The Chancellor regards herself as boxed in. The OBR is likely to tell her she needs to raise more money in tax or cut spending to cut the deficit. She will be reluctant to raise main Income tax rates or VAT as they are seen as taxes on working people she pledged to protect. Her attempt to pass off an increase in Employers National Insurance as within her promise was badly received and has done big damage to the new jobs market. Her efforts to cut spending so far have ended in failure, with the ill judged attacks on the pensioner fuel payment and disability benefits being seen off by Labour MPs.
We are now seeing various stories in papers already in the long run up to the budget trying out various ideas to raise more cash from the better off. The government has so far failed to come up with a definition of working people they promised to protect from tax rises. That would be helpful before making budget decisions and having to defend them. It pushes the Chancellor into the path of entrepreneurs, small business people, savers and the retired. Many of these groups are important to the government if they wish to succeed in growing the economy faster, in financing better services, in stimulating investment and in getting more people into jobs.
The badly judged changes to Inheritance tax affecting small family businesses and farms have led to lost investment and jobs, to sales and closures, and to anger about how the people who do much to lift the economy are to be hit. The Treasury and OBR find it difficult to work out how tax revenue will respond to such changes. Their lack of a dynamic model may conceal an overall loss in total tax take when you consider the impact on ,jobs, investment and growth of the tax decision. Whatever the truth, all can agree that the maximum possible extra revenue is small compared to the huge increases in spending that have been put through in the last year.
We read that she might limit the amount people can gift in their lifetimes to reduce the Inheritance tax bill on death. The super rich pay much of the IHT total. They may well simply leave the country or hire better advisers. Quite a lot of them have gone already after the last budget. She would need to greatly reduce the amount and frequency of gifts to have any noticeable effect on IHT revenue overall.
We read she might remove the tax free lump sum from pension savers. That would be a significant change in the rules that have persuaded many people in the past to make savings into a pension fund. She could of course increase the income tax take if she discouraged enough people from saving for their pensions. This would be a short term boost with bad long term consequences. Getting more people to retirement without second pensions would place more burden on state benefits. She might limit tax relief to stop people on higher incomes from saving so much for their retirement. This would be less damaging to state budgets in future.
The danger in the whole approach is she will make the same mistake as last time. The last budget slowed growth, knocked confidence, led to well off people leaving the country, delayed or cancelled investments and business expansion. More cheese paring tax rises on those who can help the economy grow and can create jobs is a very bad idea. There is no substitute for curbing public expenditure. This country does not tax too little but spends too much.
August 15, 2025
Good morning.
When you hear those in the Left-Wing media say; “The economy shrunk less than expected” as if that was something to celebrate, you know you are nearing the end of the road.
Let us all hope that fall is not too far.
August 15, 2025
I agree with all the complaints about high taxes and poor quality government spending. I wish to see this Labour/socialist administration removed asap. HOWEVER, we are nowhere near the worst, when comparing government spending as a % of gdp. see here:
https://tradingeconomics.com/country-list/government-spending-to-gdp
Why are other high tax and spend governments doing it better than us?
August 15, 2025
If you have to have a high tax, borrow and spend government best find one that spends the money on things that do some good or at least are not actively damaging like Net Zero, net harm Covid “Vaccines”… and one that does not have endless red tape restricting almost everything!
August 15, 2025
Rachel Reeves frequently wearing a hard hat may be a sign that the economy will be crashing down.
August 15, 2025
I think what someone of more mature age should tell this woman and her other expenses claiming crowd is that wealth comes from giving people the option to save more to provide for their old age and for future generations. Keep stopping people from saving because of low rates is a killer to wealth creation. One of the worst moves was to get rid of the main building societies and merge them with the money making banks who are not interested in the little people who want some savings in their accounts. We now have a lot of grabbers and not enough givers in my view. Just read of a couple who have sold their home and bought a caravan to live in and are living the good life on very little money and love it being in the country and no mortgage/tax worries. We will all be going that way if they don’t watch it and then where will Rachel from Accounts get her money from? Makes you laugh if it wasn’t so serious.
August 15, 2025
She prefers the rich and hard working to leave, never return, stop working, stop investing… it seems – doom loop lunacy!
August 15, 2025
Reeves’s “attempt to pass off an increase in Employers National Insurance as within her promise was badly received and has done big damage to the new jobs market.”
