Why, just months after historic election defeat, the Tory comeback is on

The term “omnishambles” was invented by Tony Roche, the writer of the BBC political satire The Thick of It. It came into more popular use when it was used by the then leader of the opposition, Ed Miliband, during Prime Minister’s Questions in the House of Commons in April 2012, criticising the then Conservative-Liberal Democrat coalition government’s Budget of the previous month. Delivered by the then Chancellor George Osborne, the Budget had unravelled very quickly, with concerns about what were dubbed the “caravan tax” and the “pasty tax”.

It has become something of a trend with UK Budgets, whichever party delivers them, that on the day they can come across well, but as the detail is pored over by economists and financial experts in the period that follows, more and more weaknesses are exposed. And just as with Osborne’s infamous 2012 Budget, the new Labour Chancellor Rachel Reeves has found that her own package of measures, announced to great acclaim from her Labour backbenchers in the House of Commons, has proven to be massively unpopular with large sections of the British electorate.

Budget ‘unfair’ on working people

According to one poll published on Monday, 53 per cent of respondents thought the Budget was “unfair” on working people, and this total included 41 per cent of Labour voters. The oft-repeated claim from Labour that the Budget would not impose tax rises on “working people” does not appear to be believed by the wider public. Moreover, the pre-election protests from Labour – repeated no fewer than 50 times – that they had no plans to increase tax are now exposed as disingenuous at best.

Reeves confirmed to the House of Commons that her Budget raises taxes by a staggering £40 billion, making this the largest set of tax rises in any Budget in history. According to the Institute for Fiscal Studies, this means that tax will rise to the highest ever level in the UK, at 38.2 per cent of the UK’s gross domestic product. In addition, public sector net borrowing will increase by £40 billion in this year alone.

Rachel Reeves' 'omnishambles' Budget was an early Christmas present for new Conservative leader Kemi Badenoch, seen with her husband Hamish (Picture: Dan Kitwood) | Getty Images

All this will undoubtedly have an impact on business and the opportunity to grow the economy. The economic growth projections published at the same time as the Budget are depressingly low, whilst it is expected that both inflation and interest rates will have to rise as a consequence. The financial markets were not impressed either.

The reaction from business to the significant increase in employers’ National Insurance was a furious one. Stephen Montgomery, of the Scottish Hospitality Group, calculated that in his sector businesses would be paying an average of an additional £160,000 a year, even before the increase in the national minimum wage was included. Large retailers have warned that food prices are likely to rise as a consequence.

Farmers’ despair

Other sectors were equally scathing. The Scotch Whisky Association was furious at the increase in spirits duty. Offshore Energy UK, representing the oil and gas sector, is deeply concerned about the increase in the energy profits levy to 78 per cent, and its extension to 2030, which will have a significant and damaging impact on the economy of the North East of Scotland in particular. It almost feels like Scotland has been singled out for punishment by this new Labour government.

There is particular anger amongst the farming community at the planned changes to inheritance tax, which are likely to mean that the ability to pass family farms down through the generations will be negatively impacted to a significant degree. According to National Famers Union president Tom Bradshaw, “the feelings of anger, betrayal and despair are palpable. The family farm tax is exacerbating the mental health crisis that farmers are already facing”.

Labour ministers have been fighting a rearguard action, trying to claim that 73 per cent of farms won’t be impacted by the changes. Farmers’ representatives take a different view of the figures. And it seems that the government are now effectively arguing against themselves by saying that only a small minority will be affected, and the tax can be avoided altogether with good inheritance tax planning, which means that this is a policy that wouldn’t then actually raise the money that is expected, in which case one wonders what is the point of taking the political pain from proposing it.

A gift for Badenoch

The prominent inventor and business leader James Dyson has launched a furious attack on the Chancellor accusing her of a “spiteful Budget” which was an “ignorant swipe at aspiration”. Labour ministers will be desperately hoping that they can deliver faster economic growth than is currently being predicted to show that their approach is working, otherwise the electoral consequences are likely to be severe.

This all adds up to something of a gift for the new Conservative leader Kemi Badenoch. Effectively leaderless since suffering a historic defeat in the general election in July, the party has steadily been making progress in the opinion polls, driven much more by antipathy towards the new Labour administration than any enthusiasm for the opposition.

One opinion poll at the end of last week showed that the Conservatives were now one point ahead of Labour, quite an extraordinary turnaround given Keir Starmer’s landslide victory in the general election. His own personal popularity has suffered a dramatic drop in support since July, and there is little sign of that turning around.

As Kemi Badenoch makes her shadow ministerial appointments, she and her team will be relishing the opportunity to take the fight to Labour. With this omnishambles Budget, it has shown quite a striking level of incompetence for a new administration, and one which seems entirely out of touch with the mood not just of specific interest groups such as the business and farming communities, but also with the wider public. It looks like Rachel Reeves has given the new Tory leader an early Christmas present.

Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife