LOWER pay, higher rents and working harder for longer clouded Britain’s prospects further today as Rachel Reeves’s Budget measures sank in.
The Chancellor conceded that the boost to employers’ National Insurance (NI) contributions was likely to lead to smaller pay rises for millions.
And independent think tanks warned that the Budget meant that workers would be no better off at the end of this parliament than now, meaning Britain’s stagnant wage crisis could run for at least 20 years.
Ms Reeves’s admission came as Premier Sir Keir Starmer told NHS workers that they would have to work harder in future.
He said: “We are going to be asking more of you. There’s no point me standing here and saying, your workload will go down.
“The whole point is, people are living longer. They’ve got more conditions. Your workload is likely to go up, not down.”
And the Chancellor also abandoned her fleeting Budget day attempt to impersonate a ray of sunshine and returned to her Cassandra-style comfort zone, telling media that her NI change would have “consequences.”
“Businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been,” she said, without indicating whether she regarded such employer conduct as acceptable.
The Office for Budget Responsibility (OBR) has forecast around 76 per cent of the total cost of the NI hike will be passed on through lower real wages, by squeezing pay and boosting prices.
The Resolution Foundation think tank added its own warning, with research director James Smith saying: “This is definitely a tax on working people.
“Even if it doesn’t show up in pay packets from day one, it will eventually feed through to lower wages.”
The think tank’s analysis showed real household income barely budging over the course of this parliament, leaving wages very much where they were in 2008 before the bankers’ crash.
The Resolution Foundation’s analysis said: “The immediate outlook for real pay is far from rosy and, after this Budget, has worsened.”
The foundation estimates that real wages will shrink by 0.3 per cent over the next two years and rise by just 0.4 per cent until the end of the decade.
Real “average earnings end up in 2029 just shy of where they were in 2008,” it said.
Reeves continued to justify her package by reference to the £22 billion “black hole” in the books inherited from the Tories, but the OBR has failed to back that figure, indicating it might be less than half that size.
“This Budget was to wipe the slate clean after the mismanagement of the previous government,” she claimed, conceding that it might not prove a vote-winner by adding: “I don’t want to repeat a Budget like this ever again.”
She got unlikely support from Kwasi Kwarteng, chancellor during the premiership of the calamitous Liz Truss.
He admitted: “Conservatives like myself should be honest, Reeves is clearing up our mess.”
The respected Institute for Fiscal Studies saw more mess than clear-up.
Director Paul Johnson said property tax changes would “increase the bias in favour of owner occupation, and against renting, and part of the consequence will be to reduce the supply of rental housing and so increase rents.”
He also warned that warned Ms Reeves may order more “tax rises in a couple of years’ time — unless she gets lucky on growth.”
Few are predicting luck on growth, although Sir Keir suggested that he had a plan involving more deregulation.
Left MP Zarah Sultana, now sitting as an independent, warned that austerity had not been abandoned by ministers.
“Billions in cuts to disability benefits is a return to austerity, on top of the means-testing of winter fuel payments and keeping the cruel two-child benefit cap,” she said.