She promised not to increase Nation Insurance so this was a blatant ratting on this promise. Also employers or employees NI are both taxes on transfers of wages from employer to employee in the end it make virtually no difference as employers have to lower wages so as to pay the extra employers NI they now have to pay (or make more people redundant or close).
JR says “There is no substitute for curbing public expenditure” true but ditching net zero, cutting red tape, relaxing planning and not spending state sector money or things that do little good and do huge net harm would help. Chagos, Net Zero, damaging Covid lockdowns and vaccines, the workers rights insanity…
August 15, 2025
John, we are not dealing with a rational government. Tax is so high now most changes will reduce revenue.
I have a reasonable pension and a rather large house
Inorder to minimise or even remove the requirement for IHT I intend to withdraw as much equity as possible from my property and help the family.
This ideological motivated Marxist crowd are only interested in penalising people like me who have worked hard and made provisions for our retirement.
We are getting very near the point of civil disorder especially as some clown is touting the BBC tax should be funded according to council tax band.
The sooner Rachel from complaints is stopped by the bond vigilantes the better. Buy gold
August 15, 2025
Ian.
Consider overseas residence, selected according to your means.
August 15, 2025
Agricola. I spent 9 years in the Royal Navy and 23 years living and working abroad including having a home in Paphos , Cyprus. We came home in 99 because of aged parents. Unfortunately they’re gone and sadly my wife passed away last year. I’m rebuilding a life over here with a friend of similar circumstances so we’re too old to move abroad again. Maximum holidays and helping family is the order of the day including new car wether I need one or not
August 15, 2025
Ian,
Not that dissimilar from my passage through life. Now there is more respinsibility than freedom to choose. Unless there is a tax advantage, think about a good quality 3 to 4 year old car, you can get a lot for less than buying new. Kind regards.
August 15, 2025
Last time I looked new borrowings against your home do not always reduce net assets for IHT so take good advice. Plus Reeves might well start taxing gifts soon in her desperation as they do with discretionary trusts already 20% above £325k Gordon (sell the gold at rock bottom) Brown I think.
Tax increases for here will raise less not more we are well into doom loop economics we were even before Two Tier and Reeves took the helm!
“Gordon is a Moron” is an amusing (but depressing) short book.
August 15, 2025
I think that we can guarantee that she will make the same mistake as last time
August 15, 2025
She will have no choice. The Labour Party in Parliament are away with the fairies and think the UKs money problems can be solved by taxing the rich. Failing that they see printing money as an option.
She had a go at the cut spending idea, but the backbenchers rebelled. They will do so again.
August 15, 2025
This is the only blog that I read every day. It’s concise, insightful, useful.
August 15, 2025
Yes we are lucky to be able to air our views with only light touch censorship. It’s a pity the clowns in Westminster don’t read it and heed the advice
August 15, 2025
It is a pity the clowns in number 10 have not really taken JR’s advice on so many thing over his 40+ years, on the EU, energy, climate alarmism, the ERM, the economy, the size of the state, crime, free speech, immigration policy… Tory MPs were so mad they even preferred John Major as leader after his ERM fiasco to JR. He buried the party almost as deeply as Rishi (Covid Vaccines were unequivocally safe) Sunak did. The dire Sunak even did it six months early.
August 15, 2025
Lifelogic
Certainly agree with that.
One of the only Statements John Major made which did make some sense, when he wanted a cascade of wealth to pour down through families.
Shame he did not do much to help it, as others after him have simply trashed that idea and possibility. Legalised theft is now the aim of this Government.
August 15, 2025
And we had the fool of a Scot boasting about being PRUDENT.
Why be that now, spend spend spend…..enjoy while it is still YOURS not Rachel/ Starmer’s to piss down a foreign drain.
August 15, 2025
Indeed the £325K IHT threshold is now worth only £200K in real terms. All the other thrsholds frozen or even reduced hugely NI, CGT…
August 15, 2025
“There is no substitute for curbing public expenditure. This country does not tax too little but spends too much.”
That really is the rub of the matter. I see Reforn want to spend £17bn pa more on the NHS, and £14bn pa more on defence, using anticipated savings from elsewhere. We’ve heard that phrase from every Party ever elected, but it’s very difficult to achieve in a Parliamentary term unless you have an iron will and a huge majority.
