Here we go again. 47 more days until the budget. 47 more days for stories to run about higher and new taxes. 47 more days for the left inclining think tanks to identify more sources of above average wealth and income that they think should be confiscated by state taxation. 47 more days for the media to generate stories that persuade more people and companies to avoid spending in case they will face a higher tax bill. 47 more days to tempt more well off people to leave the country altogether, to cancel more business investment projects and delay creating more jobs.
This was what happened before the two Reeves budgets. Long run up periods led to much unhelpful speculation about increased taxes leading to the exodus of millionaires, billionaires and talented people. Coupled with substantial tax rises in the final packages this drove down new jobs and vacancies, forced up unemployment, slowed growth and undermined the housing market. When asked about this possibility again the government says they have shortened the time to the budget to limit the damage. Two months, now 47 days, is still a long time.
The trouble is the two Reeves budgets did put up taxes by a stated £40 bn and £26 bn so people are right to have fears of more to come. If the government was seriously worried about growth and jobs they would learn from the experience of the last two years and would rule out any tax rises in Budget 3. They say you cannot rule out tax rises in advance of the budget, yet their Manifesto ruled out all rises in the big three taxes for the whole Parliament. Labour could only win the election by promising not to impose more taxes on working people. They have already distorted the promise by the hike in employer National Insurance Contributions. These do of course hit the self employed and have served to destroy jobs which does affect working people. The failure to calm fears of higher taxes implies higher taxes are still on the agenda.
The March 2024 last budget of the Conservative government proposed spending £1226 bn in 2024-5, rising to £1323 bn by 2027-8, an increase of £97 bn or 8%. In last November’s plans the Labour government proposed to spend £1468bn in 2027-8, an increase of 11% over the Conservatives and 20% higher than Conservative plans for 2024-5. £145 bn of extra spending next year has proved to be difficult to finance, with the extra taxes falling well short of the extra spending. As a result the Conservative forecast of borrowing just £50 bn in 2027-8 has risen to £147 bn under Labour.
Labour in its end 2025 budget set out plans to borrow almost £100 bn more, to tax £66bn more and to spend £145 bn more. Lower growth and fewer jobs so far help account for the need to increase borrowing and taxes by more than spending to allow for lower than expected tax revenues to pay for everything. Mr Burnham should study these poor figures and poor results. With John Healey he should try to do something different this time round. Instead it looks as if they think they need to spend yet more money than Starmer/Reeves and offset some of the costs with yet higher taxes owing to the difficulties of borrowing more at realistic interest rates.
The government was given a higher growth rate in the OBR forecasts for saying they would get some extra growth from their attempts to reform planning. So far there is little sign of this having a positive effect, with housebuilding way below required levels. Large projects still take a long time to get approval. Permissions to go ahead with new oil and gas have remain stymied by political hostility. They were also given a higher growth forecast for their increase public sector investment. The more they spend this money on things like the heavily loss making British Steel, the computer remediation costs at the Post Office and the endless delays and overruns of budget at HS2 the less they are likely to create extra growth from more nationalisation and public capital spending.
The markets have decided to charge the government a high premium in extra interest costs to borrow because many bond investors and traders think the government is spending and borrowing too much. The government needs to borrow around twice the £147 bn of new borrowing in 2027-8 in order to replace debt that needs repaying as well. The debt issuance is scheduled to be £275 bn this year and £308 bn next, leaving bond investors plenty of opportunity to acquire UK debt and plenty of bargaining power over how much interest they want in return. This creates the doom loop, with interest charges shooting up. These add to total public spending which in turn requires yet more borrowing. The UK state has to borrow to pay the interest on the debts.
So what should the budget contain? It should contain no new tax rises. It should reduce tax rates where they can collect more revenue by setting a lower rate. The taxes on wealth and transactions are now such that many people either leave the country or take legal routes to avoid the charges, lowering the receipts. It should deliver a package of tax cuts and subsidies that help many more people into jobs and allow businesses to create the extra jobs that are needed. This needs to be paid for by offering far fewer sicknotes for life, with benefit reform to incentivise work and lower the overall bill.
