Labour’s big bet

Zoe Grunewald, Westminster Editor: Wednesday was a long-awaited relief package for public services, with a £40bn injection that surpassed expectations and sparked a sharp intake of breath across the House of Commons. This welcome “breathing room” for the NHS, schools, and other essential services marks a significant departure from the last decade’s austerity mindset. This, after all, is why so many voted Labour.

But the implications go beyond numbers: Labour’s budget is the party’s clearest statement yet on its priorities. By hiking capital gains and inheritance tax, placing national insurance hikes on employers rather than workers, increasing minimum wage and adding no further freeze to income tax thresholds, Labour is making an overdue pivot to prioritise working people over corporate interests.

It’s no small feat. After years of deep cuts, where public services were choked and vulnerable communities left to fend for themselves, Labour’s ambition has been expected. But even with this record spend, the budget still hedged on certain major decisions. Plans to unfreeze fuel duties were sidelined, and public transport fares are set to rise—a missed opportunity to ease the cost-of-living burden for those who most need it and signal a strong commitment to the government’s wider environmental goals. Capital gains (CGT) and inheritance tax reforms were modest, with the UK’s CGT rate still the lowest in any European G7 country. As Rebecca Gowland from Patriotic Millionaires noted in Thursday’s newsletter, equalising CGT with income tax would have added £14bn annually to the nation’s coffers. If Labour wanted to, they could have gone further.

By focusing primarily on raising revenue from employers, Labour is taking a risk. Many wealthy individuals still benefit from a lower tax burden than middle earners, while employers are likely to pass increased costs down through lower wages or redundancies. And vulnerable groups had little reason to celebrate, with the budget maintaining the two-child benefit cap and moving forward on stricter disability benefits, impacting those with health conditions that had already worsened under a decade of Tory neglect. As the declining health and prosperity of the UK population tops the list of concerns for the government, there was good reason for the budget to think compassionately about alleviating poverty and helping the sick and vulnerable.

While Labour is pushing back against a legacy of cuts, some are quietly hoping its most transformative reforms are still to come. As Reeves stated, “Successful businesses depend on successful schools; healthy businesses depend on a healthy NHS.” A resilient economy hinges on a supported population, and Labour must remain steadfast in its resolution that those with the broadest shoulders should contribute to this worthy cause—because, in the end, everyone stands to benefit.

Subscribe to The Lead for more

A budget view from the North...

Ed Walker, Editor, The Lead North: What struck me listening to the Chancellor is this is about who has the money in their pocket. It'll increasingly be in the pocket of the government, the majority of British workers and the NHS.

Reeves has set out her stall for a longer-term plan, and while there were plenty of fillets for the North in specific investments going into securing the majority of pre-existing projects - I think we'll have to wait until next summer to really understand what new and innovative projects this government brings forward.

Tackling tax thresholds, contributions and more were the focus for the budget. But it felt like a come-on to politicians, organisations and those in the North to come and grab a piece of what is likely to be a much bigger government war-chest in the future. Whether that will rebound on Reeves and Starmer in businesses cutting back, will remain to be seen. They may look at the current state of the country and agree investment is needed.

A watch out for the government is with the creation of its “Nation and Regions” unofficial governing body. It needs to ensure it doesn't become too sucked into assisting the larger metropolitan urban cities in the North of England. While absolutely crucial, it must not overlook the areas which don't have a strong Metro-Mayor voice - don't leave the Blackpools of this world behind.

The government seems to have finally tuned in to the struggles of travelling across the country, recognising that journeys from east to west can be excruciating. Their announcement of the Trans-Pennine upgrade, along with other transport projects, will be a welcome relief for those who frequently traverse the region for work. This initiative also aims to enhance stations like Manchester Victoria, which, despite being well-used, have often been overshadowed by their more famous neighbours.

The North will be watching and waiting to see if we are shouldering our fair share of the burden. Whether directly or indirectly, we want to witness the promised improvements. It’s easy to make commitments; delivering on them is the hard slog.

Luke Beardsworth, Senior Editor, The Lead North: “Repairing” the UK has been a common line from Labour over the last few weeks and you can see that play out in the spending pledges made in the budget.

Spending on the NHS, public transport - in particular the rail network - and pay rises for people working in public services will all feel like playing catch-up in areas that have arguably been neglected and inarguably become less effective over the last decade. Investment was necessary, those shortcomings are felt in harsher terms in the North.

