Rod Stewart was right: Every picture tells a story…

SYMBOLISM MATTERS. Rachael Reeves choosing to ditch a picture of Nigel Lawson for Ellen Wilkinson, one of the founding members of the Communist Party of Great Britain, tells us all we need to know. We are ruled by ideologues who view it as their role to reshape society into their socialist utopia.

In fairness the previous Government did a pretty good job of building a socialist utopia too, but it did so bysleight of hand – promising to do the opposite. At least this lot is out and proud. There is no ambiguity as to their ambition.

With a large Parliamentary mandate, but a tiny public one (Starmer won even fewer votes than Jeremy Corbyn and a derisory 34% share of the lowest adult turnout since the franchise was extended to all those over 21 in 1928), Rachael Reeves has concocted a clever but disastrous budget that will further embed Britain’s economic decline.

Ostensibly clever because the £40bn of tax rises, a record addition to an already record tax take, falls on the few, not the many. It falls on employers, it falls on the dead, it falls on investors and savers but – while as a first derivative it might only fall on the few its true cleverness is that as a second derivative it falls on us all.

It falls on us all as it limits further liberty, reduces the incentive to employ, and reduces wage growth and ultimately opportunity. The Government admit as much as even the captive Office of Budgetary Responsibility (OBR) accepts inflation will be higher than it expected and growth consistently lower. Its longer term expectation of GDP growth of 1.5% pa from 2027 is pathetic in the context of massive population increase and substantial increases in both public spending and borrowing. The OBR is effectively saying the private sector – that little bit that keeps the show on the road – is stagnant.

The real crime today was the sophistry. Reeves, with a straight face, claimed she would achieve a budget surplus by 2027-28 “meeting our stability rules two years early.” This is manifestly untrue, effectively taking capital expenditure ‘off balance sheet.’

Let’s be clear the budget will not be balanced, debt levels which over the last twenty years have already increased over five-fold to £2.8 trillion, will continue to grow at a faster pace than forecast before this budget. This is not a prudent budget. It is a highly imprudent one; killing the private sector, blasting yet more cash to Labour’s client base and increasing debt further while admitting to an anaemic growth rate.

Reeves’ watchword is the wicked “austerity” the previous Government allegedly inflicted on the population. This is the primary untruth as the verifiable reality is public spending increased under Johnson–Sunak by over £200bn (or some 20%) in real terms over the five years of the last Government. Outside of war that is an unprecedented record.

It is essential this fact is understood and acknowledged as the black hole that is public spending consumes more and more of the national treasure and for no obvious benefit at all. £25bn more for the NHS, £7bn for education, big numbers but I’ll bet it will make no difference.

The extra £200bn over the last five years to the public sector has generally deteriorated the service not improved it. The problem is the structure, not the cash. It is its centralisation, lack of customer focus, excessive bureaucracy, cultural Marxism, and lack of accountability that are its failings. Our public sector is aone-size-fits-all leviathan that cannot adapt and must ration its outputs where a more market-driven approach would deliver. The irony is Labour hates private healthcare but increasingly commandeers it for extra NHS capacity, using its excellence to clear-up the mess of the state offering.

And then there is the infrastructure programme. Picking winners, directing capital, net zero, and friends. Evidently the OBR thinks this will drive growth. Well, as it says in financial services health warnings, ‘past performance may not be indicative of future performance’ – but I wouldn’t hold my breath. My guess would be more tens of billions of wasted capital. The UK’s record on infrastructure procurement is disastrous. Why will it be different tomorrow and that’s even before questioning the wisdom of retiring current energy infrastructure early for more expensive and intermittent green alternatives.

This budget was slightly more aggressive in terms of its tax raising than I expected. I thought Labour might dare to do £25-30bn – but £40bn is a very large number – albeit it was cunningly focused. Rachael Reeves’tone, however, was illuminating. It was both triumphalist and belligerent, with extraordinary anger at the alleged and false claims of austerity.

Johnson, Sunak and Hunt did indeed leave an awful mess, but to be clear this alleged black hole is down to Labour’s policy choices; rewarding the failing public sector with yet more wage rises and unaccountable spending increases.

Reeves showed genuine contempt and the most selective use of fact. She made it clear this is the start, not the end point, of Labour’s utopia and more tax rises are highly possible. I guess she and Starmer are right with that as this budget further chips away at an already very weak edifice. It will undermine the private sector and private and family resilience – swapping it for the false comfort blanket of the most mediocre State. They will be back for more as their growth plans will fail and their appetite to reward their client base will be unabated. These people are true believers in the socialist fantasy.

But despite the high fives today Mr Bond lurks. In mid-October UK 10-year sovereign bonds yielded 3.75%. At the close last night the 10-year was at 4.36%. I wouldn’t touch UK sovereigns with a barge pole, so they had better be careful, the real money is rather sceptical of their plans.

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