As I awoke yesterday morning, it seemed pretty cold in my bedroom and I was to discover that the outside temperature was -3° but anticipated to rise to 8° later on in the day, so we evidently starting off the day with some very clear skies. The budget is due to be delivered at 12.30 today but all kinds of pre-announcements have taken place so that we are aware already of various ‘goodies’ on the budget such as increases to the minimum wage and to the full state pension. It used to be the case that the whole budget was shrouded in the most complete secrecy until the moment of delivery, no doubt so that speculators could not make a fortune on the stock market but the norms seem to have changed in today’s conditions. One is aware of a certain degree of ‘softening up’ of the electorate as pre-announcements are made of typically the good news, no doubt to try to set a climate of opinion before the budget news is delivered later on. This budget has been much anticipated and mulled over for weeks beforehand but the only certainty is that Rachel Reeves, the Chancellor, will have to somehow plug a gap of some £20bn-£30bn in the nation’s finances. Almost certainly, we shall have a freeze on the allowances against tax which means that all kinds of individuals, including many pensioners, will be dragged into paying tax, or even higher rates of tax, for the first time. Sky News has a ‘Money’ section on its website which encourages individuals to contribute their own ideas as to what should go into the budget. I was rather taken by these thoughts from one individual which ran as follows: ‘1p per litre on fuel, 1p on income tax wholly for the NHS, 5% tax on betting winnings over £500, tax on company directors who do not reward employees, and 1p on every drink at major coffee houses. This would raise huge amounts and be largely invisible to consumers. Give me a job.’ Everybody has their own particular grouse about the budget but we do have probably the most complex tax system in the world. The UK tax code is generally cited as the world’s longest, estimated to be over 21,000 pages and containing more than 10 million words. The size of the ‘book’ is a common measure of the UK’s tax system’s complexity, though the exact page count can vary depending on what is included: Total Handbooks: The combined ‘Yellow and Orange Tax Handbooks’, which are comprehensive reference tools used by tax professionals, can run to over 21,000 pages in multiple volumes. Substantive Legislation: A 2012 report by the Office of Tax Simplification (OTS) estimated that the actual, unduplicated, substantive and administrative law was closer to 6,102 pages at that time, as the handbooks also include non-statutory materials, repealed legislation, and duplicated content. Comparison: To put the length in perspective, the 10 million words in the tax code are approximately:12 times the length of the Complete Works of Shakespeare or 9 times the length of all the Harry Potter books combined. The length has increased significantly over the years, trebling in size since 1997, leading to calls for simplification from various tax bodies and professionals.
After I had breakfasted, my son and daughter-in-law called around and we had a long chat about family, friends, relationships and how we were filling our respective lives. This year, my son and daughter-in-law are spending Christmas with me together on Christmas Eve and Christmas Day and we have spent some time planning out what our Christmas meals are going to be as we are all planning to eat the things that we really do like, rather than just relying upon the traditional Christmas fare. Given my family had called around, this meant that I decided to forego my usual visit to the Methodist centre and I settled down with a good supply of elevenses, prepared to watch the fairly momentous Budget speech from the very start. The commentators were saying that the Chancellor needed to satisfy four sets of ‘audiences’ simultaneously – firstly, her own Labour Party backbenchers, then the wider electorate, then the business community and finally the stock market and bond traders. So this was going to be a very tricky balancing act and one at which Liz Truss spectacularly failed as she was relying upon the ‘kindness of strangers’ to provide the funds for otherwise unfunded tax cuts and the stock market promptly bombed. Although the political commentators do not agree as such, I think that Rachel Reeves did a pretty good job. The Labour backbenchers were reasonably satisfied particularly as no manifesto pledges were overtly broken and the cap on Child benefit beyond the first two had been removed. The business community issued a few grumbles about the cost of paying for additions to the National Minimum wage but this was only to be expected, particularly as the business community cannot have high expectations of a Labour chancellor. Perhaps most surprising was the reaction of the Stock market which may even have risen a little. The markets seemed happy that Reeves was building up some ‘financial headroom’ for the years ahead which certainly aids sentiment within the city. As for the wider public, then some £28bn has been extracted from then, largely under the guise of stealth taxes, by not uprating allowances to be set against tax or in other words, the ultimate stealth tax. It will be interesting to gauge the reaction of, for example the ‘Question Time ‘ audience when it takes to the air on Thursday evening. There was an astonishing twist to the whole of the budget when the OBR made public the budget essentials a couple of hours before the presentation to the House of Commons in what was undoubtedly an error. Rachel Reeves was both furious and a trifle unlucky because as some of the figures behind the tax rises had already been released by the OBR then the opportunity for a political spin on issues was reduced. The main impact of the tax rises will slowly accumulate over the next few years as income tax allowances are frozen for the next few years and there is quite a lot of speculation this evening whether Rachel Reeves has done sufficient to save her political skin or whether she, and Starmer, might be ditched by an unhappy Labour Party in the next few months. But Reeves deserves some credit for keeping both the Labour Party and the stock market happy at the same time.