Public transport upgrades and improvements in the announcement focused on what is already there. It will not fix issues for anyone in Lancashire who wants to travel in any direction but south for work. Commuting via public transport to anywhere but Manchester is a laughable concept to anyone living in Preston. Leeds and Liverpool may as well be across the channel in that regard. The bus cap raising to £3 while fuel duty is frozen will hurt some more than others. The cap could be £30 on the bus I use, where the card machine is broken more often than working.

Listening to the budget speech – and response – in the braying of the Commons highlighted as it so often does the differences in the lives of those who make decisions and those who suffer the consequences of those decisions. In Lancashire, the bluster from both sides debating semantics over whether Labour has broken promises over raising NI contributions for employers is unlikely to cut through - in the same way talk of the “black hole” in the country’s finances won’t either.

What will matter most is how the increased spending actually manifests itself. A pledge to repair a million extra pot holes each year will mean very little unless the roads are substantially better, and investment in the NHS actually improves waiting times and care quality in our hospitals.

As extra powers to spend were granted to Greater Manchester and the West Midlands in this budget - armed with their Labour metro mayors as they are - it underlined the need to resolve Lancashire’s devolution issues with a real sense of urgency.

The patchwork nature of Lancashire’s council make-up means that agreeing over very much at all has been problematic and a mayor for Lancashire allowing our region access to what is now transparently going to be greater investment has never felt more vital.

Subscribe to The Blackpool Lead

Jamie Lopez, Editor, The Lancashire Lead: Across Lancashire’s widely varied landscape, different details of the budget will dominate the attention.

In places like Blackpool and Morecambe, where hospitality is so vital to the economy and poverty is so rampant, there will be fears over how the rise in NIC will affect small businesses and jobs. The rise in minimum wage will hopefully mitigate that for workers.

Among Lancashire’s many rural communities, the decision to add inheritance tax to farms valued over £1m has caused outrage among what is largely a traditionally Conservative group of people. In trying to fix the damage it has inherited, Labour considers that particular unhappiness as a price it's willing to pay.

Above-inflation rises to train tickets and an increase in the bus fare cap are hard to swallow when combined with fuel duty again being frozen. But the reality is the £2 bus cap ticket was due to end anyway and with public transport across the county so disconnected and unreliable, the goal of shifting people out of cars and onto public transport still feels an impossible distance away. That is a longer term problem that needs to be addressed for environmental, economic, and quality of life reasons.

Labour ministers often describe the election result as people having voted for change, while Keir Starmer’s administration often faces criticism that people do not know what that change is. This is the first indication of those priorities but ultimately the real test will be whether people start to feel their lives and public services begin to finally get better.

Subscribe to The Lancashire Lead

Leigh Jones, Editor, The Teesside Lead: “Looking through the budget today, here’s what there is for the people of Teesside, Darlington and Hartlepool,” wrote Tees Valley Mayor Ben Houchen on social media, in a post accompanied by a blank, grey square. The implication being that there is nothing for the only region who elected a Conservative metro mayor.

The big budget announcement for metro mayors was integrated settlements. That is lump sums for those mayors and their combined authorities to spend as they wish, as opposed to the old model where different pots were dished out from central government for definitive purposes.

However, an exemption has been written into the budget’s criteria for combined authority eligibility which specifically targets the Tees Valley. Authorities which are “subject to… or implementing recommendations from an externally mandated review” are not eligible for the big lump sum for mayors to spend as they wish.

It was only a month ago that Lord Houchen submitted his official response to 28 recommendations made by a review of his combined authority in the wake of alleged corruption.

While no evidence of criminality was found, the independent review decided “a number of decisions taken by the bodies involved did not meet the standards expected when managing public funds.”

Lord Houchen was the poster boy of devolution as far as the last government was concerned. A Tory with a strong popular mandate from the North of England? He could practically walk on water as far as the Conservatives were concerned. This budget, though, has put him (and subsequently his constituents) firmly on the naughty step.

Subscribe to The Teesside Lead

Thank you for reading. Now, we need your support.

Please consider upgrading to a paid subscription so we can continue delivering our journalism. You’ll gain access to exclusive content and the opportunity to connect directly with our editors and writers.