The stark omission from the government’s pre budget planning, and from most of the debate in the establishment media and left facing think tanks is a proper debate about where savings can be made in the bloated public sector budgets. Why send Mauritius large sums with the gift of islands which are British and should stay so? Why put so much public money into carbon capture and storage projects? Why grant so many long term benefit entitlements to people who would be better off working? Why allow the continuing cost overruns at HS2 whilst paying large salaries and even bonuses to the senior managers who have wandered so far off the original budgets and management plan? Where is the business plan to cut the £500 m a year losses at the Post Office before grants, and the £500m losses at British Steel? Where is the plan to slim the civil service and return public sector productivity at least to the higher levels of 2019?
The government cannot succeed with this budget without substantial reductions in current costs. The OBR forecast which determines the fiscal rules is likely to show a worse position than last year. Inflation is up, productivity disappointing and interest charges high. All this means less revenue and more cost. To get closer to the fiscal rules the government needs to narrow the gap between current spending and income. It needs to take more measures to promote growth. The OBR might need to revise down the credits it gave for planning reform and public investment in the light of how they are working out. It will need to reflect the market penalties on borrowing more in its outlook.
The government will in turn need to break out of its doom loop. With interest rates well above the one day worst Truss level borrowing more is not a sensible option. Borrowing £300 bn a year at these levels for new debt and rolling over old debt is crippling the finances. With the last two sets of tax rises so visibly hitting jobs, investment and growth more tax rises offer no hope. The 1970s Labour government tried to outrun markets with more spending and borrowing and high taxes. It ended in tears, borrowing from the IMF who forced it to cut spending. This government needs to restrain the hands that want to sign the cheques for more public sector costs before some external force comes in to do it to them.
Meanwhile the ticking timebomb under the budget is the Chancellor’s former promise to boost defence spending by more than the government agreed. He still has to find the cuts in the MOD budget promised as part of the package to edge the total up to the 2.7% of GDP he thought too little. It looks as if Mr Burnham expects him to eat his former words on the timetable for more defence spend. It could be a gripping story as the battle for better defence becomes a serial drama.
September 12, 2026
Good morning.
Our kind host suggests that the government do this and that but he fails to realise that this is a Labour government and the Backbenches will not allow cuts to services. The solution to the problem is to have people in post that can and will make the big decisions as what happened in the early 1980’s.
September 12, 2026
The back benches will not allow any sensible policies so the doom loop and net zero economic vandalism will continue even if the Chancellor wants to do sensible things.
House of Commons if only women aged 18-50 voted according to YouGov:- Greens 482, Labour 84, LibDim 52, SNP 18, Plaid 3, Tories 8 the rest (in total) 6.
What on earth are these young females “thinking”?
September 12, 2026
The Spectator this week “Ed Miliband has chosen to make British Jews less safe” Ed and Burnham have indeed chosen this which is pure evil in my view and economic and defensive vandalism too – dangerously alienating both Israel and the USA in the process too.
September 12, 2026
You forget that there is a bye election to win
September 12, 2026
Few other explanations for this evil vandalism.
September 12, 2026
Dame Antonia Romeo DCB, now the Cabinet Secretary is described by Tim Shipman in the Spectator as the most powerful woman in Britain. Well perhaps, she read PPE but does seem to be rather brighter than all the cabinet. True this as a rather low threshold – after all they all chose to join the Labour Party.
September 12, 2026
A really illuminating and frightening polling result from YouGov. What are the important Green Party policies they endorse? Leading the way in impoverishment and national insecurity in the false belief that anthropogenic emissions of CO2 will destroy the planet? The importation of millions of men from all over the world through uncontrolled immigration? A preference to live the life of Afghan females? Or simply their party leader’s looks and charisma?
September 12, 2026
You missed of the Class A drugs for all of you (and all of you children?) policy.
September 12, 2026
This policy may disappear unless the Party’s new recruits believe they no longer need to hide behind the “save the planet” agenda, even if they do share the aim to destroy the West, and decide to form their own party instead.
September 12, 2026
we should be running a war time economy anyways, since we are being invaded every day, have rapists, murderers, fraudsters on every corner, no control of our borders, and a ruling class which actively hates us. most of the public sector should be shut down, and we should devote vast resource to shutting the borders and deporting people. every thing else is trivia.
