On the ground, Labour’s Budget decisions are already hurting communities
As the Chancellor prepares to set out her Autumn Budget, ministers warn us that “tough decisions” are unavoidable. But make no mistake: the difficult choices now being presented as a reluctant necessity were made by this Labour Government-they are the authors of this farce.
In the months since they were elected to office Labour has introduced a package of tax and policy changes that have increased costs for businesses and squeezed household finances.
Borrowing has risen sharply under the current Government- with £100 billion being borrowed already this financial year- and ministers are now preparing further revenue raising measures to plug the gap.
The 2024 Autumn Budget implemented substantial changes to National Insurance contributions that raised employer costs and subsequently caused a direct hit to many sectors. As a shadow Housing Minister, I know how acutely this was felt by local builders,
developers and councils already working to tight margins, higher employer contributions make delivering homes and infrastructure even harder. This has caused significant delays to many housing developments, with 1.5 million applications having already been granted, but now progress is stalling on many as a direct consequence.
If all this wasn’t enough, Labour have taken a wrecking ball to our high streets, propped up by our hospitality sector, and decimating small businesses (SME’s) which are the backbone of our country. Often these small businesses do not have organised lobbying groups or confederations able to work on their behalf, yet the 5.49 million Small Medium Enterprises in our country makes up 99% of all businesses.
Labour has also altered the tax landscape for investment and wealth, I know how profound this has been after speaking to many business owners and wealth creators in my own constituency who are now worrying about their future in this country. The Capital Gains Tax rate has been raised in a move that effects investor risk appetites and blunts growth in high value sectors such as the entrepreneurs in my own constituency that I spoke to.
Energy and business taxes have also not been left untouched. The Government extended and increased the Energy Profits Levy on oil and gas and signalled a willingness to use targeted levies more widely such levies also feed business uncertainty and can deter longer term private investment into the energy supply chain.
None of this happened before July 2024. These were active choices by the current Government: raising employer costs, changing capital taxation, reforming non-dom arrangements and deploying windfall style levies- with more rumoured to come. Meanwhile, attempts to press through welfare changes this summer exposed internal tensions in the Labour party and weakened their ability to manage our finances- the Cabinet’s own choices and compromises have created the situation they now say they must “fix”, and some of those fixes that are suffocating growth.
In my own constituency, as I have outlined, hospitality, family farms, high street retailers and small manufacturers have all told me about higher overheads, squeezed margins and the very tangible fear they have for their future. Despite that, our communities continue to show resilience - with investment and new openings across my constituency - but resilience is not a policy. It cannot substitute for a coherent growth strategy from the Chancellor and Prime Minister.
For my constituency the priority must be a budget that restores confidence: lower barriers to building homes and delivering infrastructure, underpinned by a stable tax regime that supports rather than penalises enterprise, and a genuine commitment to mitigate the damage already being felt by local public services because of these decisions.
Ministers should stop derogating responsibility and take ownership of this. The briefings, and policy kite flying, in the media over the past few weeks reflect the panic, incoherence and total absence of any positive vision from this Chancellor for our economy. Worse it has further, and perhaps fatally, undermined confidence from prospective investors into our country who increasingly take the view that the UK is not the place to do business.
The country needs honesty. If the Government believes tax rises are necessary, it should make the case directly and take responsibility, not shift blame. This is the nightmare before Christmas and Reeves and Starmer are the sole authors.
David Simmonds is the Conservative MP for Ruislip, Northwood and Pinner.
