Reeves: “Bankers on short-haul flights sipping Champagne will be cheering”

Standing in for Covid-positive Keir Starmer in responding to the Budget today, Shadow Chancellor Rachel Reeves criticised Rishi Sunak by saying “at least the bankers on short-haul flights sipping Champagne will be cheering”.

The Shadow Chancellor had little chance to prepare, as Starmer received a positive Covid test result just before Prime Minister’s Questions. But Reeves took on Sunak this afternoon, branding him “out of touch” and “out of ideas”.

After Sunak compared his new pledges to 2010 levels of spending, Reeves asked: “But who was in charge in this lost decade? They were.” She attacked her opposite number for hitting workers with “the highest sustained tax burden in peacetime”.

The Chancellor did not reverse the £20-a-week cut to Universal Credit, but announced today that he would cut the taper rate by 8%, from 63% to 55%, and that the measure would be introduced no later than December 1st.

Reeves said the move was “welcome”, but noted that six million families were hit by the cut whereas the latest change would benefit 1.9 million. “After taking £6bn out of the pockets of some of the poorest people in this country, he is expecting them to cheer today at being given £2bn to compensate,” she said.

The Shadow Chancellor said Sunak was “loading the burden on working people”, with the National Insurance rise, a council tax hike, no support on domestic energy bills, as well as no action on community policing or the courts backlog.

She pointed out that there are record NHS waiting lists, people will still have to sell their homes to pay for social care, there is a growing gap between state and private education, and “almost every rape is going unprosecuted”.

Sunak declared that the Budget “delivers a stronger economy for the British people”. He said the 0.7% of GDP aid target would make a return by 2024-25 if fiscal rules are met, and there will be a real-terms rise in overall spending for every department.

He dedicated significant time to alcohol duties, saying the government would follow the principle that “the stronger the drink, the higher the rates”, making sparkling wine cheaper. He said there would be a lower rate of duty on draught beer and cider.

The Chancellor also revealed that domestic flights would be subject to a new, lower rate of air passenger duty, and that the planned rise in fuel duty was cancelled. Both policies were widely criticised, coming days before the COP26 climate summit.

Sunak said £4.8bn will go to local government over the next three years, but councils had said they needed £1.5bn a year just for social care. These costs will “eat into most, if not all, of a 3% increase in spending power”, the Local Government Information Unit said.

The Chancellor also told MPs that the government is giving a £4bn tax cut to banks over five years, as the banking surcharge will be cut from 8% to 3% in April 2023, with the aim of “maintaining the UK’s financial services competitiveness”.

Many other announcements had already been unveiled before today, in a bid to attract positive media coverage of the Budget. These included the national minimum wage rise and the end to the public sector pay freeze.

In a message to Tory backbenchers, Sunak argued today that the question “what is the government going to do about it?” should not be asked every time a problem arises, and there needs to be recognition that “government has limits”.

Putting forward Labour’s plans for the economy, Reeves concluded: “Labour would put working people first. We’d use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here, in Britain.

“We’d tax fairly, spend wisely and after a decade of faltering growth, we’d get Britain’s economy firing on all cylinders. That is what a Labour budget would have done today.”