September 12, 2026
Cutting the Benefits bill to the bone will help with the deportations.
September 12, 2026
Exactly, remove the ‘benefits’ from illegals first. Second scale down the assistance to legal migrants coming in the last 5 years. Start reducing existing benefits( quite a package) that makes it easy not to work and refuse job interviews/offers. Increase personal Income tax allowances to improve workers take-home pay before the other zillion taxes are applied to all spending.
Allow protests that block ports helping illegals arriving.
September 12, 2026
You set out what is a very from position In stark terms. I have no expectation at all that we are going to get any of the necessary changes in policy, and particularly the essential ones regarding spending from this Government. Healey clearly sold the pass when he agreed to take on the job without cast iron assurances on defense spending; without that, he has little real authority.
All we can now hope for is much greater frankness and clarity from opposition parties regarding the need for reduction of Government spending, including major reform in big spending departments.
I think it is a message the electorate will respond to as it is so obviously the truth.
I am awaiting the reactions of the new Conservative shadow chancellor with very great interest. Is he prepared to offer to do what is necessary?
September 12, 2026
Got an appointment on Monday at the blood bank so they can drain the last drop of blood from my body 😠
September 12, 2026
But I thought we had an (Anti) Modern Slavery Act. Was that just another con from now Barroness Net Zero/Brexit mean F/A May?
September 12, 2026
Can you donate free or do you have to pay? *sarc*.
September 12, 2026
Prob. Free but you will doubtless pay to park and an £90 fine if you are 1 min late back to it.
September 12, 2026
Excellent summary, the Country would be in a far better position now had the Conservatives been re-elected. I know loads of rich people (mainly but not all, foreigners) who have either left or are planning to do so. As ever, Labour governments cause incalculable long term damage.
Current gdp growth figures have come in higher than expected and the left is grabbing on to this. It’s quite possible that (as under Biden in the US) this is all public sector expansion.
September 12, 2026
Richard
The problem with your post is we would still have Sunak as leader, with the same useless polices which helped to get us where we are now.
Would agree the Conservatives under their new leader would be better, as would some of the polices, but that was not what was on offer ate the time.
September 12, 2026
money is not the only wealth store worth having a big picture of. others include intellectual property, rare earth metals, skill, coherent efficiency, trustworthyness, infrastructure, all of these are needed to succeed, and most of them are badly conceptualised and understood by our supposed ruling class.
September 12, 2026
and oil and gas still in the ground
September 12, 2026
It’s probably time for that external force referred to to enter the fray.
September 12, 2026
Reading the comments so far, it does feel very much that whatever we say or do, nothing changes! Our destruction continues at pace! It’s rather depressing!
September 12, 2026
But John, you have not mentioned his magnificent policy of reducing local bus fares by £1, I am sure that will resolve all of our excess borrowing needs and put us immediately onto the right fiscal policy road.
When the PM stood in Parliament and said he puts a higher priority of social defence than he does on National defence, you just know we are in a dangerous place with British Political policies.
September 12, 2026
5 percent extra hotel tax which will actually be 6 percent as it will have VAT charged on it will have lots of negative consequences. people escaping violence in relationship wont be able to afford a few nights in hotel, people will be even less inclined to work away from home, tourists will go to other countries, etc
September 12, 2026
“The markets have decided to charge the government a high premium in extra interest costs to borrow because many bond investors and traders think the government is spending and borrowing too much.”
The markets are right! But it is not just the borrowing it is also the Net Zero energy luancy, the OTT red tape on everything, the net cost open door immigration lunacy, the way the money is being spent often doing net harm or zero good, the very poor defence systems, the doom loop economic policies, the endless rigged markets… zero confidence in this Labour Government and not that much chance of a sensible government gaining power even in 3 years time.
September 12, 2026
The government can’t reduce spending because the back benchers won’t wear it. The government can’t borrow the money they need because the interest rates become too punitive, and raising taxes will chase the money away even faster.
Not to worry, the back benchers have a solution – the government can print the money.
