Three years ago the then opposition leader Sir Keir Starmer told a conference in Liverpool that the UK needed three things: “Growth, growth, growth.”
Growth formed a significant part of Labour’s manifesto’ pledge and was identified as the first of their five missions to ‘rebuild Britain’.
It read: “Kickstart economic growth to secure the highest sustained growth in the G7 – with good jobs and productivity growth in every part of the country making everyone, not just a few, better off.”
I scrolled through Labour’s 2024 manifesto on the train back from London last night and this paragraph jumped out at me on page 25: “Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people,” it read. “That is why it is Labour’s first mission for government. It means being pro-business and pro-worker. We are the party of wealth creation.”
After yesterday’s Budget, many may disagree.
Rachel Reeves may have mentioned the word ‘growth’ 15 times in the Budget – which was embarrassingly published early by the OBR – but where were the pro-growth measures that the business sector has been crying out for?
“Growth is the engine that carries every one of our ambitions forward,” the chancellor said before adding: “Growth doesn’t just appear out of thin air.”
The backdrop to Wednesday’s long-awaited Budget was the depressing news that the UK’s GDP had grown by just 0.1 per cent in the three months to September and it’s hard to see how that will change anytime soon.
Labour spoke about ‘stability, investment, and reform’ rather than growth.
This was not a growth Budget. It was a tax and spend Budget designed to appease Labour’s backbench MPs – evidenced by the removal of the two-child benefit cap.
It was the third largest tax-raising Budget since 2010 which will do little to stimulate growth and lift productivity.
There were a few pro-business measures, including widening eligibility for the Enterprise Management Incentives (EMI), Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) regimes to help companies grow beyond the startup phase.
One of the most telling policies, which largely went under the radar, was the announcement that new London Stock Exchange listings will be exempt from stamp duty tax for three years and hopefully stem the tide of companies heading to New York to IPO.
Thomas Pugh is an economist at RSM, who spoke at an event in Liverpool in June after Reeves’ spending review.
He described yesterday as a ‘can kicking Budget’ adding: “Of the £26bn total increase in taxes announced, just £0.7bn of those are coming next year.
“At the same time, we get a £7bn increase in spending next year, meaning the net outcome is actually a small boost to growth.”
He added: “The most disappointing was a lack of any real growth-boosting reforms. Without addressing the underlying causes of slow growth in the UK, we are likely to be facing another big tax-raising Budget before long!”
Nick Rhind is the founder of Manchester-based CTI Digital and said while he had no issues with ‘doing my bit’ by paying more taxes he said risk-takers were being punished.
“Entrepreneurs can lose everything, carry all the pressure, and still end up paying more tax than those who take none of the risk,” he said.
“There has to be a recognition and a relief structure for people who create jobs, invest their own capital, and drive the economy forward.”
In terms of growth he wrote: “If the government wants growth, innovation and genuine economic strength, it has to back the people taking the risks and close the loopholes for those who play the system.”
Steve Rigby is the co-CEO of Rigby Group and said businesses needed stability.
“The task for the government now is to end the cycle of constant tweaks and provide a stable, steady environment,” he said. “That is the only way to turn the glowing embers of demand I see in the economy into a real fire of growth.”