Friday, May 16, 2025
Are tax rises inevitable?
The paper says that Nick Williams, who left Number 10 last month, said Labour’s current public spending plans were “not credible” and would have to be reconsidered, with tax rises being unavoidable:
Mr Williams’s departure from Downing Street raised eyebrows in Westminster and came as part of a clear out that also included Tom Webb, the prime minister's health adviser.
He had been with the party since their time in Opposition, when he was Labour’s head of economic policy, before becoming Sir Keir’s adviser on planning, infrastructure and housing.
In an article for The Times he warns that Ms Reeves’s next budget will be “the last opportunity to make a meaningful change that the public has time to feel before the next election”.
He said: “While the government builds momentum behind growth, the path of public spending is just not credible.
“Not to mend creaking local government. Not to tackle rampant crime. Not to meet the modern demands for defence. And certainly not to fill the fiscal hole from sharply cutting immigration.
“The bottom line is that taxes will have to go up. There are ways this can be done which are fair and respect manifesto promises.
“The next opportunity to do so is the autumn budget. This is also realistically the last opportunity to make a meaningful change that the public has time to feel before the next election.”
Reeves created nearly £10bn of ‘headroom’ with her first set of cuts in office, but that was wiped out within months amid low growth and higher borrowing costs.
In response, she gave herself another £9.9 billion of headroom at the last budget, but has faced mounting warnings for weeks that it will not be enough and that she will have to come back either with more cuts, which would be difficult in the current climate as Labour MPs increasing worry over her plans to slash benefits, or tax rises.
The situation has been made harder by Donald Trump’s across the board 10 per cent tariffs on British goods entering the UK, even after Sir Keir agreed a deal with the US President to cut the levies on cars and steel last week.
Reeves has already made it harder for herself with the increase in Employers National Insurance contributions. That was a clear breach of her manifesto promise but it was the wrong choice as it added additional burdens onto businesses and the public sector as well as threatening jobs.
The right choice then would have been higher taxes on the wealthy and that is what the chancellor should do at her next budget.
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She can raise the 45 level tax to 50% and/or those who have over 2million pounds. Betting companies make profits from the activity, tax them more than they are at the moment.Those could be the start. Scandinavian countries are highly taxed with a high 'happiness' content.It should be something we aim for.
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