September 12, 2026
The elements of a Budget, start with what can be earned and the needed expenditure to ensure those earnings. That’s what happens in the households throughout the UK. Then when extra expenditure becomes a need, the first question and priority is how to earn extra to pay for it. Not so with this UK Parliament and its chosen government more money is more and contrived expensive to gather taxes. The never look at how it will be earned over the years the ability to earn has been cancelled, they never look at expenditure, is that producing a return?
No we are saddled with a spend thrift only UK Parliament with no concern or ability to ‘Budget’
September 12, 2026
John, I thought the comment attributed to you in the Telegraph was on the money “in a debate on “Preparing for an ageing society” in the House of Lords last Friday, the Conservative peer Lord Redwood argued: “Those who wish to abolish the triple lock… would be well advised to remind themselves that the pension is not a welfare benefit but an entitlement.”
https://www.telegraph.co.uk/news/2026/09/11/poor-reflection-on-britain-no-party-scrap-triple-lock/
A pity that the writer Dominic Lawson was so churlish in his come-back and buying into the whole DT campaign against pensioners
The DT thinks that the the full basic State Pension for the 2026/27 tax year is £184.90 a week, which equals £9,614.80 a year is to much money for those that were compelled by law to contribute to for at least 30 years.
Yet those with what is termed a Gold Plated Pension don’t even have that benefit as in contributions classed as wages its an entitlement based on job.
As with the so called chancellors budgets they fail, State run Ponzi schemes are ingrained in the psyche. The Norwegian State Investment fund stands at around £1.70 trillion, the UK fund with a far greater funding resource is minus £3 trillion in debts and loans. The difference between investing and spaffing money up the wall
Reply I have sent them a reply to Mr Lawson which I will publish here if they do not accept it.
September 12, 2026
When those now pensioners were in work, the government spent their mandatory contributions for the state pension with nothing to show for it. If those pensioners voted Labour or Conservative, they don’t deserve a state pension.
Reply They spent their contributions on pensions then in payment. That is the nature of the Fund.
September 12, 2026
The Lawsons, father and son, are either very right or very wrong.
September 12, 2026
My wife was sent a 2 page letter informing her she was awarded an increase in her State pension of ……..
25p
No joke! Cost to send this was more for sure!
September 12, 2026
Since I was a student I have noticed that left-wing high taxation and ‘internationalist’ policies are vociferously supported by many professionals who stand a great deal to lose from them – lawyers, particularly barristers, businessmen, accountants. It is only when examining the source of their income with care (which of course is generally impossible for the layman to do) that one discerns the self-centeredness of their advocacy for tax. They are almost always battening off the state for their ‘private’ business, their interest in ‘charities’ is invariably self-rewarding, and they have also usually found a way to avoid taxation (family trusts used to be a popular means for this, bank accounts in tax havens still very much are).
Young people are easily taken in by pseudo-idealism, and it took me a while to see through the pernicious pretence.
September 12, 2026
It’s not difficult to understand the policies. Socialism depends upon making and keeping people poor and dependent upon the state. In addition we have those like Lord Gus O’Donnell who, when Cabinet Secretary, said in 2011: “When I was at the Treasury I argued for the most open door possible to immigration….. I think it’s my job to maximise global welfare not national.”
September 12, 2026
Let’s emphasise the planned amount of public expenditure for next year is about £47,000 per household or £30,000 per adult. This should not merely be trimmed but decreased by about a third very quickly initially. That £30,000 is about three times the state pension and about the same as the after direct taxes (Income Tax, NI and Council Tax) income for the full time worker on a median income.
Last Monday I sat in a library next to a small queue of people waiting in a surgery queue to see a Labour Councillor about their local grievances. One said the government couldn’t do much because it is short of money. I said the government wastes a lot of money. They all agreed. I then said the government should stop wasting money and cut taxes because we could spend the money better than the government. They liked that. Right wing parties should be emphasising that sort of thing.
