Tag Archives: 2025 budget

Michael Berwick-Gooding

An OK budget, but it could have been much better

By Michael Berwick-Gooding | Mon 1st December 2025 - 2:52 pm

Rachel Reeves’ second budget has some things which we should like plus some things we should dislike.

Ed Davey shouldn’t attack the government for increasing the tax burden. We as a party should accept that people want better public services and this means that the tax burden has to increase.

We should welcome the ending of the two-child benefit cap which has been our party policy for years. Ed has welcomed the changes to fund three-quarters of the cost of the increased use of renewable energy from the government rather than consumers, which will reduce energy bills. We should welcome the near doubling of the Remote Gaming Duty. I think we should welcome the extra 2% on the all three income tax rates for income from property and savings. However, should the income tax rates for dividend income have been increased by more than 2% particularly at the ordinary rate?

We should welcome the support for retail, hospitality and leisure by reducing their business rates. We should welcome the Mansion Tax on homes above £2 million. We should welcome the extension of Air Passenger Duty to private jets over 5.7 tonnes. We should welcome the £2,000 cap to salary sacrifice as it is mostly those on higher incomes who can afford to do this.

We should oppose the introduction of VAT on the Motability Scheme making the cost of having a suitable car more expensive for disabled people. Perhaps we should oppose the 3p per mile tax on Electric Vehicles. However, this had to be introduced at some time as the total revenue on petrol duties reduces because of the switch to Electric Vehicles.

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Chris Perry

Cutting waiting lists and the Budget

By Chris Perry | Sun 30th November 2025 - 11:38 am

In her Budget Statement the Chancellor of the Exchequer stated one of her aims was to cut waiting lists in the NHS.

According to a survey by the Times newspaper earlier this year it was estimated that there were on average 13,600 older people in hospital every day who did not need to be there awaiting social care, costing the NHS £2.9m per year. Therefore, one cannot resolve the problems of the NHS in isolation of social care.

The NHS and social care are in crisis and in need of radical reform, restructuring and cultural change to liberate the professionals from the constraining contract culture into an enabling leadership one. This requires the creation of whole task right sized multi-disciplinary teams aligned behind outcome able to plan, do and evaluate their own work which completes the learning cycle of constant improvement.

There is a wealth of empirical evidence into the social determinants of health which has demonstrated the correlation between income and demand upon the health services. One cannot go on throwing more money at the first aid camp at the bottom of the cliff without building a fence at the top. Treating the symptoms not the cause. A whole systems approach is required.

If the Chancellor really wanted to save money she would increase and not reduce the income of older people. Before the COVID19 pandemic killed 223,396 mainly older dependent people, 80% of the expenditure of health and social care was on older people. Britain has one of the lowest state pensions in the developed world with 2m older people living in poverty. To increase the state pension to lift all older people out of poverty would reduce demand upon the NHS and social care. It would also improve the quality of life of many and if older people did need long term care, applying the same financial assessment which has been in place since 1948 (when few people owned their own house) they would be able to pay more without having to take their house or capital into account which would also increase government revenue from inheritance tax.

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Chris Perry

Taxing the poor to protect the rich?

By Chris Perry | Fri 28th November 2025 - 1:46 pm

The Chancellor’s budget speech was strong on rhetoric and good intentions. However, with the exception of the property tax, it was almost as though Rachel Reeves was unaware of the existence of the super-rich or the rising income inequality in our society which Morris Pearl, Chair of the Patriotic Millionaires and a former Managing Director at Black Rock believes “threatens everything we hold dear: our democracies, our planet and our broader society…..”.  Much of her address appeared to exclude the top 10% of earners.

In the Spring of 2025 Oxfam published its report “Takers not Makers” which suggested that global billionaire wealth had increased by £1.5trillion in 2024, a significant jump compared with the previous year. In contrast, according to the Office of National Statistics (ONS) the median household disposable income in the UK for the financial year ending 2023 was £34,500. This was a 2.5% decrease on the financial year ending 2022 when median household income was £35,100.

According to figures released by the Equality Trust, the UK is the sixth most unequal country by income of the 38 OECD countries. (Organisation for Economic Co-operation and Development). Many employees are paid the minimum wage to pay for this. The challenge is to address pay differentials within organisations so that everyone gets a fair day’s pay for a fair day’s work.

Unless Government tackles pay differentials, chasing inward investment in search of growth will make the rich richer and create low paid jobs for the masses as it has since the 1980s. The Equality Trust continues that “high income inequality weakens the social fabric and sense of cohesion between us. We are more likely to live, work and socialise in socially and economically segregated ways which can aid misunderstanding, resentment and undermine the sense of shared identity and purpose needed for a cohesive society”.

