Peter Fortune MP's latest column in the News Shopper.
In just less than two months, Rachel Reeves will deliver her second budget as Chancellor.
She used Labour's first budget in 14 years to impose £40 billion of tax rises on employers, private schools, and family farms — pointing the finger of blame at a fictitious black hole left by the Conservatives, half of which was due to her decision to award inflation-busting pay deals to some trade unions.
But this time, she's facing a real black hole in the nation's finances, one of her own making. Borrowing costs are at a 27-year high, and economic growth is weak. To put it simply, our country cannot afford Labour's spending plans without more substantial tax rises.
There will be the usual politicking at the dispatch box, finger-pointing and blame game. But it brings me no joy to see the difficulties the Chancellor finds herself in. We all want the country to succeed, and her decisions will impact people's lives and livelihoods across Bromley and Biggin Hill.
As any sensible household would when in a squeeze, the Labour government should look to save money. Spending on health and disability benefits is on track to hit £100 billion a year by 2030 — more than we spend each year on policing or our national defence. This isn't sustainable.
However, Labour is likely to make the situation worse rather than better by scrapping the two-child benefit cap, a move that Nigel Farage has also called for. This would cost several billion pounds. We've also seen how backbench Labour MPs prevented Keir Starmer and Rachel Reeves from reducing Britain's welfare bill by just £5 billion by 2030.
Instead, some in Labour think borrowing is the answer. Andy Burnham complained that "we've got to get beyond this thing of being in hock to the bond markets". What he doesn't understand is that borrowing isn't free. Britain pays more than £100 billion to service its debts each year, around twice what it spends on defence each year.
Sadly, this leaves us with tax rises, the most likely lever for Reeves to pull in November to save her budget. This is still risky. Her decision to increase employers' national insurance contributions has squeezed economic growth and led to job losses, most notably in the hospitality sector.
She is allegedly looking at property taxes, including scrapping the private residence relief. While most of us never think about it, this relief is why we pay no taxes on the increase in value of our family home. If she scraps the relief, Labour would slap people living in Bromley and Biggin Hill with an average tax bill of £33,000 when they sell their family home.
Britain cannot afford to continue like this. If the Chancellor opts for more tax rises and borrowing in November, she risks pushing the economy into a vicious cycle of weaker growth and higher borrowing costs, which will then lead to further tax rises and borrowing. She needs to break the cycle and ditch Labour's spending plans.
