The upcoming budget from Chancellor Rachel Reeves is expected to reflect a limited set of options influenced by existing debt and borrowing constraints. Analysts suggest that Reeves may focus on either reducing benefits for those unable to work, increasing taxes on working individuals facing financial struggles, or slightly raising taxes on high-income earners who do not need to work. Questions arise as to whether these options are the only feasible choices available, or if there could be alternatives.
Labour’s recent political messaging aims to reassure working-class individuals. The party’s 2024 election manifesto emphasizes its commitment to rebuilding an economy that serves their interests. Prime Minister Keir Starmer and Chancellor Reeves frequently highlight “working people” in their speeches, but some note that initial actions taken by the government, such as potential cuts to disability payments, seem contradictory to this rhetoric.
Recent controversies surrounding these proposed cuts led to significant pushback from within Labour, prompting recognition of the adverse effects of prior austerity measures. This raises the question of whether the government can move beyond these discredited economic strategies to pursue more progressive alternatives, such as increasing taxes on excessive wealth.
While some discussions hint at possible reforms like council tax adjustments or an “exit tax” on wealth relocation, there’s hesitation within government ranks to implement significant tax changes for the wealthy. The fear of a perceived exodus of wealthy individuals is often cited in opposition to such proposals.
Critics argue that if significant income taxes are enacted, particularly at the basic rate, it could adversely affect working families already grappling with high living costs. Since 2007, real wages have seen minimal improvement relative to the cost of essential goods, amplifying financial strain on these households.
Ultimately, there is a call for a shift in focus, advocating for systemic changes that address wealth inequality rather than merely redistributing existing resources. The government faces the challenge of balancing the need for revenue against the economic realities faced by working individuals.
Source: https://www.theguardian.com/commentisfree/2025/nov/07/labour-rachel-reeves-budget-choices-increase-tax