Latest / Merryn Talks Money / UK Budget Special: What Will It Cost You?

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UK Budget Special: What Will It Cost You? · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talks Money,
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Speaker 1: the podcast in which people who know the markets explain
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Speaker 1: the markets. I'm Maren zumsetweb listeners. As some of you
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Speaker 1: will know, we have made a bit of a tradition
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Speaker 1: of hosting a live recording of the podcast the morning
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Speaker 1: after the budget. So earlier today I sat down with
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Speaker 1: a familiar cast of Merin Talks Money guests to talk
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Speaker 1: through our reactions to the budget and to take listener questions.
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Speaker 1: Joining me in Bloomberg's London headquarters was John Steppeck, my
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Speaker 1: co host and author of the Money Distilled newsletter, Stephanie Flanders,
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Speaker 1: Bloomberg's head of Government and Economics, and Helen Thomas, CEO
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Speaker 1: of Blonde Money. Now, this we are hoping is going
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Speaker 1: to become a long term tradition. We did this last
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Speaker 1: year the same panel. You were here last yearn you, Stephanie,
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Speaker 1: John Bial's say me.
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Speaker 2: Okay.
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Speaker 3: And the idea is that we do a.
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Speaker 1: Live podcast here the morning after the budget from Bloomberg
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Speaker 1: headquarters here in London. So with me today Stephanie Flanders,
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Speaker 1: head of Economics and Government at Bloomberg, Helen Thomas, you
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Speaker 1: were here last your way, I was not worked. Okay,
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Speaker 1: Well come every year please, founder and CEO of Blonde
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Speaker 1: Money and John Steppeck, senior reporter and author of the
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Speaker 1: award winning a multi award winning Money Distilled newsletter. I
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Speaker 1: will say, by the way, that this podcast has also
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Speaker 1: won an award, So there's an award winning podcast right now.
1:35
Speaker 1: Before I start, I just want to check the feel
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Speaker 1: of the audience.
1:39
Speaker 3: Who is happy with the budget?
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Speaker 1: Hands up the right, Oh, well, two hands have got free,
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Speaker 1: hands have gone up. I think we've got about three
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Speaker 1: hundred and fifty people in the audience who thought it
1:50
Speaker 1: was a good budget for Rachel Reeves more hands okay,
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Speaker 1: good budget for young people, no old people, for more
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Speaker 1: of their okay, for growth, not a single hand, not
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Speaker 1: a thinker. That was my aim to go to a
2:09
Speaker 1: bit where not a single hand went up.
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Speaker 3: Okay.
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Speaker 1: So can we start Helen with you now? The question
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Speaker 1: that a lot of people ask before this budget and
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Speaker 1: after it is is this enough for Rachel? We used
2:21
Speaker 1: to keep a job for a.
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Speaker 4: Few more weeks, maybe months at best, and she can
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Speaker 4: thank the Fed's John Williams for that, okay, Because what
2:35
Speaker 4: we have had is the market giving her the benefit
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Speaker 4: of the doubt because broadly the market now seeing potentially
2:42
Speaker 4: will rate cuts out of the US is sort of
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Speaker 4: in a slightly more benign mood. So yes, benefit of
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Speaker 4: the doubt for now, but it will unravel, It will
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Speaker 4: unravel politically, and we'll probably come onto it.
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Speaker 1: Okay, So as far as the guild market is concerned,
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Speaker 1: everything's basically fine.
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Speaker 4: For the next well for sort of the next few
3:00
Speaker 4: days and weeks. Okay, if you want me to read
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Speaker 4: out the bit of the OBL report that means it
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Speaker 4: isn't No.
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Speaker 3: I don't want you to read it out. I want
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Speaker 3: you to summarize.
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Speaker 4: Okay, borrowing will be is higher, and the fiscal consolidation
3:15
Speaker 4: comes later. Yeah, that is a pretty toxic mix if
3:18
Speaker 4: anyone thinks they're going to do fiscal consolidation in the
3:20
Speaker 4: year before scheduled election.
