A tumultuous week in British politics
This week was a tumultuous one in British politics. It began with the return of firebrand politician George Galloway to Westminster, after he secured a convincing victory in the Rochdale by-election. Then, on Wednesday, Chancellor Jeremy Hunt delivered the Spring Budget. With a general election due to be held no later than 28 January 2025, the implications of these developments – both for Britain and internationally – are considered below.
The Rochdale By-Election
The Rochdale by-election was triggered by the death of Labour MP Sir Tony Lloyd, who had held this seat since 2019. The Labour Party had originally selected Azhar Ali – a local councillor – to contest the seat but withdrew support from him after it was revealed that he had made inflammatory comments about Israel.
This withdrawal paved the way for Galloway to run a provocative campaign – under the banner of the fringe Workers Party of Britain – predicated on opposition to the positions of Prime Minister Rishi Sunak and Labour Leader Keir Starmer in relation to the Gaza conflict. Galloway – who has been in and out of the House of Commons since 1987 when he was first elected – had himself been a member of the Labour Party until he was expelled in 2003 for comments relating to the Iraq war.
The return of Galloway is likely to further inflame tensions, following an ill-tempered vote on a ceasefire in Gaza last month. This presents the sternest test of Keir Starmer’s leadership to date. Since the conflict began in October, he has aimed to walk a tightrope between recognising Israel’s right to defend itself without alienating traditional Labour voters. Given the Conservative party’s abysmal poll numbers, Starmer enjoys a degree of latitude that might not otherwise be politically possible for a campaigning Opposition leader.
With one eye firmly fixed on government, Starmer will be reticent to do anything to damage relations with the UK’s most important international ally. Therefore, despite inevitable attacks from Galloway – and possible defections within his own ranks – it is likely that Starmer’s positioning on the conflict will remain relatively aligned with that of Prime Minister Sunak and, more vitally, with Washington.
The Spring Budget
Jeremy Hunt has this week delivered his Spring Budget – undoubtedly with one eye on the looming general election. Overall, the Conservatives have indicated that they want to reduce the tax burden and improve economic growth.
One of the key takeaways is that the headline rate of national insurance for employees has been cut by a further two percentage points, from 10 per cent to 8 per cent. The measure will save the average worker £900 when combined with the two percentage point cut announced in November.
Meanwhile, tax breaks for non-domiciled residents – those who are resident in the UK, but not domiciled for tax purposes – have been abolished. The measure is projected to raise £2.7 billion a year by 2028. Under present rules, foreign nationals who are domiciled abroad but live in Britain do not have to pay tax on their foreign income for up to 15 years.
The VAT threshold for small businesses has also been raised from £85,000 to £90,000 as of April 1, which will exclude around 28,000 small businesses from paying VAT altogether. In addition, a government-backed loan scheme designed to support access to finance for businesses will be extended by £200 million and renamed the “growth guarantee fund”.
Taken in totality, these measures hold obvious general appeal, but appear particularly designed to target voters in “Red Wall” areas, who the Conservatives were successful in enticing to defect from Labour in the 2019 election.