Rachel Reeves' 2025 Budget has already collapsed under the weight of its own contradictions. In this video, I explain why tax rises on ordinary people, baseless growth forecasts, and a refusal to tax wealth fairly mean this Budget will fail — and fail fast. Neoliberalism promised growth. It has delivered stagnation and inequality. This is more Tory policy by another name.
This is the transcript:
As should probably be fairly obvious from the picture that you can now see in front of you. I am at this point in time standing right outside the BBC, having just finished broadcasting with Jeremy Vine, discussing Rachel Reeve's 2025 budget.
What have we got to say? It was a disaster. Let's not beat around the bush.
From the moment that the Office for Budget Responsibility leaked it, adding to all the mess and complete misplanning that preceded this budget, she had nothing left to say when she reached the Dispatch Box, and frankly, she could have skipped the whole thing.
She has promised tax increases of £26 billion and cost increases of £12 billion, all of that to achieve one goal, which is to increase her so-called fiscal headroom to keep the City of London happy. That borrowing is under control according to their logic.
None of this will, of course, work out as she says, because the assumptions underpinning the Office for Budget Responsibility's work are about as flawed as their IT systems are when it comes to scheduling the release of publications. There is not going to be the economy that she's forecasting over the next five years. There will, for example, be a major crash in stock markets over that period, and there's nothing forecast for that in what she has to say.
What did she have to say? Fundamentally, she basically picked on ordinary working people to deliver this budget, and she totally ignored the demands of so many that wealth should make a greater contribution to this country's well-being.
I'm not saying we need a wealth tax; we don't. We do need, however, to ask the wealthy to pay more because they underpay tax at present.
A token gesture with regard to a mansion tax, which is going to raise maybe £400 million a year, is neither here nor there.
A minor change to dividend tax will do nothing of the sort, as I proposed of an investment income surcharge, which could have raised £18 billion a year, almost the total sum that she is talking about in extra tax revenue.
She didn't equalise capital gains tax and income tax, which would've raised £12 billion.
She didn't impose VAT on financial services that could have raised another £8 billion.
She could, in other words, have been vastly more generous to people, but she wasn't.
We do know that this mansion tax will not be matched by relief for those on benefits from paying council tax, meaning that the inequality in that system will remain.
We do know that more pensioners will now be paying significant amounts of tax as a consequence of the freezing of allowances for many years.
We do know that the number of people now paying at 40% will have increased from around 2 million in 2021 to something like four and a half to 5 million in 2031. That was Rishi Sunna's design. Let's be clear that's where this started, but Rachel Reeves has continued it, and that is perhaps a clear message from this budget. She has simply continued with Tory incompetence. What we are seeing is yet more of the same minor tinkering around the edge,s and growth is not being delivered as a result.
The claim of neoliberalism, anti-social economics, if you like, was that GDP growth would be the measure of success for the politicians who promoted the idea, and that was what the market sector would deliver.
But it clearly isn't delivering, and it's not because the state is too big; it's because the markets have no idea what to do with money. They're not putting it to good effect. They are not putting our savings to use for the benefit of society or anything else. Neoliberalism is not delivering growth as a consequence, and the result as a consequence is that Rachel Reese is actually downgrading her forecast for growth in four out of five years to come, and that is the sure sign of failure of a government that said it was going to deliver both growth and better outcomes for people in this country when that is not going happen on the basis of what she is proposing now.
This budget was a disaster before she stood up; a disaster because of all the kite flying and all the leaks and everything else, which gave rise to her being admonished by the deputy speaker for nearly two minutes before she actually managed to get to the Dispatch Box herself, and then the OBR managed to destroy any illusion of control that she had because, as we discovered, we could actually sit down at one o'clock in Jeremy Vine's studio and discuss the budget for an hour waiting for her to announce things that we already knew about.
This, in a sense, is the end of budget speeches.
It's the end of Rachel Reeve's competence.
It's the end of the Labour government's competence.
It's the end of the narratives around antisocial neoliberalism because there's nothing left for it to do or say.
It's an end to the idea that governments that pursue those ideas can, in any shape or form, now deliver for the well-being of the people of this country. This myth is over. This budget is going to fail.
The question is, how long will it take to fail? And the devil is in the details, and I haven't read all of that as yet. But I suspect that there are plenty of details which are going to cause massive backlashes in what she had to say. And when that is understood by Labour MPs, I suspect they will be the people who will be bringing her down.
That could be sooner or later. My suspicion is they might wait until May to do that when they have disastrous election results. But her fate and that of Keir Starmer might arrive even sooner than she expects because so empty, so hollow, so visionless was what she had to say today, that anybody looking at what Labour is up to will realise this is a woman who does not know what she's doing.
And I'm not being misogynistic in pointing out she's a woman. She's very proud of the fact that she's the first female Chancellor, but she is as incompetent as many of those who went before her. George Osborne had his disasters. So did Philip Hammond. Kwasi Kwarteng was right up there in the scale of incompetence. And frankly, Reeves is not far behind now. Two budgets, two disasters. That's pretty poor going. I can't even say that of Osborne and Hammond.
This is a terrible day for the Labour Party.
It's a terrible day for the people of this country who need help and who need a radical transformation of our economy to ensure that we can be released to do what we can achieve in this country, which is a lot, but which this government will not be doing because of fear of the markets, it's petrified view of borrowing and the fear that they must balance the books on every occasion when that is unnecessary.
It is time for change, and that's the one thing that Labour promised and which it will not deliver.
Rachel Reeves is very unlikely to deliver a third budget, and I've got to say I will be delighted if she never does because this country cannot afford her.
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You state:
It’s the end of Rachel Reeve’s competence.