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Speaker 3: Yeah, so this is what the markets may be missing.
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Speaker 1: There's a lot of spending up front, but the consolidation
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Speaker 1: itself is backloaded, and we can't be absolutely sure that
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Speaker 1: very many things those things will happen, and we'll come
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Speaker 1: onto the mansion tags later, which is one of the
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Speaker 1: things that I suspect the audience is super interested in
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Speaker 1: and which I suspect will never happen.
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Speaker 5: John, from your point of view, Yeah, I think.
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Speaker 6: I mean, I agree with Hell and I do think
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Speaker 6: the other issue is that possibly people I think they
3:48
Speaker 6: will get a little bit too excited about the gelp's
3:49
Speaker 6: market these days because of what happened to realized choice.
3:52
Speaker 6: And the thing that we have to remember is that
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Speaker 6: when that happened, it was an extremely fair rail moment
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Speaker 6: in global microeconomics, so interesting, it's shooting up. And on
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Speaker 6: top of that, Britain had some kind of LDI leverage
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Speaker 6: inside the system. So you can think what you like
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Speaker 6: about Liz Trust, but she was throwing a Molotov cocktail
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Speaker 6: at Agenda Tower. That's the point. So what has happened
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Speaker 6: now is the guilts market is much more stable. Also,
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Speaker 6: the Debt Management Office is managing the issuance much more so.
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Speaker 6: For example, they canceled three scheduled thirty year guilt auctions,
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Speaker 6: so that means there are fewer chunks of long term
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Speaker 6: debt being issued, which means the supplies down, which is
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Speaker 6: the reason that yield went down yesterday, because if you
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Speaker 6: need thirty year gilts, that are a few of them
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Speaker 6: kicking about So I think all of that stuff is
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Speaker 6: easy to neglect because we do get obsessed with the
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Speaker 6: politics and the ushi. But equally, as Helen said, it's
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Speaker 6: also because they fed now looks as if it might
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Speaker 6: cut interest roots. So it's you know, there's a big
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Speaker 6: chunk of things going on that make her you know,
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Speaker 6: she's throwing a Molotov cocktail. She's thrown it at like,
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Speaker 6: you know, a skyscraper or you know, a kind of
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Speaker 6: fireproof trump.
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Speaker 1: Okay, and this was a relatively non inflationary budget, particularly
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Speaker 1: relatively yes, well.
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Speaker 6: Yeah, I mean relatively speaking, it still wasn't you know
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Speaker 6: she was pushing back against you know, like she's sort
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Speaker 6: of gaming the figures a bit over the next year
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Speaker 6: by you know, poising the index and the train fairs
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Speaker 6: and things like that. But certainly putting the minimum wage
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Speaker 6: up by four point one percent is not.
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Speaker 5: That's an inflationary younger people.
5:22
Speaker 6: Oh yeah, And it's also because you know, because supermarket's
5:24
Speaker 6: employer paid a lot of people who I mean to
5:26
Speaker 6: be through the supermarkets all pay above minimum wage. But
5:29
Speaker 6: if you're going to keep paying above minimum wage, and
5:31
Speaker 6: then every time minimum wage goes up, you have to
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Speaker 6: bump up your staff salaries. I mean quite apart from
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Speaker 6: the impact on kind of wage compression and you know,
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Speaker 6: damaging people's motivation to work. The point is they need
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Speaker 6: to pass that cost on somehow. In the Bank of
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Speaker 6: England itself said, you know earlier this year one of
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Speaker 6: these food prices have gone up. Isn't because global food
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Speaker 6: prices are higher. It's because the kind of labor costs
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Speaker 6: are having to get passed on by the supermarkets, which
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Speaker 6: are extremely low margin businesses. As I suspect everyone in
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Speaker 6: this room probably knows. So yeah, so yeah, I'm not
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Speaker 6: particularly interest, but I think the reason she's got away
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Speaker 6: with it is bequised. The envitement is much more forgiving.
