Investment in public services must be key aim of budget

Is it me. or are the media stories surrounding the run-up to Labour's first budget getting a bit hysterical? Warnings about businesses going to the wall if the employer's national insurance levy is raised, opposition politicians accusing the government of breaking manifesto pledges and even suggesting that the Office of Budget Responsibility is politically biased, stories about households panicking, workers facing a £3,000 pay cut and talk of a mega-inflation-busting increase in the minimum wage are all rife at the moment.

To be fair, some of the speculation about what is likely to be in Rachel Reeves' speech is likely to be right, if only because she and her colleagues have been slowly releasing details in an effort to soften us up. It's also the case that Labour have painted themselves into a corner on this one by announcing straightaway that they found a £22billion black hole in the nation's finances, while at the same time tying their own hands in closing this gap by promising not to raise income tax, VAT or national insurance paymeents, all measures that could quickly deal with the deficit.

I don't want to get involved in the speculation, except to say that from a government point of view, this must be one of the most ineptly managed lead-ins to a budget for some considerable time. When you have ministers from Keir Starmer downwards, tying themselves in knots, while struggling to define what working people are, just so they can create some fiscal room for manoeuvre, then you know that they are in trouble.

One article I can identify with is this one in the Guardian. This quotes a poll of 500 UK business leaders undertaken on behalf of the TUC, which found that UK businesses are losing staff working time because of waits for healthcare or caring duties due to underfunded public services.

The paper reports that more than half of these business leaders said workers had to take time off in the last year because of problems accessing public services:

The TUC said the extent of time lost to public service pressures showed that the government should spend more on repairing services. While higher taxes tend to be unpopular with businesses, the union body argued that better public services would help UK companies to grow by allowing workers to be more productive.

The polling, carried out by Opinium, suggested that 35% of business leaders – ranging from small business owners up to management of large businesses – had staff absent while waiting for hospital treatment, and 17% for mental health treatment.

The Institute for Public Policy Research, a thinktank with close links to Labour, has previously argued that poor health is holding back the UK economy. It said last month that the 900,000 people lost to the labour force since the coronavirus pandemic would cost HMRC £5bn in lost revenue this year.

Caring duties were also a drain on time, with nearly a fifth of bosses saying staff took time off to fill in for social care for an adult relative, while 17% said workers took time off because they were unable to find childcare.

This poll underlines once again how our care system is broken and how it is pulling the health service down with it. 

If Rachel Reeves does just one thing on Wednesday then she needs to start putting this right. Our public services are in a parlous state and the failure to invest in them is damaging our economy. Sorting that out must be a key objective of this budget.