As John Healey prepares to deliver the Budget tomorrow, one glimmer of common sense has emerged. No, it’s not about cheaper gherkins and marmalade.
It is reported that the Chancellor will break with Labour’s manifesto commitment to raise the minimum wage for under-21s to match the full adult rate, after concerns it was increasing the challenges of getting young people into work. By the same logic, he really ought to reverse the job-killing Employment Rights Act as well. Meanwhile, both older minimum wage earners and those aged 18–20 are set to receive a 3.9% pay rise. Some things don’t change.
And another Labour target has fallen by the wayside. The Financial Times reports that the party’s promise to build 1.5 million homes in England by 2029 is now ‘effectively dead’.
That’s bad news for anyone worried about the housing crisis. But it could be bad news for the public finances too. The OBR increased Labour’s fiscal headroom based on their planning reforms. If that boost is failing to materialise, Healey’s headroom may be even smaller than feared. And we all know who’ll end up footing the bill for that.
Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.
Marc Sidwell
Editor, CapX
Today’s Takes
Fresh thinking from CapX
Europe’s welfare state is turning young against old
Mani Basharzad
‘Europe has become increasingly unreformable because no one wants to accept that the welfare state they are proud of was not designed for the world we live in today.’
Europe built its postwar welfare state in a very different demographic reality. Life expectancy today is much higher and the ratio of workers to pensioners is shrinking, putting strain on the social contract between generations. As Bill Maher said recently, no wonder the young want socialism: they’re jealous that older people have it and they don’t. Read More
How Thatcher turned Britain around
Madsen Pirie
‘From the sick man of Europe, we became one of the most prosperous. Growth reached unprecedented heights, and Britain became the place to do business.’
When the Adam Smith Institute was founded, it was easy to discredit the postwar consensus: it was visibly failing. There was also a politician willing to fight for an alternative. Margaret Thatcher redistributed power from union bosses to their members and privatized state industries – and Britain boomed. Now Andy Burnham wants to put it all into reverse. Read More
Stat of the Day
Best of the Web
Britain needs another Big Bang
Andrew Griffith, The Telegraph 🔒
‘A resurgent City allowed countless businesses in the decades that followed to list and grow after the stagnation of the Seventies.’
This day 40 years ago was the ‘Big Bang’, when deregulation transformed the City. Employment in the sector doubled. Digitisation was brought in, which helped to make share ownership more accessible and attractive. This gave Britons a stake in the economy and ensured they had better lives via their pensions and savings. The Chancellor should give Britain another ‘Big Bang’ – instead we’re getting higher bank taxes. Read More
🎧Mel Stride: the Chancellor’s sums won't add up
Don’t overlook the ‘PuFins' in the Budget
David Willetts, ConservativeHome
‘[Healey] needs to continue to show effective control of public spending – not just because of the bond markets but because it is the right thing to do.’
The Chancellor’s Budget tomorrow will be heavily constrained. He has some room to manoeuvre thanks to Rachel Reeves’s change to the fiscal rules. Public Financial Institutions, or PuFins, can spend without adding to the net national debt. But such accounting tricks can’t answer the big challenges like soaring energy bills or the need to spend more on defence. Read More
The Capitalist: David Frost on how to free Britain
And if you want more...
– The invention of equality (Engelsberg Ideas)
– Healey’s £11bn defence dilemma (RUSI)
– Britain’s disk is full: can you cut spending?
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