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Speaker 1: Yeah, definitely have any major surprises in their view.
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Speaker 7: Well, so the surprise was actually the market reaction is
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Speaker 7: at some level, and I think it also underscored the
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Speaker 7: missed opportunity because you had a budget that was I'm
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Speaker 7: not sure, at least for the purposes of today, I'm
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Speaker 7: going to be slight. I'm going to try really hard
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Speaker 7: to be a bit more positive because it just feels
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Speaker 7: like otherwise we're going to be beating our stick over
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Speaker 7: this budget for the next hour.
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Speaker 5: But it's hard.
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Speaker 7: I have to say, it's hard to find things to
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Speaker 7: good say, but I think it was if you're looking
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Speaker 7: at the UK and thinking is this, and you would
6:40
Speaker 7: many people were, obviously, and the global markets were thinking
6:42
Speaker 7: this when the Labor government came in, and were actually
6:45
Speaker 7: betting on the UK, putting money into the UK on
6:48
Speaker 7: the basis that this was going to be a government
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Speaker 7: that was going to be more long term, certainly more
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Speaker 7: stable politically, was going to take some of these tough
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Speaker 7: choices after all this chaos, and instead you've had a
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Speaker 7: series of budgets that made all the same sort of
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Speaker 7: awkward short term compromises. I wouldn't say these I mean
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Speaker 7: they're obviously in a labor direction. I wouldn't say they're
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Speaker 7: fundamentally worse than some of the compromises that were made
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Speaker 7: in the previous government. But you certainly haven't seen a
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Speaker 7: step change in the quality of macro decision making or
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Speaker 7: a government taking advantage of the fact that it had
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Speaker 7: a full term ahead and a large majority. And I
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Speaker 7: think in this case, you know you had and our economists,
7:27
Speaker 7: chief economists Dan Hanson had identified you know, you have
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Speaker 7: that money on the table that you could have got
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Speaker 7: from persuading the markets that actually you were going to
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Speaker 7: you were willing to take some pain, that you were
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Speaker 7: willing to have some front loaded fiscal consolidation, which also
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Speaker 7: incidentally could have helped the more sort of fundamental way,
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Speaker 7: Hey up the Bank of England to cut rates sooner.
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Speaker 7: And when I saw how little the market had reacted
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Speaker 7: to this one, you know, purely with the reassurance that
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Speaker 7: there was more margin for error now, but not that
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Speaker 7: we won't actually be making those errors, I thought, Wow,
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Speaker 7: they really could have.
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Speaker 5: They could have come away.
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Speaker 7: We had what four basis points cut in yeals, it
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Speaker 7: could have been twenty. We could have got halfway back
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Speaker 7: to the US, potentially on a day where people, as
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Speaker 7: we've all said, you know, the markets were feeling a
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Speaker 7: little bit more favorable. Anyway, that gap with the US.
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Speaker 7: There's no sensible reason for it, even if you look
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Speaker 7: at the long term fundamentals, except this feeling that UK
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Speaker 7: governments can no longer do difficult things, which is true,
8:28
Speaker 7: which you know, based on you know, all available evidence,
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Speaker 7: seems to be true.
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Speaker 1: What difficult thing do you think that she could have
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Speaker 1: had to go at?