More particularly President Trump is now promising to give EVERY ADULT about £3600 if Republicans win. The emphasis is on everybody. Promises to reward some if their Party wins have not been that successful in the past (Corbyn with WASPI women and Senator Dole with taxpayers in 1996 against Clinton). Because the promise is for everybody, including for the young and unemployed people and the fact Trump has some credibility for doing unusual things, it will I think have some effect in discouraging less political Democrats from voting and encouraging more reluctant Republicans to vote and changing just a few votes to enable him to win the mid-term elections. If that happens other right wing parties in the world, probably including here, will look to follow suit. That is very affordable if one reduces public expenditure, perhaps to Asian levels, the area where most of the economic growth in the world now is.
September 12, 2026
I am concerned for Singapore. Their excess death rate hit 20% after the universal 3rd Covid shot and has not dropped.
How long can you suffer 20% excess deaths before the economy starts tanking?
September 12, 2026
Its to easy for government to borrow funds/issue bonds etc ….It should be law that emergency borrowing should only be as the last resort, after cutting costs, reducing staff, reducing commitments/functions and stopping any external obligations and purchases ….than and only than should the commons vote on the acceptance of monthly/yearly emergency borrowing
September 12, 2026
They should ration spending according to what comes in, and perhaps a bit lower so the debt can be reduced over time, but that policy doesn’t win votes.
September 12, 2026
In the same way that labour have no resistance to their inbuilt instincts to ruin the country by high taxation.
I can’t see them doing anything different for this coming budget except to punish us for their abysmal management of the economy.
Operating on the principle of the stick or the carrot, labour ignore the third way which would be to roll back on some of the stick.
The trouble is, infatuated as they are with net-0 and with a hard left core of back-benchers who want to get rid of the concept of ordinary people having any wealth, they will never pursue sensible tax policies that would make a difference.
They want all of the blood from out of the stone – make no mistake!
September 12, 2026
An excellent post John, but we all know your suggestions will not happen with a Labour Government, so the can’t be bothered attitude will continue, because what is the point of working hard, trying to better yourself and your families life for a better future, when the majority of what you earn will be taken in taxes, and eventually another 40% when you die.
Afraid successive governments have completely lost the plot, we work for ourselves and our families, not for the STATE whom seem to fail, at great expense, in anything they seem to attempt to put in place, or run.
September 12, 2026
On the subject of taxation, I seem to be seeing more frequently signs provided by HMG saying:
Or equivalent.
They have truly forgotten where the money actually comes from.
September 12, 2026
Should be:
MORTGAGING THE NEXT GENERATION’S FUTURE TO INDULGE THE PRESENT
September 12, 2026
MPs have voted against proposals to legalise assisted dying in England and Wales, bringing the latest effort to change the law to an end. Following a debate in which both sides made emotional speeches, the House of Commons voted 286 to 270 – a majority of 16 – against the proposed legislation.
The Terminally Ill Adults (End of Life) Bill would have allowed adults with fewer than six months to live to apply to be given help to end their own life, subject to certain safeguards.
A similar bill in the last parliamentary session was supported by MPs before stalling in the House of Lords. The decision from MPs on Friday rules out the prospect of changes to the law on assisted dying in the short term.
The bill tabled by Labour MP Lauren Edwards will make no further progress, although MPs and peers could make another attempt in the next parliamentary session.
Where do you stand on this issue Lord Redwood.?
Reply I did not involve myself in the Lords Committee which was well advanced with many amendments when I arrived. I assumed it would have insufficient time to conclude and no votes were held. It was obvious the Commons would then decide whether to insist on the bill or to change their minds. They changed their minds.My view expressed in informal conversations was the government needed to engage and explain how the NHS would handle an assisted dying service for us to be able to make a well based decision. The government and NHS refused to engage and the Labour majority in the Commons for the original bill was unable to make them. It seemed likely the original Commons majority included MPs who thought it deserved more scrutiny but did not necessarily support the proposal. If I were still an MP I would have voted against the unamended bill this week given the issues exposed in the Lords and the absence of an NHS statement of what they could do. I found it surprising some MPs did not bother to turn up.
September 12, 2026
Too busy accepting £72 million in donations.
