As was inevitable – Autumn Budget 2025

The debate about the Budget has begun and will continue for some time, something which we will experience with varying levels of enthusiasm. At least the speculation about what will be in it has stopped which is something which many of us will be grateful for, even if it is going to be accompanied by a hue and cry over the OBR having published it early.

Whatever your view of the measures announced by the Chancellor in the Budget or your view of the management of the economy by the current Government since it came to power last year, there is a clear factual background to the Budget. Government borrowing (much of it inherited by the current Government from its highly critical predecessor) is at £2.6tn and incurs annual interest in the region of £111bn.

No-one loves paying tax, but I’m not sure that too many are in favour of there being no Government either, so it’s something that we all understand the need for. But as the Parliamentary slugfest that comprised the delivery of the Budget speech and the reply of the leader of the opposition showed, there are polarised views about how much and by whom it should be payable.

There will always be debates about whether Government departments and the services that they preside over are efficiently run or if they aren’t, why they aren’t. Assessing efficiency is valid, but a number of recent exercises have shown that efficiency reviews may make some contribution but are not the panacea that many politicians claim. They also expose that, in some cases, inefficiency is down to a lack of investment which would, in turn, require more Government spending to remedy. There will also always be differing views on what Government should spend money on, with a balance having to be achieved between, broadly, enabling economic success, health and welfare and security in its widest sense.

Any modern Chancellor is confronted with a problem which previous generations of politicians have created, namely that we have lost sight of the overriding function of taxation. The use of taxation policy as a means of promoting social and economic equality championed by the Labour Party for generations has long gone, having been replaced from 1979 onwards by a market economy based narrative that tax is bad and should be low. Apart from Government borrowing which has accumulated over a number of years, and which not only has to be repaid but requires £1 in every £10 of Government expenditure to be used to service it, recent events have highlighted the problem. We have become fearful of the threats posed by Russia and the USA’s conditional commitment to NATO. It seems to be generally accepted that more defence spending is needed, but raising taxes to do so is regarded in many quarters as bad. We worry about the NHS and waiting lists. There is a wider debate to be had (although it will take politicians who are prepared to take political risks to do it) about what the function of the NHS should be in the context of demographic changes and advances in medical science making more treatments available, but in the meantime, cutting lists will require more government money. Yet it is perceived by many, even by many in the electorate who value and use the NHS, as a bad thing to raise taxes to achieve that.

The Chancellor has made some choices about spending, including on welfare. The leader of the opposition has, in no uncertain terms, made clear her dissent from most of those decisions and the additional tax take that will be needed to fund them. The quality of the debate, with its personal jibes and assertions of received wisdom, was neither edifying nor constructive. I don’t expect that the media treatment of the Budget will be much more enlightened.  In a world of increased security threats, economic instability and the potentially disrupting influence of AI, we are ill served by it.

I look forward to the day when there can be a grown up conversation about tax, including what it should pay for, who should be taxpayers and which taxpayers should pay how much. Sadly, I doubt that our politicians will have the courage to allow it any time soon.