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Speaker 7: I mean the obvious one, but it's funny because you know,
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Speaker 7: it's a bad sign for a government that has this
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Speaker 7: many years ahead that you're constantly going back to things
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Speaker 7: they might have done a year earlier. Yeah, So, you know,
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Speaker 7: this time a year ago, we were saying, why did
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Speaker 7: she sign up to that national insurance cut that Jeremy
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Speaker 7: Hunt or the two success of Jeremy Hunt national insurance cuts,
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Speaker 7: and why hadn't she not just said we're going to
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Speaker 7: reverse those, but we'll be back to where we were,
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Speaker 7: will keep rates exactly where they were a year ago,
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Speaker 7: but we don't think these cuts are affordable. That would
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Speaker 7: have saved her twenty billion pounds of pain. Then we
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Speaker 7: got to this budget, we said, well, why hasn't she
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Speaker 7: done you know, why hasn't she been braver on saying
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Speaker 7: the world has changed, you know, and actually tackled some
9:12
Speaker 7: of the things on income tax. Same with the spring
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Speaker 7: statement that we had a complete change in the global
9:18
Speaker 7: environment with Trump and the intensification in Ukraine, and yet
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Speaker 7: they still missed that opportunity. So I just think, you know,
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Speaker 7: the real shame is that we are constantly saying she's
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Speaker 7: missed an opportunity. She's just doing the minimum, and you know,
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Speaker 7: we're going to look back and say, wow, there's just
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Speaker 7: there's so many things that this government could have done
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Speaker 7: that it's not done. And instead, as we're pointing out,
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Speaker 7: the welfare bill is going up and the same physical
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Speaker 7: challenges are there.
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Speaker 3: Yeah.
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Speaker 1: Well, we were talking about this earlier, about the signals
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Speaker 1: that we're sending here, and one of the sort of
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Speaker 1: extraordinary things that you can look at at the moment
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Speaker 1: to see that the total welfare bill is remarkably similar
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Speaker 1: to the total income tax bill. And you get to
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Speaker 1: a point when you're looking at maybe young people working
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Speaker 1: and working very hard paining their income tax and they
10:00
Speaker 1: can now look at it and go wow, pretty much
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Speaker 1: every pound I pay an income tax is going one
10:04
Speaker 1: way or another into the welfare bill. And that's a
10:06
Speaker 1: terrible signal to send to our young people.
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Speaker 7: And it's also just a weird signal that disc government.
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Speaker 7: I mean, you've got a particular thing around.
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Speaker 5: You know. I think it was.
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Speaker 7: Really disappointing and you know, dereliction to not push harder
10:19
Speaker 7: on the welfare of formula, but to not push to
10:23
Speaker 7: not get anything in return for this kind of important
10:26
Speaker 7: contribution to child poverty. But you would always have said,
10:29
Speaker 7: given the downsides of that, you would always have said
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Speaker 7: it had to go with some more serious reform and
10:34
Speaker 7: to end up with nothing.
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Speaker 5: On the other side of the ledger, I think, well.
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Speaker 1: There is something the return to face to face appointments well,
10:40
Speaker 1: and I think that sounds little bit and actually maybe
10:42
Speaker 1: quite big.
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Speaker 7: I was actually yesterday someone asked me, you know, what's
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Speaker 7: some sort of the opposite of an unexploded bomb, you know,
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Speaker 7: the sort of positive things that might unexpectedly go well
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Speaker 7: in the last year, And that was the while I highlighted.
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Speaker 7: I think, I think there is a possibility that that
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Speaker 7: will have a much bigger effect on the roles. But
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Speaker 7: remember you've still got a lot of people who you know,
11:00
Speaker 7: the fixed number of people already on the rolls as
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Speaker 7: well driving up the bills.
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Speaker 1: Helen were let's let's pick up that, then let's go
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Speaker 1: for something positive. Were there any hidden positive surprises in
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Speaker 1: there for you? Do you think I have a horrible
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Speaker 1: feeling the answer is going to be no.
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Speaker 4: But well I want to give I suppose give some
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Speaker 4: credit to Rachel Ruves that she was trying to square
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Speaker 4: an impossible circle and it could have been worse.
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Speaker 3: So it could have been worse that's not what I'm
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Speaker 3: looking for, no.
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Speaker 4: Okay, okay, so yes, all right, let me let me
11:30
Speaker 4: think about that.
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Speaker 3: It's quite difficult, okay, John.
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Speaker 8: I was.
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Speaker 4: In terms of, well, I've got to go back to
11:43
Speaker 4: this thing about welfare, because the front page of the
11:45
Speaker 4: newspapers this morning pretty much singularly or negative.
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Speaker 3: But you know, it's what is it?
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Speaker 4: You know, the shirkers, the strivers are paying for the shirkers.
