Fast forward to 2024 and Kier Starmer limply plods onto the stage telling us all that things will only get worse - and there's a budget coming! It very much looks like there's been a whole lot of head-scratching going on at number eleven Downing Street and Britain's first-ever female chancellor of the exchequer looks like she might be a lady on a mission.

Alarmingly, there aren't too many purses or wallets out there that aren't being eyed up, because the Right Honourable Lady needs to find billions of extra pounds to meet the Labour Government's pre-election promises. You needn’t take any of this from me because I'm simply echoing facts as laid out by the influential Institute for Fiscal Studies (IFS). Basically, what they’re saying is - there's a tax raid on the cards. The question is - how big?

The Labour government has already declared that there are absolutely no plans for an "Austerity 2.0" which would, of course, have meant sweeping cuts to public services. On the contrary, the Labour Party have pledged to boost government investment in the hope that this will help kickstart economic growth. It's the polar opposite of the kind of austerity imposed under Chancellor George Osborne during the David Cameron premiership. We all remember how that went! However, to honour her Party’s spending commitments, the chancellor will need to come up with a further £16bn on top of £9bn’s worth of tax rises set out in their manifesto.

As Rachel Reeves puts the finishing touches onto her first Budget (set to be announced on October 30th) she finds herself struggling to come up with the necessary funding needed to meet an entire plethora of manifesto pledges. Pledges that were made against a backdrop of self-imposed restrictions on matters such as borrowing, debt management and public spending.

These days, Labour are uber-keen to show their prudent economic management side. However she cuts it, this forthcoming budget will be the Starmer government's first big set-piece. Not only will it set out the new government’s fiscal priorities and aplomb, but it will also showcase Downing Street’s values with a hope that this budget will reset the political landscape following a disastrous backlash over donations relating to top ministers’ clothing and private hospitality arrangements. Be in no doubt, a lot rests on this budget.

Even before the general election, there was a strong sense that a Labour landslide was imminent, to the point of inevitability. It led to much speculation and indeed a high expectation that under a brand new Labour administration, an increasing chunk of the tax burden would soon fall onto the broader shoulders of Britain’s highest earners. On paper, taxing wealth sounds fair enough because no government can tax those who have very little to give.

However, this Robin Hood approach to taxation spooked thousands of high-net-worth individuals prompting them to pack up and flee, taking their wealth out of the reach of the socialist chancellor’s hands (capital flight). This includes Charlie Mullins “Britain's richest plumber” who sold his plumbing business for £145 million. He faces a tax grab of 6 million on his London home alone, should the Labour government choose to clamp down on loopholes that currently provide people like Mullins inheritance tax escape routes. Currently, loopholes allow them to transfer a sizeable chunk of their wealth to their children and/or grandchildren despite such remedies being fraught with a plethora of risks in of themselves. But doing nothing guarantees that the Treasury becomes the main benefactor.

Notwithstanding all of the above, Chancellor Reeves' rather brutal axe has proven to be far more indiscriminate than many first thought possible under a Labour government. It isn’t just the wealthy who are feeling the squeeze. By now, we all know that millions of UK pensioners have felt the pain of Reeves' axe. Its blows have fallen far closer to home than many felt comfortable with.

It's fair to say that most millionaires are blessed with much more by way of mobility than most. They are therefore far better placed to up-sticks to find lucrative tax havens should the need arise. Few people stay in Blighty for the wonderful weather or for the rich and colourful culture. So, what's so bad about moving to Dubai or Barbados in order to protect wealth?

Such freedoms are seldom afforded to pensioners whose lives are restricted due to modest means. These are a demographic who won't be seeing out the harsh winter months on sun-drenched shores. They will be facing the full force of the freezing cold winter months on British soil having had little time to prepare any contingencies after suddenly learning that their winter energy allowances were to be wiped out.

It seems that no sooner than an emboldened Rachel Reeves sat at her new desk in Eleven Downing Street, the decision to limit winter fuel payments to all but the very poorest pensioners was all but made. Of course, few would argue that the cuts weren't made against a grim backdrop of higher post-pandemic debt, higher interest payments (compounded by those additional debts) as well as soaring inflation which has only recently settled to more manageable levels. Compounding the Treasury’s financial woes is a rapidly growing population in addition to the Labour government’s own net zero commitments; all of which impose additional challenges for those trying to balance the nation’s books.

Few would disagree with the IFS when it stressed that the Labour government inherited an "unenviable" situation regarding public finances. But hitting the pensioners seemed harsh. It is a political decision that won the new government very few friends.

Increasing pressures on health and pension provision, combined with falling revenues coming from tobacco and fuel duties have made the situation even more awkward for any chancellor according to the IFS.

But let's set aside what the boffins are saying for a second. Mainly because it has always been a major curiosity to me how successive governments have been looking in all the wrong places to find a benchmark of their reported economic successes or failures. Banding about figures declaring that “economic growth” is rising at 0.25% or crowing about GDP figures seem to be immensely poor benchmarks. These statistics have little correlation with people’s daily lives and struggles. For most, it's pure hyperbole. Ordinary people will measure the success or failure of any government by how much better (or worse) their daily lives get as a result of decisions made at the government level. That's what actually matters to most.

Surely taking more tax (directly or indirectly) from the pockets of already struggling families won't be welcomed. Taxing the businesses who provide employment will also only prove counter-productive in the long run.

The brewing industry has already warned that it has nothing further to give as it braces for more regulation and punitive taxes both on the industry itself as well as on its customers.

We await the latest budget with bated breath!

Author

Douglas Hughes is a UK-based writer producing general interest articles ranging from travel pieces to classic motoring. 

Douglas Hughes