Floundering Rachel Reeves admits Brits are NOT feeling better off as jobs slump after Labour’s tax raid… with fears she will have to up the burden AGAIN after spending crunch
Floundering Rachel Reeves admitted Brits are not feeling better off today amid signs jobs are slumping after Labour’s monster tax raid.
The Chancellor acknowledged ‘working people’ are not seeing ‘progress’ in their everyday lives as she prepares to deliver a crucial spending review tomorrow.
The comments came as grim figures showed the unemployment rate hitting its highest level for nearly four years.
The most up-to-date statistics were even worse, showing numbers on payrolls recording the biggest drop in five years last month and vacancies tumbling.
Although the stalling economy has been partly blamed on Donald Trump‘s trade war, the finger has also been pointed at the Budget decision to ramp up national insurance for employers and boost the minimum wage.
Ms Reeves will outline plans for government spending covering the next three financial years tomorrow, after months of bitter wrangling with ministers.
But the generous fiscal envelope set last Autumn has been put under massive pressure by UK plc’s slowdown, calls for more defence cash, and revolts on benefits.
Fears have been mounting that the Chancellor will have to drive the tax burden even higher in her next fiscal statement later this year to balance the books.
Chancellor Rachel Reeves visits the Castlehaven Horticulture hub in North London yesterday
Speaking at the GMB Union Congress in Brighton, Ms Reeves said the Government was ‘making Labour choices’ and ‘making progress’.
She said: ‘I know that not enough working people are yet feeling that progress, and that’s what tomorrow’s spending review is all about – making working people better off, investing in our security, investing in our health, investing in our economy.
‘This Government is going for growth because that is the best way to create jobs, boost wages, lift people out of poverty, and sustainably fund our schools and our hospitals and all the public services we rely on.
‘And we’re doing things differently, because unlike the Tories, I don’t think that the only good thing that a government can do is get out of the way.’
Ms Reeves is under pressure to reverse course on cuts to benefits after she confirmed an humiliating U-turn on winter fuel payments that will see them restored to pensioners with an income of less than £35,000-a-year.
She stood firm on welfare reforms as a union representative urged her to ‘think again’ on the cuts.
The Chancellor said the current system is ‘not sustainable’ and that reforms aimed to get those who can work back into work and help ‘fulfil the ambitions of people with disabilities themselves to get back into work’.
The reforms include plans to tighten the eligibility criteria for personal independence payments, known as Pip.
The rate of unemployment jumped to 4.6 per cent in the three months to April, up from 4.5 per cent in the three months to March and the highest level since the three months to July 2021.
The figures also showed vacancies tumbled by 63,000 to 736,000 in the three months to May, while payroll data revealed the biggest drop for five years last month, down 109,000 to 30.2million.
The ONS said average regular earnings, excluding bonuses, increased 5.2 per cent in the three months to April, down from 5.5 per cent in the previous three months and the lowest since the third quarter of last year.
While this is still outstripping inflation, up by 2.1 per cent with Consumer Prices Index inflation taken into account, it was lower than predicted, with most experts pencilling in a fall to 5.3 per cent.
Counterintuitively that could be a bright spot for Brits, as wage pressures hamper the Bank of England from cutting interest rates.
Liz McKeown, ONS director of economic statistics, said: ‘There continues to be weakening in the labour market, with the number of people on payroll falling notably.
‘Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.’
The Institute of Directors raised concerns that ‘the business case for hiring new staff has been dealt a series of blows’ by rising staff costs and upcoming changes to employment law.
Shadow business secretary Andrew Griffith said: ‘It is disappointing but no surprise that unemployment is up again.
‘Businesses are still absorbing a £25billion Jobs Tax but things are about to get even worse as Labour’s £5billion unemployment bill hits businesses with higher regulation. Labour have to think again.
‘Only businesses create jobs and wealth in the economy.’
The Bank of England will be weighing up the wage signals carefully against the weakening of the jobs market, according to economists.
Matt Swannell, chief economic adviser to the EY Item Club, said he believed a cut in June remained unlikely, but that rates may come down again in August.
‘Today’s data is likely to reinforce the view that underlying inflationary pressures are cooling, but with pay growth still far above the rate consistent with inflation returning sustainably to 2 per cent, most of the MPC will still want to act cautiously to guard against sticky inflation,’ he said.
Minister for employment Alison McGovern said: ‘Six months after we launched Get Britain Working, we are already seeing the benefits with economic activity at a record high, with 500,000 more people in employment since we entered office and real wages growing more since July than in the decade after 2010.
‘People all over the country are benefiting from increased training opportunities and the newly launched Jobs and Careers Service will allow us to test new and innovative approaches to personalise employment support.’