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Speaker 4: So we just roll on all the time, and what
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Speaker 4: is this government about? What is its strategy, what is
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Speaker 4: its narrative, what is it s message? Where are its priorities?
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Speaker 4: And then this tussle over welfare turned into a temic
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Speaker 4: debate about the two child benefit cap, and now it's
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Speaker 4: rolled into shirkers versus drivers, which is surely not what
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Speaker 4: the government wanted it to do.
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Speaker 3: So sorry, that's negative again.
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Speaker 4: They okay, okay, Well, she has, as we started on this,
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Speaker 4: given something more to the sort of labor. It's a
12:26
Speaker 4: labor budget for labor people. I'm a labor person doing
12:29
Speaker 4: progressive things.
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Speaker 3: She said that. I think she's she has sold.
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Speaker 4: That to some degree, so perhaps she has managed to
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Speaker 4: bring a bit together. The splitting parts elements the Labor Party.
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Speaker 3: Okay, brave Helen.
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Speaker 6: It's really didn't work with the line Fell tax. There
12:52
Speaker 6: was a line Fell tax which was basically I'm not
12:54
Speaker 6: an infrastructure of gay, so then that I might change.
12:56
Speaker 6: They were going to like multiplayer by about ten teams men.
13:00
Speaker 6: You can never build our hose again in the entire country.
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Speaker 5: So that was quite a good idea.
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Speaker 3: Slash that would be.
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Speaker 1: A much better idea because yeah, constructure and it's one
13:10
Speaker 1: of the reasons why we have dumping across the UK,
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Speaker 1: because it's so expensive to move stuff to a land
13:14
Speaker 1: filled stuff there.
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Speaker 7: Is I mean, what's ironic about this government is all
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Speaker 7: the good stuff they're doing is the stuff they're really
13:19
Speaker 7: trying to hide not talking about very much at all.
13:22
Speaker 7: So as she did mention John Fingleton's report on the
13:25
Speaker 7: making it easier to build nuclear power stations, I mean
13:27
Speaker 7: that goes to this whole swath of things of why
13:30
Speaker 7: is it so flipping difficult to build anything in this country?
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Speaker 7: And there has been quite a lot of active involvement
13:36
Speaker 7: if you.
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Speaker 5: Look for my sins. I was actually looking.
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Speaker 7: At some of the amendments in the remember it's called
13:41
Speaker 7: now Land Planning and Infrastructure Bill, which for some reason
13:45
Speaker 7: is still not got roll ascent. But anyway, there was
13:48
Speaker 7: an intervention actually by number ten to make that even
13:50
Speaker 7: tougher in terms of overruling local councils on big projects,
13:54
Speaker 7: a number of things that should make it easier also
13:56
Speaker 7: to do big infrastructure and those things. You know, if
14:00
Speaker 7: it becomes not impossible to build a nuclear power station,
14:04
Speaker 7: I think that's something that you know, future governments will
14:07
Speaker 7: benefit from. But it's an important change which you know,
14:10
Speaker 7: let's face it, all of those the planning, all of
14:13
Speaker 7: those things got much worse under the last fifteen years.
14:15
Speaker 7: There was no concerted pressure from the Conservatives on that,
14:19
Speaker 7: so you know, I think that kind of thing matters. Also,
14:21
Speaker 7: I know it's not very popular and many people have
14:23
Speaker 7: said it's something that might get reversed, but we were
14:27
Speaker 7: going to have to move to a way of taxing
14:29
Speaker 7: electric cars, and for them to have had actually been
14:32
Speaker 7: brave enough to say, okay, this is the system and
14:35
Speaker 7: it's going to come in in a few years time.
14:37
Speaker 7: You know, somebody was going to have to do that,
14:40
Speaker 7: and we don't want it to be another thing that
14:42
Speaker 7: governments are incredibly unbrave about that we have for the
14:46
Speaker 7: fuel levees.
14:47
Speaker 5: The other positive stick sticking with electricity.
