Despite the theatrical jousting across the House of Commons chamber, opposition politicians really do wish the Government to succeed in improving the country every bit as much as our countrymen. It is with a heavy heart, then that I have so many criticisms of the Budget delivered by the Chancellor.
At its heart is a fundamental misunderstanding of what makes people tick. The businessman looking to invest, a farmer hoping to pass on the fruits of his labour to the next generation, or a parent wanting the best for their children’s education are natural impulses that we should support and harness, rather than tax into the ground.
And as someone who worked in business before politics, and is returning to it now, I know that what makes people tick is at the heart of private enterprise. Capitalism is human, creative and moral. It allows us the mechanism to provide something our peers want or need and allows us to be rewarded for providing it. This simple insight is lacking across the whole Labour front bench, due I dare say to their lack of exposure to the private sector – and it showed in this Budget.
As Rishi Sunak said (in what was easily his best-ever performance as a national figure with a fantastic cri de coeur for Conservative economic principles), governments can foster conditions for growth, but they cannot create it. Only someone taking a risk, pursuing a dream, and dedicating themselves to a cause can do that. This Budget would hold back all those who want to push to grow and build something.
Whether it’s ratcheting up taxes in all sorts of areas and making it harder to pass things on to your children, the UK is becoming an ever-less appealing place to work, invest and build. This will not be compensated by the increase in public sector investment, which is inefficient and lags far behind the world of business. Public sector efficiency has barely improved in 20 years.
The Adam Smith Institute warned that the UK will lose more millionaires to other jurisdictions over this Parliament than any other country on earth, and that was before this Budget. That doesn’t mean the old stereotypes of monocle-wearing fat cats; it means tech geniuses, entrepreneurs, and strivers. They will take their money, their talents, and the sweat of their brow to the USA, to Europe and increasingly to places like the UAE, who actively court them with promises of no taxes, safe streets, and business-friendly regulatory regimes.
Sideswipes against private jets may be popular soundbites, and the Labour backbenches and union bosses might sadistically enjoy the damage caused to the prospects of the wealthy moving to the UK by the independent school VAT hike or non-dom abolition. But these moves are already having a huge impact in boardrooms and growing businesses around the world. Frontline services will bear the brunt of that. And higher interest rates will hurt commercial investors as well as ordinary Brits.
The deepest tragedy of the Budget is that it manages to hike taxes to the highest levels ever seen in the UK and burden future generations with terrifying new levels of debt in the form of higher borrowing, and yet somehow achieve low growth. This will be a complete red flag to international corporations when considering where to invest on a global level.
And in a world where moving both people and capital is so easy, this approach will leave lasting, deep damage to the private sector, and therefore our ability to improve growth. As more people leave, the burden on those who remain will grow and we will be back to the doom spirals of the past.
Labour will realise this in a few years. Things will continue to get just a little bit worse, every year, in every way – for everybody.
Nadhim Zahawi is a former Conservative MP. He served as Chancellor of the Exchequer in 2022