Budget Week 2024: Unpacking Key Reforms and Political Ramifications

Chancellor’s Major Fiscal Announcements: What to Expect

It’s Budget Week, but what more is there to say beyond the fine print? With four months of preparation and expectations, the stakes are high for the Government. The political backlash will likely be immediate, but the bigger question is whether they can endure long enough to see the benefits.

Employment Rights Bill and Labour’s Ambitious Legislative Push

Despite extensive briefings, businesses and the wealthiest are expected to foot the bill, mainly due to the Government’s emphasis on protecting ‘working people’ and Labour’s pre-election stance against other, potentially more effective, tax increases. Unquestionably, Wednesday will be significant, so much so that the IFS suggests it could be “one of the biggest tax-raising budgets in history.” Yet, Labour is moving quickly on much beyond Wednesday’s fiscal statement.

The new government has taken on significant political risk early in the parliament through its legislative programme. Last week saw the second reading of the Employment Rights Bill, dubbed the ‘biggest upgrade to workers’ rights in a generation’. This week, we have the final stages of the Great British Energy Bill, the Water (Special Measures) Bill, and the Passenger Railway Services (Public Ownership) Bill in the House of Lords. And, of course, the Chancellor’s Budget on Wednesday. All of these reflect a government keen to begin the work of ‘change’. They also illustrate the Government’s complexities in balancing its “pro-growth, pro-business, and pro-worker” stance, an increasingly challenging position. Yes, the Government is proactive but that quick movement on complex issues has also created difficulties.

Political Risk and Public Patience

There’s logic in tackling difficult projects early, enduring the pain with hopes of reaping long-term benefits. However, as the Employment Rights Bill shows, some reforms will take years to become effective. While Labour’s push for change has begun, the political risk is mounting. The Government’s effectiveness and the public’s patience will be tested. Likewise, how much appetite for ‘change’ will become dependent on seeing its benefits. Self-inflicted political missteps, such as what defines a ‘working person’, are unlikely to help.

Substantial reform is never easy, and Labour’s ambition is, in some ways, refreshing. But if their narrative doesn’t become more positive, their instinct to reform could become a liability. According to YouGov, dissatisfaction with Keir Starmer as Prime Minister has risen from 43% in August to 58% in October, and the Government’s disapproval rating has jumped by 20 points since July. The stakes are high; Wednesday’s Budget will only increase them.

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