August 15, 2025
“…savings from elsewhere” of £30 billion within twelve months and aimed to limit direct impact on the population are achievable according to Grok.com from: –
Efficiency Savings: £5-8 billion
Non-Essential Capital Projects: £4-6 billion
Overseas Development Aid: £3-5 billion
Tax Avoidance Measures: £2-3 billion
Public Sector Pensions: £3-4 billion
Non-Critical Subsidies: £2-3 billion
Asylum System Costs: £2-3 billion
Regulatory Delays: £1-2 billion
Grok’s response states “These suggestions are drawn from an analysis of recent UK fiscal policies, public spending patterns, and economic commentary, while critically examining the feasibility and impact of each measure”. It further states, as you allude, that “political and implementation challenges could cap savings below the target, requiring careful monitoring to avoid unintended social consequences”.
August 15, 2025
I propose you ask the exact same question to ChatGPT5 and compare the results as for example ´Efficiency savings £5-8 bn’ looks very vague with a very wide (60%) margin.
Don’t forget; In Feb’25 Musk originally announced $2 tn of savings, in practice after six months it was less than $200 m (even if at the time some here were claiming, based on the bat in their belfry, that it was ´$2 tn and counting’). And Grok is Musk.
August 15, 2025
Formula57
State spending in 2024 /5 is expected to be £1.276 billion.
Your ideas for savings are quite modest.
But I expect someone will try to claim these savings are impossible.
Just imagine if you could trim 5% off £1,276 billion.
The only solution apparently is ever higher taxes.
August 15, 2025
@Wanderer – reform seem to have got ahead of themselves, they are now no-longer the choice because they are not the ‘others’, they are morphing themselves into the ills of the Uniparty by becoming just another faction of it. It as with all the others spend, spend, spend, that was never the problem we faced. We have a 70 year high in tax and borrow because of the promises to spend other peoples hard earned money.
No one wants to balance the budget, create way for us all and the economy to earn, in doing so fund our future. It is a case lets dump the cost of our future on the generation yet to be born. There is this sense of entitlement without the need to earn contribute that has riddled Parliament. No one wants the responsibility it will always be someone else
August 15, 2025
The key is in your last sentence, cut spending. The obscene number living off welfare, as a career choice, is indefencible. Our shoot yourself in the foot energy, not a plan, is conceived in insanity at enormous expense. I hear anecdotally of a local company making a fortune out of trading with the NHS. This points to incompetence in NHS purchasing on a monumental scale. Billions could be saved by doing it nationally and professionally. Then there is, dare I say it the ever growing cost of immigration, both legal and illegal. In the light of the lack of government action or will, I am begining to see it as a policy of deliberate ethnicity change and socialism’s war on the culture of the UK and England in particular. Our excuse for a government is a long term danger to the future of the UK and England specifically. I await the woman’s further destructive efforts against the economy.
August 15, 2025
“This country does not tax too little but spends too much“ indeed far too much and loads of it does net harm. Covid Vaccines, Covid lockdowns, HS2, Net Zero, rigged markets in healthcare, schools, energy, housing, pension investments…
August 15, 2025
The Chancellor is out of her depth a Recession made in Downing Street
August 15, 2025
A good and worthy topic today John, given the millions of us out here that will be affected by the Chancellors proposed next tax raid.
Once Politicians start believing that personal savings and investments, no matter how big or small, are ripe for the government to plunder (or manage), you are well and truly at the end of the road for a democratic Country.
You list today some of the most reported options that we are told may be under consideration, others and additional ideas have also been mentioned in the past, and all have one thing in common, the Government want to control all savings methods, for their own benefit and possible use, simply because over the decades Politicians of all Parties, and yes the LibDems shared power for 5 of those years, have managed to completely wreck the finances of this Country, and got it into a colossal amount of debt.
The working model of the UK Government is bankrupt, expenditure exceeds income by a huge amount !
No if’s no Buts, we are on a financial day to day basis Bankrupt.
Now the Government insist that those of us who have planned and managed our own affairs in a sensible and efficient manner, by living within our means to plan our future, to pay for their complete and utter financial incompetence.
Those of us who are now past our working age, who have spent a lifetime obeying the rules (set down by Government) and trying to plan for self sufficient future with a life on a limited income, are hearing that the rules which they followed for decades are now going to be changed, not just by stealth with frozen allowances, but now by legalised theft, where the rules will be changed retrospectively with regards to personal pension funds.
Decades of financial advice from trained financial experts is now going to be turned on its head, simply to suit the present Chancellors money grab.
