The Lead's budget verdict: technocratic tweaks to a broken system

Lifting the two-child benefit cap is welcome, but Rachel Reeves' tax and spend plans fall far short of the financial shake up this country needs

Cabinet meeting ahead of the Budget in 10 Downing Street. Picture by Simon Dawson / No 10 Downing Street

Firstly: I’m sorry to say, but this Budget wasn’t for you.

I know you think it might have been, should have been, but it’s not. Not really.

You see, this Budget was built for two audiences: the markets and Labour’s own backbenches. Nothing in today’s fiscal statement is likely to materially change your life or the long-term trajectory of this country.

This was a ship-steadying budget, rather than one that plumbs the depth of reform that this country needs. Rachel Reeves’ second major fiscal event was cautious to the point of inertia — a document crafted to avoid spooking anyone, and to keep onside the people who can sustain or sink this government.

First, credit where it’s due: there are a few genuinely meaningful social-justice wins. Scrapping the two-child benefit cap will lift around 450,000 children out of poverty and consign one of the most punitive welfare policies of the last decade to history, finally. Something we’ve been saying since before this time last year - a call that has eventually been heard in Westminster.

Child poverty is a failure of the state and the economy it claims to safeguard

Raising gambling taxes to 40 per cent is long overdue, as is freezing Russian assets. The £18m for playgrounds is small but welcome — it will genuinely improve many local communities. The rail fare freeze — the first in almost three decades — will at least stop prices climbing further, even if voters won’t feel the real-terms cut economists talk about. An effective £150 reduction in energy bills will hopefully be felt more directly.

Funding apprenticeships for under-25s and delivering an 8.5 per cent wage rise for 18–20-year-olds will also make a tangible difference to young workers. For these, the government deserves its credit.

But beneath all the warm words, tax tweaks and small injections of spending, the truth remains that Britain is still getting poorer, sadder, and more unfair. Ultimately, there is little in here to substantially change that.

The politics are obvious. After months of muttering from her own MPs, Reeves needed something to placate concerns, and on that narrow metric, she probably succeeds. Markets have stayed broadly calm and Labour MPs get a shopping list of wins to take back to their constituencies. But the broader picture remains unchanged: an economy still carrying the long tail of austerity, Brexit and a decade of underinvestment.

Meanwhile, big, consequential decisions were traded out in favour of the status quo. This was still a Budget that taxes work over wealth. Of the £26bn in tax rises, the vast bulk comes from the oldest trick in the Treasury playbook: freezing thresholds. Freezing income tax bands until 2030 is stealth taxation at an industrial scale as inflation quietly drags millions into higher tax brackets, take-home pay shrinks and workers carry the load.

Then comes the pension change. Capping salary-sacrifice contributions at £2,000 before national insurance contributions kick in sounds like an administrative tidy-up. In reality, it’s a strike at the one halfway decent incentive younger workers had to build a pension. If you’re paying half your salary in rent and watching homeownership recede like a mirage, salary sacrifice wasn’t just a perk; it was one of the few rational financial choices left to you. Now, even that is being taxed.

Meanwhile, those who have benefited most from decades of property inflation remain almost virtually untouched. The so-called “mansion tax” is a positive move, but the decision to implement on £2m+ properties raises just a meagre £0.4bn. Right-wing broadsheets are already offering tongue-in-cheek guides on how to devalue your home to dodge it, meanwhile, the obvious reform to the regressive council tax bands remain politely ignored. So Britain remains a country where work is taxed heavily and wealth is barely taxed at all.

The Lead Untangles: The case for a wealth tax

For all the leakage, all the build-up, this budget is ultimately rather underwhelming; budget-balancing politics built on the backs of workers. If everyone has to pay more, say it - and mean it. There’s still no windfall tax on excessive corporate profits, no re-alignment of capital gains with income tax, no serious council tax reform, no action on offshore avoidance. Britain’s wealthy walk away largely unscathed, while workers take note of the punitive measures they must once again absorb under the guise of “all being in it together”.

Millionaires 'leaving the UK' is a false narrative - it's time to introduce a wealth tax

And then, of course, there’s Brexit; the elephant in the room, stamping all over fiscal headroom. Reeves is right to say there’s a hole in the public finances: a big, Nigel Farage-shaped void at the cost of 6–8 per cent of GDP, worth £180–£240bn a year.

Leaving the EU left us with less tax revenue, less investment and less resilience; a country poorer because of self-inflicted policy that this growth-obsessed government refuses to acknowledge. No one Budget can reverse that damage.

Politically, the government’s success may be short-lived. This might buy time with jittery MPs, but nothing here fixes the hollowed-out public realm, or convinces disillusioned voters that Labour is prepared to rethink Britain’s broken economic model.

Nothing here reopens the closed youth centre, unclogs courts backlog, restores our crumbling schools, or tells the country that Westminster has learned from the last 14 years of Tory rule. Nor is this a budget that stops the onward march of Reform, or soothes the frustration of Labour MPs who will return home at Christmas to constituents asking why they are waiting months for a routine operation.

This wasn’t a Budget for transformation, but political stability: an attempt to hold together Labour’s fragile coalition while keeping the bond markets calm. But stability without longevity is really just a momentary pause.

This government will need to dig deeper; not just into its pockets or its reserves of courage, but into the imagination required to say what Britain could be if it were finally willing to confront hard choices.

As it stands, the Budget wasn't quite anything. It wasn't radical or consequential, it didn't show us what Labour’s Britain could be. Instead, it was technocratic tweaks to a broken system. It might buy time, but it certainly won't buy hope. ■

About the author: Zoë Grünewald is Westminster Editor at The Lead and a freelance political journalist and broadcaster. Zoë then worked as a policy and politics reporter at the New Statesman, before joining the Independent as a political correspondent. When not writing about politics and policy, she is a regular commentator on TV and radio and a panellist on the Oh God What Now podcast.

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