Fear is the watchword for this most important of Budgets. For those who own shares, or second homes, or cannot conceivably be defined as “working people” (whoever they are), the fear is of tax rises. From capital gains to pension relief and inheritance tax, the Chancellor is looking to raise in the region of £40 billion to plug a gap in the Government’s finances and fund departmental spending. The broadest shoulders must bear the heaviest burden, but the anxiety in the suburbs is palpable, while the tax accountants have been doing a roaring trade.
The other group filled with more than mild concern is Labour MPs. Despite the significant tax rises to come, few expect Tony Blair-level increases in spending. Instead, much of the money will go to filling gaps left by the previous Conservative Government. Consequently, whether it be the National Health Service, the prisons or education, backbenchers fear that come the next general election, voters will be paying more without enjoying measurably better public services.
The next group of concern lies the Treasury itself. The markets have largely taken in their stride Rachel Reeves’s announcement of a change to her fiscal rules, which could generate as much as £50 billion a year on spending for capital investment. Yet the Chancellor may decide to allocate far less than that, in order to stave off even a hint of Liz Truss-esque market mayhem, and the associated higher borrowing costs.
But there is a chance that the most alarmed will be the new Conservative Party leader. Because, should the Chancellor thread the needle, raise enough money to cut NHS waiting lists and invest in the right projects to get the economy growing, it is they who will have to explain why it all really went wrong. And though Labour has not exactly got off to a fast start, there is one thing on which plenty of Britons still agree: the Tories are responsible for the mess in the first place.
