on the very victims who should have been protected.
Despite an unprecedented borrowing spree of £50billion, using the great art of ‘sleight of hand’ (which would have certainly impressed Paul Daniels the magician), by the looks of things and according to the OBR (Office for Budget Responsibility) which is meant to be the bastion of economic modelling, there will be no perceptible growth across the electoral term than would have been the case under the Tory regime, which the Electorate so despised.
Let’s look at the net effect of her policies;
- Commerce will be reeling from the £25billion tax grab on increased National Insurance charges, and higher minimum wage (three times inflation rate), which together with the changes to working practices will lead to higher unemployment, lower growth, and reduced wage payments for ‘the working people’ and will exacerbate inflation. Let us not forget, that the private sector and enterprise drives the economy and not the public sector.
- The increased borrowing will keep interest rates higher for longer, which means mortgage costs will be greater than would be otherwise and inflation will be higher.
- With higher mortgage costs, increased Stamp Duty, and greater Capital Gains Tax on second homes, this will drive a coach and horses through the already decimated Buy-to-Let market which on top of rent reforms and no-fault evictions, is encouraging these investors to cash in and get out of the market. With a rapidly shrinking supply of private rental properties, rental values will go up exponentially and the vulnerable, who the Labour Party profess to protect, will be further disenfranchised.
- Non-Dom’s are leaving the UK in droves which means that the £6.9billion that the government earned from them will all but disappear. These are precious entrepreneurs and risk takers who have helped to drive enterprise by employing people and spending their valuable cash in the UK. Instead of being blinded by ideological dogma the Chancellor should simply have increased the cost to them of living in the UK to say, £250,000 per annum and let them keep their world-wide income and their inheritance, out of the IHT net, but at least the Country would benefit from this largesse and not our continental counterparts who are now so grateful to welcome them. This is stupidity on steroids.
- Higher Inheritance Tax and the pension reforms, which raises very little money, just irritates the middle and upper middle classes since for the Exchequer, it’s a ‘second bite of the cherry’ and does not reward responsible saving for later life.
- The VAT on private schools is the daftest legislation of recent times. The ‘just about managing’ parents of pupils in these schools will be forced, against their will, to send their children to the already over-burdened local state schools, if they can get in. This will inevitably push their resources to the extreme and before long, teacher/student ratios will start nudging into the 35-40 region, which will diminish the overall educational standard for all. Private schools will be reclaiming VAT on capital projects carried out in the past and therefore, there will be no net gain for the Exchequer. I call this is a folie grandeur of whopping proportions.
- Whilst £10billion is being earmarked for the NHS, despite the rhetoric of the Health Minister Wes Streeting, there was no talk of the reforms to try to make the bloated NHS more efficient and get better value for money for us.
- The OBR have challenged the government’s £22billion fiscal hole and suggested it was more like £9.5billion until the government fuelled and encouraged by their union paymasters, foolishly granted the most extraordinary increase in wage payments to the rail workers and doctors without any corresponding reforms in working practices or enhanced productivity targets.
- The freezing of the Income Tax band thresholds will mean more working people are pushed into the higher tax band which will increase the hardship inflicted upon them.
Rishi Sunak, bravura, last hoorah performance
Although the former Prime Minister, Rishi Sunak, did put up a bravura performance as his last hoorah in the Commons, sadly it was too little too late. He was incredibly foolish and ill advised to call an early Election and as such handed the Labour Party two quarters of better-than-expected growth figures, whilst inflation dropped below the 2% benchmark, he had so sorely coveted. Whilst he would never have won the Election, had his strategy been more judicious, he would not have handed the unworthy opposition party a landslide, which could technically give them two terms worth of government.
It is peculiar in the extreme that with so much money being borrowed, taxed, and spent, according to the august institutions there will be no benefit for the people of this country or commerce at the end of the electoral cycle. We will probably be saddled with higher inflation, lower growth, higher unemployment, and our national debt will be even greater, thanks to the handy work of the two goons, Starmer and Reeves.
Although a number of transactions in the property market have been stalled awaiting the outcome of the Budget, with a bit of luck buyers and sellers will factor in these changes and get on with their business.
I fear for the Buy-to-Let market since the government needs a continuing partnership with private landlords to supplement the supply of rental properties in-order-to stop rents rising exponentially.
Reforms to the Planning System
There is much talk of reforms to the Planning System, but even if these can be implemented, let’s see if one more extra brick gets laid from all this well-intentioned but meaningless rhetoric. Twenty housing ministers since 1997 have still failed to unlock this problem.
They should have renewed the Right-to-Buy scheme which did allow a number of renters to become property owners but clearly, the government do not understand the dynamics of the housing system.
Personally, I don’t see any growth in residential property values in the middle to upper ranges and the old-fashioned view that values always rise over time, exposing more equity for the owners, may be now obsolete.
Potpourri of bad tidings
I’m not sure why it took the Chancellor three months to conjure this potpourri of bad tidings and I have to say the mutual congratulatory glances exchanged between the Prime Minister and Chancellor in the Commons after the Budget, was more than a little nauseating, given the pain that these measures will inflict on everyone in the UK.
When the Prime Minister, ‘Mr. Glum’, warned us about the nasties that were about to descend on us after the Budget he wasn’t kidding was he?