September 12, 2026
well the NHS is aborting babies at full term, murder when its a fully formed baby, strange set of rules they play by and the politicians make
September 12, 2026
reply to reply…thank you for explaining your point of view, and indeed the situation as you found it unknown to most of us. The vote result of 286 against, 270 for does as you comment far too ( nearly 100 ) many not turning up top vote on an issue which continues to condemn thousands to an awful, painful last months and so distressing to families.
September 12, 2026
Well if I developed one of those dreadful diseases that might prevent me from killing myself in its latter stages I would not be please by having the law standing in the way of my suicide. Perhaps even making me have to choose to go early while I still could do it.
But on balance I would probable have voted against it as I do not trust the protections they had in the bill nor the people dealing with these matters. Due to the slippery slope once legal it would rapidly get extended to people just needing ann expensive heart op. Plus the undue pressure arguments and follow the money might well rule.
In my experience doctors have their ways of smoothing out early deaths already anyway like the Liverpool pathway – doubtless it has been renamed now but will still be available.
September 12, 2026
Of course you are free to act in your own best interests.
Esther Ranzen could have gone to Dignitas, but DIDNT.
She told us she had months to live years ago!
So she has chosen a natural death, but wished to deprive others of that choice.
September 12, 2026
Deprive – no at all, Esther was not wanting to make assisted suicide compulsory!
September 12, 2026
Presumably GDP includes cars bought for government and charities such as police cars and Motability. We have neighbours who have disability allowances and expensive new cars. One has a 3 year old son with inability to speak. Otherwise he seems to be very lively and fit. They have recently obtained a new Chinese large estate car which costs over £25k to buy. The mother is single and not working.
As taxpayers paying a large proportion of income and other taxes, our family has 13, 10 and 8 year old cars worth a total less than half of the Chinese job.
AI informs that Motability now accounts for a fifth of new car sales and its boss is on nearly a million pa. The costs have risen by 24% to 2025. The government has stopped the lease of luxury models but Chinese models are available instead. And of course the cost of insurance and maintenance is increasing and these are also paid from personal allowance payments. It seems a long way from the little one person 3 wheelers that used to be subsidised for people who couldn’t walk.
September 12, 2026
You call for less public sector spending, JR. So does anyone with any sense. The key point you perhaps didn’t have space to get on to is:- Less public spending on what
exactly? I’d like to request you do that in your next diary post.
Reply I have written up manyof the spending cuts on this website.
September 12, 2026
So very much fat to cut – start with ditching net zero, encourage private healthcare and private education with tax breaks, stop the rail subsidies, halve the size of the state, make all people who can work do so…
September 12, 2026
I wonder how far back I have to go. I have scrolled back, and there have been no specific government spending cuts advocated in posts on this site since 12th August. I see you have, however, advocated more government spending on hospital beds, prisons, and in support of farm reservoirs. Fine by me, but could we please hear about suggested cuts in public spending? I might well agree with them too.
Reply cancel Chagos give away, big cut in illegal migrants costs , cancel carbon capture and storage projects,reduce renewables subsidies, slash Bank of England losses, Post Office losses, Rail losses, HS 2 end the London section costs, benefits reform, restore 2 child cap, ban local authority capital spend on so called investments outside the local area,prevent anti driver road projects, boost poor productivity in public sector,end public sector wage increases unsupported by productivity improvements,smaller civil service, no football regulator, quango reduction, etc etc. Do bother to read my site if you want to know my views.
September 12, 2026
These Budgets are really “Go fund me” Labour appeals to Taxpayers that they can’t manage their own budgets and out of control spending and borrowing due to their track record of ignorance and arrogance imposed on the rest of us. Advance notice of impending doom is designed to soften us up so it doesn’t come as a shock but the blowback creates uncertainty which destroys optimism, confidence, savings and investment desperately needed for growth and incentives.
Lessons will be learnt No, Never.
Hypocrisy that these folks think they are educated but are deluded fools.
September 12, 2026
A ticking time bomb indeed. How this Labour government and these Treasury Ministers borrowed £4.25bn at an unprecedented interest rate of 5,86% yet straight faced blame Liz Truss’s short lived administration for wrecking our economy? Unless Mr Healey fulfils the promise to fully fund our military, cut welfare and promote growth, he and his Prime Minister are toast.