It’s the end of the Labour government’s competence.
Can you tell us when the competence of Reeve and this Labour government actually started? I for one, have never seen the slightest signs of any kind of competence, beginning, middle or indeed end.
I am geneorus
When I marked essays I always started at 62% – a lo0w 2:1 – and moved from there
They’re now on 38% – fail territory
After the spring statement in which the OBR forecasts revealed a troubling reality: interest rates in the UK are set to stay high – not to support households or businesses, but to attract foreign money. And while that has made wealthy overseas investors happy, it’s made life a lot harder for the rest of us. Reading the latest OBR forecast I still see this as the case, do you?.
I know you wrote an article about Foreign Investors being happy with Reeves – as above, but I can’t find it
I will cover this in tomorrow morning’s video. We are editing now. It is 22 minutes or so…
£22 billion headroom? That is about 0.75% of GDP.
My non expert opinion is that, overall, she has fiddled when we need reform (in the proper sense of the word )
Agreed
I will say so in the video now being edited for the morning…
A great and elegant evisceration of governmental incompetence Richard. It really is tragic. I feel a mix of great anger and sadness that at my age – I am in my 60s – my entire adult life has seen the deliberate dismantling of the greatest period in British life, namely the construction of the post-WW2 deal.
I had a cynical teacher of economics in the 1970s who told us boys, “Oh well, you know the Establishment only consented to give the masses free stuff because they feared two million trained service personnel coming home to the same shitty deal they’d been served up after WW1 and becoming rather angry”.
Smart man. I genuinely fear where we are going with this stuff – oh, not for me, but for the younger generations – if this is what *Labour* can serve up economically alongside their vile slop on migrants. It really is scary stuff.
Thanks, and agreed.
Aside from Reeves waste of breath today I just wanted to say that I think ‘antisocial neoliberalism’ works extremely well, both written and on video
Thanks
It seemed to do so.
I found that video liberating. I have had a bit of a hang up about standing in a public space recording myself – just to prove I am human, after all – but preety much that one worked, and it was quoite quick. We could in fact clean the sound little less, I suspect.
Looking on the bright side, economics correspondent and former BBC ‘Wake up to Money’ presenter Andy Verity said on the BBC News website tonight (Budget Day):
‘ Government funds aren’t like ours; they don’t tax people in order to stick it into a savings account and thereby pay doctors and nurses or benefits.’
Maybe the truth is dawning. But don’t hold your breath. We now need to hear that from Starmer!
Andy has always got MMT
I agree that the budget statement should have been more courageous in handling the broad economic picture. The kowtowing to the City is awful and avoids the basics of managing public services.
There is a major problem for me in the re-introduction of PPP (PFI ) for the proposed neighbourhood health centres – seems to have been hidden in the detail.
The only positive item is the removal of the 2 child benefit cap and the effect of removing 450,000 children from poverty – surely that has to be welcomed???
who would ever have thought that in our time Food Banks Would be necessary. The greatest failure of neoliberalism or even the market economy. I note that even Denmark has food banks. Inequality is now endemic.Our tv is now a begging channel
Her delivery was angry, arrogant, and nasty. It was a budget delivered by someone who knows her time is up.
Someone deliberately leaked the details. I wonder what the motive was. Had she pissed off that person too?
Britain can not afford Reeves, nor deserve her, no one voted for this
An accurate and damning assessment.
When the PM and Chancellor go. As they must and preferably sooner rather than later. Who will replace them. I’m not seeing any obvious alternative candidates that would be any better. There is nobody who seems to recognise MMT or even reality at all.
I am afraid you are right.
The budget is a car crash even worse than Truss. The elephant in the room which Reeves missed is Brexit. Since leaving EU UK is losing billions and it has caused a massive hike in the cost of living and costs to business. If they want to encourage investment then penalising shareholders with dividend tax level set at £500 or less will not help. Osborne abolished tax credits and set the dividend tax level at £2000, then it was reduced to £1000 and Sunak reduced it to £500. In May 2026 Labour will get a pasting in the elections. Over here in Belfast we never vote Labour or Tory, we mistrust GB politicians for good reason. You get the government you deserve.
I’m watching the C4 news as I write this and according to certain numpties we are an over taxed country (with one notable exception) and there is still this argument that we are apparently being charged by the private sector for government debt.
I think the whole budget business is just simply rancid.
The Green spokeswoman did well talking about ‘domestic investment’ (as opposed to the international type we know).
Even the Lib-Dem was talking about saving up money to spend on stuff. These MPs have no idea what they are managing. It’s a farce.
Helium Ebrahimi made much of it.
Great video, Richard. One positive thing in the budget, however, was the abolition of the 2-child limit on Universal Credit. That’s very good news for children in families with 3 or more children on low incomes, and long overdue.
Meanwhile, in other news, the Government has announced the lifting of restrictions on new North Sea oil and gas drilling – an abrupt shift that clearly runs counter to the UK’s stated commitment to reaching net-zero. Expanding fossil fuel extraction at this stage will lock in higher emissions, undermining the credibility of national climate targets and international efforts to limit warming. That this decision was released on Budget day, when public attention is inevitably elsewhere, is a cynical attempt to avoid scrutiny of a move that carries serious long-term environmental and geopolitical consequences. What an appalling bunch they are.
I’d like to hear what you think about the ending of the customs duty exemption for low cost items.
Delighted. I have wanted this for a long time. It used to be abused by the Channel Islands. Then China did it. It has always been tax abusive competition.
My immediate comment might be why not bring in the mansion Tax BUT as a percentage of the sale price, uprated annually for properties bought after a cut off date – say three months from now and pending a full review of Council Tax?