14:49
Speaker 1: The other positive you might pull out is the beginning
14:51
Speaker 1: of a recognition that electricity builds them. You go too
14:54
Speaker 1: high because of the piling of green levels, green levees,
14:57
Speaker 1: on and on and on and on and on, and
14:58
Speaker 1: of course they will have to be paid. Shifting them
15:00
Speaker 1: into general taxation doesn't take away the fact they have
15:03
Speaker 1: to be paid, but it takes them off of electricity.
15:05
Speaker 1: But it probably should have been in general taxation. Yeah,
15:07
Speaker 1: it should be in general taxation in the first place.
15:08
Speaker 1: But it's a recognition that we have a problem with
15:11
Speaker 1: electricity prices. So that seemed that was a very minor
15:14
Speaker 1: positive that I could.
15:16
Speaker 6: Thing as well.
15:18
Speaker 1: Yes, that just irritated me, to be honest.
15:20
Speaker 6: I mean it's really it's really a limp because yeah.
15:23
Speaker 1: And this is this is the if you I p O,
15:24
Speaker 1: then you don't. There's no stam duty on the trading
15:27
Speaker 1: of the shots for three years, which you know is fine.
15:29
Speaker 1: But the reason people don't IBO in the UK is
15:31
Speaker 1: because they're not going to get a good enough price.
15:33
Speaker 3: And this of only three years.
15:34
Speaker 1: Sure you capitalize that into it, you get a small
15:37
Speaker 1: uplift possibly in your issue price, but but not much.
15:40
Speaker 1: And you know stamp duty should go across the board,
15:43
Speaker 1: don't you think. I mean, you've been listening, but can't
15:47
Speaker 1: take the big steps to make the proper change that
15:50
Speaker 1: is needed.
15:50
Speaker 6: I think that's that that is the problem, and it's
15:52
Speaker 6: kind of bog was doing a very FoST question that
15:53
Speaker 6: you asked here, and like the issue here is that
15:56
Speaker 6: this is our budget done essentially to see for the
16:00
Speaker 6: Chancellor's neck, and that means she's basically doing it for
16:04
Speaker 6: a tiny audience of labor MPs and that makes all
16:08
Speaker 6: of the difficult things even harder. I mean, it was
16:11
Speaker 6: always to have to promise that she wasn't going to
16:13
Speaker 6: put up income tax. I don't know why people are
16:16
Speaker 6: so obsessed with the manifesto because it's very clearly been broken.
16:19
Speaker 6: I mean, if you don't think physcal drag is putting
16:21
Speaker 6: up income tax on people, and I don't know what
16:23
Speaker 6: to tell you to We're absolutely honest, you know this
16:25
Speaker 6: stuff is you know, it's very loyally kind of like
16:28
Speaker 6: way of looking at things, But if you look at
16:32
Speaker 6: all the problems that we fundamentally have, it is about
16:34
Speaker 6: politicians being afraid to tell people hard things. And that's
16:37
Speaker 6: why they're hiding the planning stuff as well, because there's
16:40
Speaker 6: a cohort who really you know, the ymbies want to
16:43
Speaker 6: hear it, but the nymbi's don't.
16:44
Speaker 3: They don't want to be told it.
16:46
Speaker 6: And as soon as I mean even the ymbi's, as
16:48
Speaker 6: soon as it's actually in their backyard, very very quickly,
16:55
Speaker 6: I think.
16:56
Speaker 5: That's the problem. And I don't.
16:57
Speaker 6: I don't know how we get beyond that. Except for that,
17:01
Speaker 6: I guess they'll like that. It has to get source
17:03
Speaker 6: sick of the kiniscaliursis and the plaque building not in
17:07
Speaker 6: the arteries of the state, that eventually we get somebody
17:09
Speaker 6: who's got the vote online date total quilo.
17:13
Speaker 5: You get to crisis?
17:14
Speaker 1: Can I ask you Ellen about We're talking about fiscal drag,
17:16
Speaker 1: which is such a big deal in the UK and
17:19
Speaker 1: we worry a lot.
