If Keir Starmer has any heart at all, he should be quivering.
Ironically, the very people that he promised to protect are being hit the most savagely from last October’s Budget which introduced such swinging tax hikes.
These are the so-called working people, those who the Prime Minister defined as having ‘no savings’.
Yet it is precisely these low-paid, and often part-time employees, who work in the hospitality and retail industries who are losing their jobs the fastest.
Almost 90,000 have been lost in the hospitality sector since Rachel Reeves put up the National Insurance rate for employers.
That’s just over half the 165,000 jobs which have gone since the Budget and far worse than the 50,000 predicted.
Tax hikes: Almost 90,000 hospitality jobs have been lost since Rachel Reeves (pictured) put up the National Insurance rate for employers
Trade body UKHospitality reckons that one in every 25 jobs in pubs, bars, restaurants and hotels has been lost since the April increase in the employers’ tax.
Hospitality is being hit badly because Reeves cut the rate at which the tax applies to £5,000, so more employees at the lower end of the pay scale are brought into the net.
Kate Nicholls, head of UKHospitality, is not exaggerating when she describes the numbers as staggering. Only bold action, like cutting VAT rates and business rates, can stem the blood, she says.
The British Retail Consortium is equally furious. Retailers are demanding an overhaul of business rates – and a stop to the planned increase in rates for the biggest shop and supermarket chains. It also warns – again – that food prices are set to keep rising.
Squeezing retailers and hospitality may have looked fiscally convenient for Reeves but, like so many ill-thought through tax hikes, it had serious unintended consequences.
Coming on top of the impact of other tax hikes, plus runaway inflation and higher borrowing costs for the Government, fears are growing over a perfect storm.
That’s why an increasing number of top economists are warning the UK is heading into another 1970s-style debt crisis.
Some say we may even need an International Monetary Fund bailout. With more workers threatening strikes this autumn, the situation certainly has all the hallmarks of a full-blown financial and economic crisis.
One of the country’s most esteemed economists, Prof Jagjit Chadha, argued in a weekend interview that the economy is at risk of collapse ‘as perilous as the period leading up to the IMF loan of 1976’.
Chadha added: ‘We will not be able to roll over debt, we will not be able to meet pensions payments, benefits will be hard to pay out.’ That’s bleak.
He’s not the only one raising the red flag. Andrew Sentance, business economist and ex-Bank of England policymaker, has also warned of the parallels with the IMF bailout, claiming the pound faces historic losses against the euro and the dollar.
Unless policies are reversed, he says, the UK is heading for an economic crash. Sentance points out that it is a severe indictment of where we are when the UK is paying investors more than Greece, to tempt them to buy government bonds. Or at least, where we are perceived to be by the financial markets.
Labour doesn’t appear to understand the gravity of the looming fiscal crisis. If the only option the Chancellor comes up with is more tax rises in the autumn Budget, then we could indeed be heading into a winter of discontent.
More crippling tax rises would most certainly depress confidence and dash any flickers of growth. Time to change course.
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