The Chancellor’s career and Labour’s future rests on her not betraying businesses in her budget, writes TERRY MURDEN
Offshore Energies UK has been saying it. Even Scottish Renewables. Now the British Chambers of Commerce, Scottish Chambers of Commerce, and Aberdeen & Grampian Chamber of Commerce are saying it. The energy profits levy (EPL), or windfall tax, has to go. Now. Not in five years, or even four years, if rumours circulating of an ‘earlier’ termination are anywhere near accurate.
With a near-consensus building against the EPL, that leaves three key people that need to be told they have to change course or face the mother of all backlashes on 26 November: Sir Keir Starmer, Ed Miliband and the hopelessly stubborn Rachel Reeves whose budget is about more than shoring up the public finances, it is about saving her career and the Labour party’s reputation.
If the Chancellor insists the levy stays, she will find the oil and gas industry’s frustration turning to rebellion, and Labour ministers, already portrayed on one front page as The Traitors, only allowed into Aberdeen under the cover of darkness. Anas Sarwar, the party’s Scottish leader, will need to start looking at the job ads.
Ms Reeves is fond of repeating catchphrases in her speeches and on present form it would be no surprise to hear her dig out two of Mrs Thatcher’s famous quotes that ‘this lady is not for turning’ and that ‘there is no alternative’ to her tax and spending plans. Well, there is, but she isn’t listening.
In several acts of betrayal the self-styled Chancellor for Working People has put many of them out of a job. Unemployment, certainly south of the border, is rising and will continue to rise unless she applies the handbrake on her reckless policies.
The Chancellor talks a lot about her focus on those at the sharp end of industry, but enjoys being feted by rich bankers and powerful institutional investors. She needs to stop fantasising about the economy in 10 or 20 years time, put an end to blaming everyone else for the state of the economy apart from herself, and do something about the rot that has crept in over the last 12 months.
She promised businesses, not only in opposition but in the manifesto, that there would be no tax rises. It took just a few days in office for all that to be put through the shredder, quickly followed by Labour Party membership cards.
Ms Reeves’ strategy requires an urgent re-boot that focuses on today’s economy rather than the billions promised by overseas investors over the next decade and longer, by which time thousands of indigenous businesses will have decided enough is enough.
Her pre-budget speech in Downing Street was a warning that the following drama will contain strong language and scenes that some people may find upsetting and offensive. She has tried to play down attempted spoilers that this and that tax will rise, but the broad thrust of the plot is pretty well understood. We are all about to be the victims in a ghastly horror story.
The likelihood is that she will put a limit on the tax break on pension contributions for both employers and employees, while higher earners will be asked to pay more tax. Limited liability partnerships, high-end property owners, those with warehouses full of assets. It won’t stop there. As she said in her gloom forecast: “We must all do our bit”. That means we will all take a hit for the terrible mistakes in her first budget. Thanks, Rach.
As for the windfall tax, a short video featuring Shevaun Haviland, director general of the BCC, makes the case without equivocation. She explains that despite having vast quantities of oil and gas on our doorstep, Britain is burning increasing amounts of imported gas which travels thousands of miles to reach us. That is after it is drilled, frozen, loaded, sailed and warmed again to turn it back into gas. Producing lots of emissions before it reaches UK homes.
By contrast, gas is produced in the North Sea with a far smaller carbon footprint and supports 200,000 skilled workers. The windfall tax, says Ms Haviland, is damaging this industry which is making us ever more reliant on imports. Removing the EPL would allow the UK to meet more of its demand from domestic sources. The same sources that will help deliver the transition.
It is clearly too obvious for either the fanatics in the climate campaign or our leaders in Westminster who can’t grasp the notion that retaining and investing in one of our biggest national assets will get us to the cleaner energy future most of us seek.
Ms Reeves should view this video in between her homework lessons on the regulatory requirements for letting your home. She needs to widen her consultations to the hospitality and retail sectors, and every SME in the land. She would hear them warning that imposing yet more taxes on business will be the final straw. Not just for them, but for her time at the Treasury.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
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