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Jack Carter

Labour’s economic programme: hoodwinking, self-limiting, and failing

By Jack Carter | Fri 28th November 2025 - 11:18 am

If you had asked me in July last year whether I had much hope for Labour’s plans for fixing our stagnating economy, our underfunded public services, and chronically weak social investment, I might have (cautiously) said “maybe”. But a year and four months later, I think I’d like to change my answer to “absolutely not”.

You would think that after fourteen years of being stuck in opposition, whether that be due to bacon sarnies or the Brexit bonanza, they would have had time to think. I, personally, at that time went to school, college, got a job, and fell in and out of love (much like the Parliamentary Labour Party does with their leadership), went to university (and somehow ended up as a Liberal Democrat), but I always thought about what I wanted to do.

However, much like a university student who procrastinates right up until deadline day (pre-ADHD meds me), they’ve put forward something that would barely get a “pass”. They came into government, telling us they would fix the dire state of our economy, but if anything they’ve done the opposite. They spent months handwringing about the importance of work, and intimidating vulnerable people with loss of benefits if they didn’t, but now unemployment is rising – due to their own policy. They promised there would be “no new taxes on working people”, and just as Keir Starmer hoodwinked Labour members in 2021, he’s hoodwinked the public with more stealth taxes.

Rachel Reeves has put in place her “fiscal rules”, and while she may claim to be pro-investment, her very own rules discourage borrowing to invest. She talked about Labour being the “Party of Work”, but by failing to borrow to invest in infrastructure projects, she’s left working people far worse off, with less opportunities, and worse social mobility. Labour are just incoherent, self-contradictory, and seem utterly unable to deliver for Britain right now.

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Brandon Masih

A Labour budget that does not back the savers, investors or working people

By Brandon Masih | Thu 27th November 2025 - 5:47 pm

The follow up to Rachel Reeves’ huge raid on employers last year was expected to be more subdued, after all a 3% increase in employers National Insurance Contributions (NICs) did have the expected effect of slowing wage growth and a slowdown on new jobs, what we couldn’t have expected until a few weeks ago is that she’d come back again for it. Not for employers NICs, mind you not directly, but via the limit on Salary Sacrifice. When we have a Pension Commission ongoing on outcomes for current workers saving into private pensions, and have had an excellent piece by the Institute for Fiscal Studies (IFS) stating “39% of private sector employees are not on track to meet their target replacement rate”, it seemed unfathomable that this government would actually go for raising billions off Salary Sacrifice schemes. 

Sure enough, budget day comes, and Reeves has done exactly that, with a damning description from the OBR saying this measure would both reduce their employer contributions into pension pots and reduce future wage growth and bonuses. Hardly the message we want to send for the working age person trying to save for retirement. Even more foolhardy is that this reduction in wage growth comes when companies are faced with more employment pressures for hiring, with minimum wages creeping up above inflation, leaving less room for wages to grow and less jobs on the market. The tax choices this week will mean less growth and more unemployment for younger workers, whilst subsidising an ever unsustainable triple lock that benefits from double dipping on high inflation one year and higher nominal wage growth the next in response to inflation, this is not a budget that treats the savings of working age people well.

This budget confirmed the announcement on the Government following the US’ lead (and the EUs position this month) on removing a de minimis threshold on imported items. Paraded as a way to avoid high streets being undercut, it is dipping into the same protectionist rhetoric that the US is using on its tariffs, unconcerned on their policy measure responses on the cost of living. Liberals should never celebrate the imposition of tariffs and find it regrettable the new direction of travel is for new tariffs rather than liberalisation, a burden on the individual to collect items rather than ease, just another way this government is harming productivity. 

The past couple weeks briefed this budget as a Smörgåsbord, that conjures up a well presented Swedish table, but the tax pickings here are anything but. 

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Tom Reeve

Threshold freezes are a stealth tax on the poor

By Tom Reeve | Thu 27th November 2025 - 3:16 pm

The Chancellor hopes no one notices. Voters are starting to realise.

There is no getting around it. The NHS and social care need more money – this is the lion’s share of the budget and is where the government is experiencing the greatest growth pressure. Every serious analysis from the IFS, the OBR and the Health Foundation says that demand, staffing pressures and rising clinical complexity make extra funding unavoidable. If we want a system that works, the state will need to raise more revenue.

The question is not whether we need to pay more. The question is how.

The government’s preferred method is to freeze income tax thresholds for year after year, pushing more of people’s wages into taxation without ever having to announce an explicit rise in basic or higher-rate tax. It sounds painless. Nothing changes on the payslip. No parliamentary vote. No headlines. But it is one of the least fair ways possible to raise revenue and it hits ordinary workers far harder than the wealthy.

