The public is running out of patience with this Labour government
People believe freezing income tax thresholds was an unfair breech of Labour’s manifesto and think Kemi Badenoch would make a better Prime Minister, according to new polling for City PM, writes Matthew Lesh
The heist looked, for a moment, as though it might succeed. The Treasury had seeded rumours of a looming fiscal black hole to justify an income tax hike, and the Chancellor had even interrupted our cornflakes last month with a gloomy address on the state of the public finances. Yet it was a bait-and-switch. The numbers were rosier, and with a few carefully chosen tweaks, the government managed to please Labour backbenchers – by scrapping the two-child benefit cap – and the gilt markets. Quite the feat.
But as the latest City PM / Freshwater Strategy Poll demonstrates, the Budget has landed far from well. The personal favourability ratings of the Prime Minister, Keir Starmer (-47, down two points), and the Chancellor, Rachel Reeves (-45, down four points), have both slipped to new record lows. A majority (57 per cent) want Reeves to resign after the budget.
On the central measure of success or failure of a fiscal event, less than one-in-ten voters (eight per cent) expect to be better off because of the budget, while almost half (48 per cent) expect to be worse off. A clear majority say that raising taxes demonstrates the government’s failure to manage public finances or the economy (58 per cent), rather than it being necessary to fix long term problems and protect public services (35 per cent).
At the heart of the Budget were a series of redistributive choices, including tax hikes and the extension of income tax threshold freezes, to help pay for higher welfare spending. This may have played well in the chamber, but it hardly resonated with the public, with more voters considering it unfair (43 per cent) compared to fair (22 per cent).
A majority (56 per cent) disagree with the decision to freeze the income tax thresholds, and even more (64 per cent) consider it a breach of Labour’s manifesto promise, including a majority of Labour voters. When it comes to removing the two-child benefit cap, more disagree (46 per cent) than agree (33 per cent) with the government’s decision. The decisions are not in keeping with the public mood, with voters these days preferring tax cuts even if it means less spending on public services (56 per cent) to tax hikes and spending rises (33 per cent).
Grim
The broader picture is still grim: three-quarters (75 per cent) believe the country is heading in the wrong direction, and a majority (56 per cent) expect the economy to deteriorate over the coming year. It has become a cliché to call each budget a missed opportunity. Yet despite all the rhetoric about growth as the government’s central mission, the Budget offered not a single measure that would genuinely lift the country’s economic prospects.
The poor public reaction to the budget comes on top of the explosive story that the public was misled about the state of public finances in the lead-up to the budget. In a surprising move, the Office for Budget Responsibility revealed last week that it had informed Reeves of a £4bn surplus almost a month before the Budget – and before the aforementioned speech on the poor state of public finances. This means the market-moving briefings on public finances and the need for income tax hikes were not only politically damaging but also untrue. Now, even ministers are briefing journalists that they, too, were misled – a highly ominous sign.
The political beneficiary may be the Conservatives. With reducing inflation and the cost of living now once again voters’ top priority, overtaking immigration, the public debate has shifted. While Reform still has a commanding primary vote lead, its momentum has slowed, now down four points over the last two months to 31 per cent. The Tories are up by one point to 20 per cent, and Labour up by two points to 19 per cent. Notably, after a much-lauded speech in reply to the budget, Kemi Badenoch (41 per cent) has taken a commanding lead as the preferred Prime Minister over Keir Starmer (32 per cent).
What initially passed for a deftly executed budget has swiftly unravelled — leaving Starmer and Reeves no better, and arguably worse, than where they began.
Matthew Lesh is country manager at Freshwater Strategy