Frying pan, fire etc

All life long, the same questions, the same answers.

Smile, they said, for things can always get worse. So they smiled, and low and behold, things got worse. I’m not, as it happens, talking about the news from across the Atlantic this morning. That I can’t deal with right now. It’s too huge. Too awful. Too depressing. Too appallingly predictable. I can’t go there, not yet.

I am, however, referring to the measures in Rachel Reeves’ first Budget as Chancellor of the Exchequer, which, while they had been trailed for some time in the media, still came with a sucker punch to the gut. Years ago I remember people making sure they had the radio on at 3pm on a certain Wednesday in March – it was always March in those days – so that they could hear the moment when the Chancellor of the Exchequer put 5pence on a pack of fags or announced that petrol would rise by 3p a gallon from 6pm that very evening. I still remember the queues round the block from the petrol station down the road as I walked back from school some years.

This year, we more or less knew what to expect. We knew it would be nasty, and so it came to pass.

Largess of the Covid years would need to be paid back somehow, sometime, and we knew that the Conservatives hadn’t really started to address this.

There had been the hope that the 2024 version of Labour would be the party to pick up the pieces from 14 years of the Conservatives. They might not have been able to completely make-over the economy, but there was the nation that they would at least have had a good tidy-up, and put away some of the mess.

Yet when people started doing the sums on Wednesday afternoon, adding up the increase to minimum wage and the employers’ National Insurance rise, it became clear that business are going to suffer. Businesses across the spectrum, small and medium. Big ones too, obviously. The CEO of a decently run, forward-thinking, sizeable regional business tells me he’s looking at £1.5m off the bottom line as a result, before they’ve even thought about opening the doors for business in the morning. Businesses will be looking at their wage bill and deciding whether they really can afford to take on another person in that department, or if the existing employees are just going to have to work even harder. Again.

However. As the parent of youngsters whose current career choices are never going to take them anywhere near the higher tax bracket, am I pleased that the minimum wage is going to go up? Yes, I am. The Cost-of-Living issues don’t just affect the grown-ups. An 18-year-old on minimum wage currently needs to work for 30 minutes to afford a Tesco Meal Deal, and that’s with a Clubcard. So, on the one hand, I’m glad to see that wages at that level will rise. On the other hand, there’s the real possibility that those on minimum wage, zero-hours contracts will see their hours cut if that’s the only way that smaller businesses can afford the increases and survive.

On the plus side, there might be some movement on the business rates side of things, to help mitigate  the rises, and the yet-to-be-detailed plans for boosting the building sector by building 1.5million homes. Although the question does have to be asked, with an industry already struggling with skilled labour shortages, who is going to be building these homes, and how are smaller businesses going to be able to afford to increase productivity.

Plus, there’s the issue of product availability. If housebuilding does pick up, either on the back of the Government’s efforts or just because it’s time it did, what will happen is what always happens: there will be shortage of certain products. We’re already hearing talk about allocations. So, even if the market picks up, can merchants be sure that it will be enough to pay for the Budget increases?

It’s another of those cases where we just have to wait and see what happens, tighten belts, yet again, and make it work where we can.