The Institute for Fiscal Studies has been unusually blunt about this. Their latest analysis of threshold freezes states that the impact is equivalent to raising all income tax rates by 3.5% by 2029. The Chancellor hopes no one notices that she did this, but people are starting to realise because their real living standards are not improving and the tax take continues to rise.

The numbers are stark, according to figures from the IFS. In 2021, around 59% of adults paid basic rate income tax. By 2029, that will be 72%. In 2021, 8% of adults paid higher-rate tax. By 2029, that will more than double to 17%. These are not people suddenly earning more in real terms. They are people whose wages are simply keeping pace with inflation while frozen thresholds quietly shift them into higher bands.

The Chancellor has also found another way to push people into paying more tax. By increasing the minimum wage faster than the personal allowance, she guarantees that even part-time workers are drawn into paying income tax for the first time. The IFS calculates that if the freeze is extended again, a full-time minimum wage worker will pay £137 more per year in tax compared with current policy, and £759 more than if thresholds had risen as normal. 

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The Voice

Ed Davey reacts to “botched” budget

By The Voice | Wed 26th November 2025 - 2:30 pm

Ed Davey has described Rachel Reeves’ budget as a failure. He said:

This was a botched Budget delivered by a Chancellor who has diagnosed the disease, but refuses to administer the cure.

This Government has chosen to reject the single biggest thing it could do to turbocharge economic growth and repair the £90 billion Brexit black hole.

Labour was elected on a promise of tackling the cost of living crisis and growing the economy – and this is the second budget where it’s failed to do either.  For millions of people struggling with higher bills, all this budget really offers is higher taxes.

David Chadwick, our Welsh MP, had this to say:

This is yet another budget that fails to deliver the structural changes needed to deliver for the people of Wales.

My constituents will be bitterly disappointed in the lack of help for the cost-of-living crisis and the failure of the Government to listen to Liberal Democrat calls to make energy bills cheaper and cut VAT for hospitality businesses.

Rural communities have been left abandoned again, with Labour’s refusal to compromise on the family farms tax set to cause devastation to the entire wider supply chain.

The Government has deliberately turned its back on the single most effective step it could take to kick-start growth and fill the £90 billion Brexit-shaped hole in the public finances. No wonder our public finances are in such a rough state.

He made further comments on the lifting of the two child benefit cap, which we opposed from the start:

This is a commendable move that will go a long way to addressing Wales’ sky-high child poverty levels, which are amongst the highest in Europe and something the Liberal Democrats have been campaigning on since 2017.

But this could have been done much sooner; thousands of Welsh Children have been dragged into poverty due to the Conservatives and Labour’s refusal to do this sooner.

This must be the start, rather than the end, to reducing child poverty in Wales, with the level of children in poverty almost stagnant since Labour started running the Welsh Government in 1999, we will need further action.

That is why we are calling on the Welsh Government to introduce 30 hours of funded childcare per week for every child in Wales aged between 9 months and 4 years old.

And he welcomed the release of the investment reseerve of the British Coal Staff Superannuation Scheme back to its members. This will not cost the public purse anything but will make a massive difference to the lower paid staff in particular – the office staff and the nurses, for example, who are its members and are mostly women. In fact, it will bring a gain in taxes.

He has been really active on this issue since he was elected last year:

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Caron Lindsay

What are Lib Dems saying about the Budget?

By Caron Lindsay | Wed 26th November 2025 - 8:27 am

I don’t know if you feel the same, but it seems to me that this is the longest run-up to a Budget that I can remember.  We’ve been talking about it forever. At times the Government’s communications around Rachel Reeves’ second budget have made the Omnishambles Budget of 2012 look competent.

First we were raising income tax rates then we weren’t, the Black Hole in the country’s finances has been of varying sizes and suddenly there now seems to be billions down the back of the sofa to stave off a break in the manifesto promise.

I don’t mind paying more tax. In fact, if I want decent public services and to tackle poverty,  I think a household on our income should be paying significantly more than we are. I really hope that our reaction to today’s announcements is more than “Aaaargh…..tax.”

So what do Lib Dems want to see from the Budget?

We’re looking for energy bills to be cut, cutting VAT for hospitality and getting a better deal with the European Union. We quite like the increase in the minimum wage, but we want to see more opportunities for businesses to grow as Treasury Spokesperson Daisy Cooper said:

Increasing the minimum wage is always welcome news for millions of low-paid workers but unless businesses are able to grow, there is a danger that this will result in fewer jobs being available overall.

The government must make people’s money go further by slashing energy bills, boosting our high streets with a cut to VAT for hospitality until 2027, and going for growth with a better deal with Europe.

We’ve opposed the two child benefit cap brought in by the Conservatives from the start so we should welcome its abolition.