I could go on with much more detail, but enough to say that those who are making the decision are all in a gold plated defined pension scheme (funded by the taxpayer) so will not be affected by such changes.
Disgusted from Wokingham.
August 15, 2025
How about increasing Income tax on MP’s. After all their definitely not working people. They wallow in expenses.
I suggest 90% rate on all MP’s income. That should raise quite a bit.
August 15, 2025
How about a windfall tax on all state sector pensions say 100% of eveything over £15K that plus the state pensions should be plenty for them! Should get quite a bit just from the Kinnock family! They all seem quite keen on tax grabs!
August 15, 2025
She’s completely snookered herself.
“There is no substitute for curbing public expenditure” but she is going to completely bankrupt the country trying to avoid the inevitable. Either Labour does it, or the IMF will.
In true Marxist fashion, when their policies fail and are seen to fail, they will get more and more authoritarian as they try to prove that the Gods of the Copybook Headings no longer apply. There was a very good article about this poem in the Daily Sceptic on 7 August if anyone wants to look it up.
“In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”
https://www.kiplingsociety.co.uk/poem/poems_copybook.htm
August 15, 2025
@Donna
The Office for National Statistics (ONS) said the expansion over the past quarter was driven by “government consumption”.
Growth slowed in the three months to June, with the economy expanding by 0.3pc compared with 0.7pc in the first quarter of 2025.
When parliament and the one in complaints get done with patting themselves on the back where will the money come to pay the bills?
August 15, 2025
Sir John: This country does not tax too little but spends too much.
I blinked, stopped and re-read that.
Our Sir John writing it does NOT tax to little.
No wonder this country has gone to the dogs…..we have 4 grandchildren all reaching ‘maturity’ and guess they might all abandon the hopeless, rudderless, increasingly migrant camp society and emigrate.
What positive remains for our youngsters in this lawless, feckless, criminal, violent joke of a world-leading country?
August 15, 2025
My grand children will also be looking to emigrate once they have decided where to go.
Sadly the choice is becoming more and more limited. Its a globalisation thing….
August 15, 2025
They face an oppressive Uni education cost, a crazy car/insurance cost/loan, else ridiculous travel cost (London). When they work and earn above £12k they pay income/NI taxes. Doing/watching sports expensive….a pint £6-£7.
Renting is horrific, sharing problematic, mortages might be sensible but deposit almost out of reach unless Bank of mum&dad /grandparents ( who then get liable for IHT).
Great Britain now ‘grate britain’.
Depressing to be alive.
August 15, 2025
Dignity in Dying, anyone? 😉
August 15, 2025
This far out how about the treasury and the OBR model how tax cuts might increase the tax take?
Start with the assumption that higher taxes decrease motivation and work from there and perhaps they will come up with an accurate model that shows lower taxes increase the take.
August 15, 2025
The tories where scared of the OBR, and even labour are scared of the OBR ….and they’re all to scared to abolish it
August 15, 2025
I enjoy reading your comments John…at this time of Labour insanity.
But we are all just howling at the Moon…for the next 4 years.
Hell will freeze over before Labour announce something positive…and not just another boost for their Union Paymasters and their core demographic.
Stay strong together. We can do this. Better times ahead.
August 15, 2025
How can any tax added to the largest tax in 70 odd years take be considered ‘small’?
The problem is there is no management of expenditure, as such they have lost the plot – they can only remove money from the economy as a result each rise cause more decline in the tax take and no wealth creation.
The Uniparty the Socialist WEF collective, even this faction of it are happy as they know they are winning the more people complain the more they ramp it up. If you are not a Socialist, you must leave how else do you create the ‘Great Reset’ a Marxist State. Just a conspiracy theory? But, think about it nothing else makes sense
August 15, 2025
The net-zero tax is very damaging but importing 20.3% of energy from France today is even more damaging …..increasing everyone’s domestic bill …and according to the met-off we’re in a heat wave with sunshine and wind
August 15, 2025
Net-zero; not a small tax but a big tax hidden in plain sight
August 15, 2025
“This country does not tax too little but spends too much.”
