After a 14-year wait, the Labour Party has finally presented a budget, with Rachel Reeves marking a historic moment as the first woman to serve as chancellor. However, her speech can be described as decidedly traditional, evoking a sense of 1974 rather than embracing the future of 2024.

The budget resembles those from the past, long before Ms. Reeves was part of the political landscape. Following four tumultuous months in office, the chancellor has delineated the political identity of Sir Keir Starmer’s government. This identity includes the highest recorded tax revenue, increased borrowing, augmented spending on healthcare and education, all primarily supported by employers and the wealthier population.

While Ms. Reeves made a few prudent choices, there are substantial critiques to be made regarding this conventional Labour budget. Starmer and Reeves have vowed to foster economic growth, reminiscent of the promises made by Clement Attlee’s administration in 1945, which Ms. Reeves quoted at the outset of her lengthy address to Parliament. The critical inquiry they confront in governance is the timing of this anticipated growth. According to the Office for Budget Responsibility (OBR), this growth is not expected anytime soon, forecasting only a 1.6% increase by 2029.

Ms. Reeves places significant value on the assessments of the fiscal watchdog, making it essential to highlight the OBR’s comprehensive verdict. The OBR indicates that while “Budget policies temporarily boost output in the near term, they leave GDP largely unchanged in five years.” Thus, the new government is already grappling with its initial shortcomings.

Amid intense financial pressures and an economy that isn’t growing, Ms. Reeves has introduced what can be considered typical Labour radicalism: an additional £40 billion in taxes on the affluent and businesses, alongside significant investments into the public sector with minimal scrutiny.

The chancellor might contend that her budget adheres to Labour’s commitment to safeguarding the incomes of working individuals. It is now evident who these working individuals are: those employed by wealthier individuals, now facing a range of fiscal deterrents that could stifle business growth and employment opportunities. Contrary to her claims, Ms. Reeves never suggested that she intended to raise an additional £25 billion through higher national insurance rates on employers. The implications of this kind of taxation for business owners could lead to reduced investments and hiring. According to the OBR, firms may pass on 60% of their additional costs to employees, which would result in stagnating real earnings in 2026 and 2027 — hardly a positive outcome for Labour’s base.

Furthermore, Ms. Reeves might point to the decision to end the freeze on income tax thresholds by 2028 as evidence of her intentions. This choice is indeed a welcome change, putting an end to the unfairness of fiscal drag. Yet, during the election campaign, Sir Keir presented a vision focused on wealth creation. Now, as Ms. Reeves increases capital gains tax and introduces new inheritance tax measures affecting small family farms and unused pensions, this vision appears compromised. Additionally, the sudden imposition of stamp duty on second-home sales — announced with less than 24 hours’ notice — raises concerns about fairness, affecting not just the affluent but all home sellers amidst a challenging market.

As expected from a Labour government retreating to its traditional approach, the burden of additional costs will primarily affect the top 10% of income earners. Allocating £2.5 billion to the National Health Service is likely to resonate positively with many voters, but this government has continually asserted that the era of lavish funding for struggling hospitals had concluded. Without a corresponding reform plan to enhance productivity and reduce waiting times, this funding risk being squandered, similar to past allocations under previous Conservative governments.

Public schools are set to benefit from the modest funds Ms. Reeves has chosen to allocate, with their core budgets rising by £2.3 billion and capital budgets increasing by 19%, reaching £6.7 billion. Given the OBR’s prediction that approximately 35,000 pupils may be priced out of private education due to VAT on fees, these added resources will be crucial for the state sector. The government will likely use this to bolster its claims that Ms. Reeves’s insistence to “invest, invest, invest” signifies more than just a campaign slogan. This publication has consistently advocated for national infrastructure development, particularly in housing.

However, an increase of £143 billion in state borrowing over the next five years is justifiable only if it stimulates private investment. Ms. Reeves, who failed to mention growth industries within technology and science in her extensive speech, should be apprehensive, considering expert opinions suggest this may not occur. Instead, the state could overshadow private business investments. Although the markets are not in a state of alarm, the rise in government borrowing costs observed on Wednesday does not reflect strong confidence.

Is this genuinely a budget from a reformed Labour Party that is committed to growth and liberated from outdated ideologies? This was not the message conveyed to voters cautious about the party’s historical record last July. Sir Keir and Ms. Reeves suggested an understanding of the business sector while honoring wealth creators like new-age Blairites. Now they are presenting a weary nation with a lackluster vision reminiscent of Gordon Brown’s approach, devoid of the progressive growth and public service reforms characteristic of New Labour. Confronted with governance after a generation, they seem to have retreated to familiar territory. Instead of embodying the spirit of their manifesto, Ms. Reeves appears to be extracting what she can from the affluent.

The chancellor’s approach lacked boldness and inspiration. This budget came from a defensive position. It is disheartening that a newly elected government, just four months into its term, resorts to the politics of appealing to its newly acquired voter base. Perhaps in five years, those whose income stability has been supposedly secured will appreciate seeing tangible improvements. More likely, however, is that they will find themselves in a Britain facing ongoing high taxes and economic stagnation.