17:20
Speaker 3: We talk a lot John nine on the podcast.
17:21
Speaker 1: We talk about the rich leaving the UK, and we
17:24
Speaker 1: talk about the millionaires and the billionaires and they're all
17:26
Speaker 1: going to Milan and Luxembourg, in Dubai, etc. But I'm
17:29
Speaker 1: not sure we talk enough about high income young people.
17:32
Speaker 1: And so there's in fiscal drag like this so they're
17:35
Speaker 1: starting to pay higher levels of income tax very early.
17:37
Speaker 1: And then of course we saw yesterday the thing that
17:40
Speaker 1: I was I was surprised by. I didn't see that coming,
17:42
Speaker 1: with freezing preshoals for student loans and the freezing of
17:45
Speaker 1: interest rates for student loans.
17:47
Speaker 3: So you will see increasingly.
17:49
Speaker 1: Young people hitting this level where their marginal rate of
17:51
Speaker 1: income tax at fifty one percent, really remarkably early. And
17:54
Speaker 1: this seems to me to be one of the not
17:57
Speaker 1: particularly discussed problems in this budget.
17:59
Speaker 4: Well, this is the the thrust of if you do
18:01
Speaker 4: a smagas board rather than be brave and do and
18:04
Speaker 4: do the big income tax rise on.
18:06
Speaker 3: Everybody that you then end up hitting.
18:09
Speaker 4: I mean, presumably that was done to scrimp back some
18:13
Speaker 4: cow work lard wire to get the numbers swab up
18:15
Speaker 4: in that year onwards, and so to actually, you know,
18:19
Speaker 4: I think that you know the risk of this unraveling.
18:22
Speaker 4: I mean we're here less than twenty four hours later
18:26
Speaker 4: is extremely high that this unravels. Don't forget that just
18:28
Speaker 4: because she made the statement doesn't mean it gets through through.
18:32
Speaker 4: You have to vote on each tax measure. Then there's
18:35
Speaker 4: a second reading. I mean this there is you know,
18:37
Speaker 4: the whole finance bill that goes through. Quite possible that
18:40
Speaker 4: if one of these becomes a totemic issue, that maybe
18:43
Speaker 4: it is something on that maybe it is something for
18:44
Speaker 4: young people that there's a big fuss about that various
18:48
Speaker 4: MPs aren't happy with, and that this is the issue
18:50
Speaker 4: politically now because of what happened on the welfare bill.
18:53
Speaker 4: Because of now this budget's moving slightly to the left.
18:57
Speaker 4: That side of the party is a veto it can
19:01
Speaker 4: it can it can push harder. So we're saying in
19:03
Speaker 4: other countries as well, look at France, other places where
19:06
Speaker 4: there's fragmentation politically.
19:08
Speaker 3: And so and so.
19:09
Speaker 4: Yes, it could, it could, it could unravel. And then
19:14
Speaker 4: we now know. What we do now know is her
19:16
Speaker 4: political capital is very low. It hasn't yet got lower
19:22
Speaker 4: as a result of what happened yesterday, but for it.
19:26
Speaker 3: To go up your d to see the polls shift.
19:29
Speaker 5: Okay, so she's done very well.
19:30
Speaker 1: She's hung on to a position as one of the
19:32
Speaker 1: most unpopular chancellors in the history of the UK and
19:34
Speaker 1: it hasn't got much worse.
19:35
Speaker 3: Yeah, yeah, that's right. But this is only going to
19:37
Speaker 3: get rid of the original sin.
19:39
Speaker 4: If you like was that we we've had a government
19:42
Speaker 4: with a huge majority but no mandate for various of
19:45
Speaker 4: the things it's done, and they are never getting away
19:48
Speaker 4: from that because really their real mandate was just don't
19:51
Speaker 4: be the Tories. And then actually some of the things
19:55
Speaker 4: they're doing are actually some previous government did and then that's.