After Lib Dem instigated research from the House of Commons Library showed that the costs of Brexit to the nation, namely a staggering £90 billion in tax revenue in 2024/25, Scottish spokesperson Susan Murray said:

The economy is at a standstill. Despite years of promises from the Conservatives and now Labour to kickstart growth and clamp down on crushing household bills, the British people are facing a cost-of-living permacrisis and yet more betrayals from those in charge.

The Government must not load struggling households or high streets with yet more tax rises to pay for its own mistakes. Rachel Reeves must take bold action to slash the cost of living, rescue our high streets, and start fixing the mess left by Brexit – by negotiating a new Customs Union with the EU, to grow our economy and bring in tens of billions for the Exchequer.

Anything else would be tantamount to a dereliction of duty.

Steve Darling, our DWP Spokesperson, has been talking about the impact of freezing tax thresholds on pensioners. I agree with him that we need to worry about those on the lowest incomes having to find extra money because they’ve been dragged into income tax.

This is a stealth tax bombshell that will hit pensioners hard, leaving those affected £800 a year worse off – and Labour is poised to make that nightmare even worse.

Rachel Reeves once called extending these tax thresholds a policy that would ‘hurt working people’. Now it’s clear she’s getting ready to copy the economic vandalism of the past.

The Chancellor must stand by her word, rule out an extension to this outrageous tax freeze at the Budget, and stop hammering pensioners who have already been left out in the cold by skyrocketing energy prices and the disastrous Winter Fuel Payment scandal.

According to a blog post from Independent Age for Equal Pay Day, many of  the poorest older people are women so it is improtant that we take an intersectional approach to this:

While poverty affects almost two million of all older people across the UK, older women are disproportionately impacted. Behind closed doors and on fixed incomes, hundreds of thousands of older women are finding it harder to make ends meet. The statistics are stark:

Poverty among older women is projected to rise from 20% in 2022 to 26% by 2040
Women aged 55 to 59 have 48% less private pension wealth than men in the same group
Older women too often face a future shaped not by rest and recognition, but by rising costs, shrinking incomes and a system they feel overlooks them. At Independent Age, we are determined to ensure that all older people in financial hardship receive better support which they are entitled to.

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Tom Reeve

Stand up for poor people: the Chancellor’s Budget must not make things worse

By Tom Reeve | Tue 25th November 2025 - 9:12 am

As the Chancellor prepares to deliver the Budget tomorrow, those with the most to lose are the poorest in our society.

Many of you reading this can hardly imagine living on £20,000 a year before housing costs, yet that is the reality for millions. It is roughly 60% of the median income, the level officially defined as “poor.” While the cost-of-living crisis hurts everyone, it hits low-income households hardest. Food, rent and fuel now swallow almost all their disposable income. Far from helping, the government has made life harder.

About 14 million people – one in five – live in relative poverty after housing costs. That includes 4.3 million children, 8.1 million working-age adults and nearly two million pensioners. The Institute for Fiscal Studies reports that child poverty has risen from 27% in 2010-11 to 30% in 2022-23. More than two-thirds of poor children live in households where at least one adult works. Poverty is no longer confined to those out of work; it has become an everyday feature of low-wage Britain.

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Vince Cable

What happened to wealth tax?

By Vince Cable | Mon 24th November 2025 - 2:10 pm

There are few issues which animate both the super-rich and the political Left more than the notion of a wealth tax. The idea has been championed by the French Left: a 2% levy would be levied on the roughly 0.01% of household assets worth over 100 mn. Euros. Britain’s Green Party has also adopted it as a signature policy. There is a global version of the same idea promoted by Brazil’s President Lula.

For populist politicians, a wealth tax has a double appeal: it can, in theory, promote greater equality and ‘fairness’, and, also in theory, raise a lot of money for public services. Theory and practice have however diverged.

A wealth tax is unlikely to be in the coming UK budget despite advocacy by Neil Kinnock, leading trades unions and others. Indeed, it is being abandoned by governments including those with a social democratic, redistributive agenda: Austria, Denmark, Finland, France, Germany, Iceland, Sweden. They found that the tax was difficult to operate, easily avoided and raised disappointing amounts. Only Norway, Spain and Swiss cantons retain a comprehensive wealth tax.

Political demands for wealth taxation are energised by extreme and growing inequalities at global and national level. The world’s wealthiest man is Elon Musk, and his personal fortune appears to be around $500 billion. He has recently negotiated a pay settlement which could earn a further $1000 billion (a trillion) over the next decade: equivalent to the combined salaries of all primary school teachers in the USA.

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    It is such sad news. I was lucky to get to know Micheal over the last few years (working on a book project for the John Stuart Mill Institute). He reaffirmed fo...
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