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Issue No 93 Autumn 2025

Paul Laxton
SHOULD WE BE WORRIED ABOUT THE AUTUMN STATEMENT?

I started writing this editorial on the day of Angela Rayner’s resignation. That same afternoon, the Prime Minister conducted a reshuffle that left Rachel Reeves in her post, which means that the Autumn statement will be delivered as advertised on 26 November. Much has been made of Torsten Bell’s rise in the Treasury as he was full of ideas for increasing the tax take when he headed up the thinktank, the Resolution Foundation. On the trade union side and on the Labour left, there has been a demand for a specific wealth tax. The demands on the public purse have grown since July last year, and there are only three ways these demands can be funded; spending cuts, tax increases, and borrowing, or a combination of them.

The government’s own backbenchers have already had their say about spending cuts. The money markets are having their say about the cost of borrowing by government by raising the interest on government bonds to a level now higher than during the ill-fated tenure of Liz Truss. The nightmare scenario here is that the money markets pull the plug and the UK enters a full-blown financial crisis on a par with those of 1931 or 1976. Keir Starmer will have no desire to follow the example of Ramsay McDonald, and neither will Rachel Reeves want to follow in the footsteps of Denis Healey and go cap in hand to the International Monetary Fund for a bailout in return for deep cuts in spending, from which few would be exempt. Given the likely impact on party unity with Jeremy Corbyn’s new venture waiting in the wings, the government will be very keen not to get itself into that position. So that leaves tax rises, where Labour will either have to break its promises about raising at least one of the big three revenue raisers, or come up with alternatives, such as raising taxes on property, inheritance and capital gains.

The point needs to be made that wealth taxes already exist in the form of inheritance and capital gains taxes. The taxes on savings interest are also a form of wealth tax, as the tax levies money on saved earnings that have already been taxed at source. Taxes on savings bite much deeper than the seriously wealthy. So how might we be hit? The Local Government Association is lobbying for the end of the single occupancy discount in Council Tax. At our age, we have a disproportionate number of widows and widowers. Another idea being considered is the levying of Capital Gains tax on the sale of the main home. I’ve written about my experience of downsizing elsewhere in the Newsletter. Many of our members live in expensive homes because of inflation and geography, not because they are wealthy. With the freeze on tax thresholds, an increasing number of our members will be moving into the higher tax band. If capital gains tax is then levied at your income tax rate, who the hell is going to downsize? All will depend on where the threshold is set, and after that, for how long it is frozen. The nil rate band for inheritance tax has been frozen since 2009-10.

Of course if you believe that we are undertaxed and are happy to pay more tax, then you will not be worried about the Autumn statement. I’m only giving my take on what is coming down the line and why.

PAUL LAXTON, editor