The purpose of high, wasteful spending is to justify high taxation for socialism depends upon making and keeping people poor. Net Zero is the perfect vehicle to achieve this. It is only feasible if we have a command economy (communism) with the rationing of energy, food and transport. For example, the NESO Clean Power 2030 project will cost, according to NESO, which is quite likely to have the accuracy of the HS estimate, “over £40bn annually”. This will be over £200bn by 2030 or £8000/household. The result will be expensive, subsidised, chaotically intermittent electricity from un-defendable renewables whilst needing 35 GW of subsidised, unabated gas backup generation and up to nearly 40% peak demand reduction using DSR (Demand Side Response), aka rolling blackouts, and expensive, unreliable interconnector electricity to keep the lights on somewhere. There is no plan for grid-scale electricity storage as it is far too expensive.
August 15, 2025
Farming, according to the London Socialist elite is something we don’t need, we don’t need food production in the UK.
According to media reports. Quoting a Telegraph news item. “The Company, best known for loading struggling utility giant Thames Water with debt” has moved on and has taken to energy, the NetZero’ scame for its next financial grab, it is writing to land owners “Our proposed development consent order will authorise compulsory acquisition of land, including interests in land, rights over land and imposition of restrictions, powers to override, suspend or extinguish rights over land and powers for the temporary use of land”. https://www.telegraph.co.uk/business/2025/08/01/families-face-losing-their-land-in-solar-power-push.
The Killer clause brought to you by the Millibrain attacks property owners and handed these developers “compulsory acquisition” rights to take over other people’s private land and buildings. A key element of the act was that it gave private renewable energy developers as much power to seize people’s land as the Government, provided they had a “compelling case in the public interest”.
In a nutshell, private is ownership bad, socialist control good. So IHT is needed to feed the monster that is Socialism. What do we a Nation gain, a big fat Zero. What does the Politburo, the UK Parliament and it top table gain – ultimate power. They want to have Putin and Xi Jinping applaud them for following their directions.
Parliament is making itself the enemy not the servants of the People.
August 15, 2025
”Parliament is making itself the enemy not the servants of the People”
That became abundantly clear during & after the brexit referendum
August 15, 2025
Government Spending has been out of control for twenty-five years. Governments of all parties have squandered taxpayers’ cash and built up debt with no regard for the future.
Where are the MPs challenging government spending and the casual attitude to debt?
Every Labour government in my lifetime (over 80 years) has squeezed hard-working people, families, and business owners, making life more difficult in many different ways. Every Labour government leaves the UK in more debt.
What we have not had is a proper conservative government that undoes all the harm Labour inflicts on the UK.
So this Labour Government started with a high level of debt and is determined to make it worse.
It is like sitting in a car, heading for a high-speed crash, with a blind driver!!!
August 15, 2025
If you were the Chancellor what would your budget be?
Reply I have set out many times the taxes I would reduce and the spending I would cut or delay, and will do so again in the run up to the budget
August 15, 2025
some of us might not survive the wait for the next budget!
August 15, 2025
SJR’s comments imply he believes Reeves to be in good faith in claiming her tax policies have the genuine aim of collecting tax revenue.
Yet all her moves since July 2024 have so clearly been recklessly indifferent to their predictable result, and so obviously deliberately punitive acts towards non-Labour voters, that it is impossible not to believe the latter to be her actual intention.
August 15, 2025
If we spend to much, which I agree we do, where you you make the saving.
August 15, 2025
I was at your last sentence before I finished reading. Quite! It’s not tax increases we need but to look at where we’re wasting it!!
A. Glover
August 15, 2025
Yes but the economy is fluid John,you know that better than anyone..there wouldn’t be regular budgets if this was not so and finances always stayed the same.I would have thought that we have a different starting point than 2 years ago.
August 15, 2025
Off-topic today but nationalisation has been a topic in the recent past :
May I please ask the question to you, Sir John:
Thames Water :
Which is preferable to you please:
Ownership by China or the UK if no other private buyer can be found?
https://order-order.com/2025/08/15/eyebrows-raised-over-chinese-firm-leading-bid-for-thames-water/#comments
Reply You can always find a non Chinese buyer. Its a question of price and terms
August 15, 2025
82 criminals were illicitly shipped, into the UK yesterday on the 14th August from France……
August 15, 2025
Why aren’t those who have no identification put up in tents in a secure compound?
August 15, 2025
If Rachel Reeves made greater use of indirect taxes on unhealthy lifestyle choices such as ultra processed foods with shockingly high levels of salt and refined sugar, not to mention unheard of chemical additives, then the nation may have to tighten its belt in more ways than one. If a result we’re all a lot slimmer and healthier then that would also have the added benefit of taking pressure off the NHS in treating so many preventable diseases.