Labour’s own pledges prevent the Chancellor from balancing the books
Telegraph: 15th August 2025: PopCon Director, Mark Littlewood, considers whether the Chancellor's much-rumoured inheritance tax plans stand up to scrutiny
"It’s hard not to feel some pity for Rachel Reeves. Her party and her own promises have boxed her into an impossible position...It turns out that maths and economics don’t quite work this way, and she has found herself with a three-pronged conundrum.
First, she cannot cut government expenditure at all. Even attempting to marginally trim the rise of our unaffordable welfare state will prove to be unpalatable to her party’s backbenchers...
Second, the party only got into power because you exuded some vague commitment to economic prudence. It promised to get borrowing down. Break this pledge and the markets will kill them...
Third, in the heat of battle Labour conjured up a barely comprehensible piece of campaigning verbiage that it would not raise tax on “working people”...
...Given this trifecta of economic nonsense, Ms Reeves faces a serious day-to-day problem. How can she raise more revenue to make it look that you are even half-serious about balancing the books?
The latest wheeze seems to be to tighten up inheritance tax rules. This, we are told, will only affect the rich, will mean that those with the broadest shoulders bear even more of the increasing state expenditure burden and could help to generate a smidge of “fiscal headroom”. Such a move would be a nightmare on almost every level... They are complex, they are avoidable, and they are difficult to collect...
...Attempting to tighten any of these rules may be politically performative but it won’t raise many beans. Currently, IHT accounts for less than 1 per cent of government income. Even if you could get this to 1.1 per cent or 1.2 per cent, which is unlikely, you have not seriously moved the fiscal dial...
Benjamin Franklin was right when he said the only two certainties in life are death and taxes. But a civilised and sane society should try to keep the two entirely separate."