That’s the message being sent to Rachel Reeves as she scrambles to control Britain’s finances ahead of November’s Budget. Her plight is desperate, as official figures yesterday showed government borrowing hit £18billion in August, the highest for five years and well above expectations.
She’s borrowed a staggering £83.8billion in just five months, despite hiking taxes to record highs. The £10billion fiscal safety margin set in March has already been wiped out.
Spending cuts are off the table after Labour’s botched attempt to shave £5billion from welfare earlier this year triggered a backbencher revolt.
The Chancellor is committed to her “iron-clad” fiscal rules. Tinkering with them in any way would trigger a bond market backlash, sending our borrowing costs through the roof.
The only way to stay within her rules is to hammer taxpayers again. And she will. But which ones?
She daren’t tax businesses more though. In the last Budget, she hiked employers’ National Insurance bills by £25 billion, destroying profits, businesses and hundreds of thousands of jobs.
This puts pensioners right in the firing line for what is shaping up to be the most brutal Budget in decades.
The Times reports today that a group of economists has written to Reeves, urging her to “rebalance” the system by taxing “better-off older people” more heavily.
Signatories include academics and policymakers who argue this is the fairest way to protect public services.
This will strike a chord in the Labour Party, where older voters are often viewed with suspicion because of their record of backing the Conservatives.
The left prefers to pitch itself to younger workers, who in theory might benefit from such a transfer. In practice, any new revenue will be swallowed by Reeves’s spending splurge.
We’ve been here before. Those who spent decades building a decent retirement are once again seen as cash cows. Every Budget seems to find fresh ways of squeezing them further.
Now it looks like the same story will play out again in November, all dressed up in the language of “fairness”.
Reeves needs no encouragement. She already has form on this front.
Her first act in office was to scrap the Winter Fuel Payment for 10million pensioners, before being forced to U-turn.
She extended the freeze on inheritance tax thresholds to 2030, dragging more estates into the net, and will make unused pension pots subject to inheritance tax from 2027.
Earlier this year, ministers floated cutting the annual cash ISA allowance from £20,000 to £4,000, a proposal that would target pensioner nest eggs.
Labour may claim to be targeting the better off but as we’ve already seen, low income pensioners are getting hit too.
This week it became clear that the new state pension itself will become automatically taxable from 2027.
Fear of what’s coming next is driving some retirees to raid their pension pots early, desperate to lock in the 25% tax-free lump sum in case Reeves caps it.
Others fear she could slash tax relief on contributions, or extend capital gains tax to family homes, a move that would hit those who bought cheaply decades ago and watched values soar.
Yet on the left, the idea persists that older people don’t pay enough tax.
If one thing is certain about this autumn’s Budget, is that it will be brutal. And pensioners are squarely in the crosshairs.