19:57
Speaker 3: Not getting it going well with anyone. And so the
19:59
Speaker 3: only way you end up resolving they'll switch leader.
20:01
Speaker 4: That might give them a bit more romandic because that
20:02
Speaker 4: person will have some slightly different polished platform, but that
20:06
Speaker 4: still won't gather. That's not what every labor voter voted for.
20:10
Speaker 3: Yeah. Sorry, seven No, I was just going to put
20:11
Speaker 3: back a little bit on hell.
20:12
Speaker 7: I mean, I think it's maybe that's the parlor game
20:14
Speaker 7: that we should be playing, is what you've identified.
20:17
Speaker 5: Marin.
20:18
Speaker 7: I think the student the freezing of those threshold for
20:21
Speaker 7: student loads is actually one of the worst things that
20:24
Speaker 7: was done as sort of on the sly, But I
20:26
Speaker 7: also think it's one of the least likely things that's
20:29
Speaker 7: going to get voted down because all the evidence talk about,
20:31
Speaker 7: what the visible evidence for, all the evidence for is
20:33
Speaker 7: that you can really squeeze students for a very long
20:36
Speaker 7: time remember how long the fees stayed exactly the same,
20:39
Speaker 7: and you had the university sector students facing hard, worse
20:44
Speaker 7: and worse services, and there's been no pressure to change it.
20:47
Speaker 7: So I think that's it should be one of the
20:49
Speaker 7: ones the most content students.
20:51
Speaker 1: You can squeeze students, but can you freeze relatively high
20:55
Speaker 1: income thirty two year olds who suddenly look at their
20:58
Speaker 1: income and go fifty one percent?
21:00
Speaker 7: And it comes from having been fixed in terms of
21:05
Speaker 7: the basic rate, because as you know, we actually have
21:08
Speaker 7: in terms of the average tax rate on average earners
21:12
Speaker 7: in the UK is much lower than certainly any other
21:15
Speaker 7: countries in Europe.
21:15
Speaker 5: We're much more reliant on the high earners.
21:17
Speaker 7: But we've just ended up with this really skewed system
21:20
Speaker 7: where people are some rather than having the basic rate
21:25
Speaker 7: be higher for everybody. We're hitting these very high marginal thresholds.
21:28
Speaker 3: Yeah, and maybe they will leave, maybe they won't.
21:30
Speaker 5: We'll find out in a few years.
21:31
Speaker 3: When we.
21:46
Speaker 1: Okay, so let's talk about the thing that I just
21:47
Speaker 1: think everyone would like us to talk about, the mansion tax.
21:52
Speaker 1: We're talking about things that might not make it. So
21:55
Speaker 1: this is a tax that will take years to figure out.
21:58
Speaker 1: Quite a long time to implement, will be relentlessly challenged.
22:02
Speaker 1: Do any of you think that we will ever actually
22:05
Speaker 1: see a mansion tax on houses supposedly worth over two million?
22:08
Speaker 4: I do froll the point actually of me saying over
22:11
Speaker 4: all this labor MPs something manravel. I would think it's
22:16
Speaker 4: broadly extremely popular with labor MPs to do something on this,
22:20
Speaker 4: even if it's not very well designed, which does appear
22:22
Speaker 4: to be one of the key criticisms. So actually that
22:24
Speaker 4: I would put on the could get pasted absolutely easily.
22:28
Speaker 3: Are you talking about in the mechanics? Is it logistically possible?
22:31
Speaker 1: Is anyone ever actually going to pay an extra tax
22:33
Speaker 1: on their house that may or may not be worth
22:34
Speaker 1: two million pounds?
22:35
Speaker 6: I think so, John, I mean, I guess the problem
22:38
Speaker 6: is that the logistics are quite see it is because
22:41
Speaker 6: you've got it, You've got a guess at the valuation,
22:44
Speaker 6: and the tax itself reduces the value of the house.
22:47
Speaker 6: And then the top of that I've already heard conn
22:49
Speaker 6: appracially saying, is it's split in your hosts and in
22:52
Speaker 6: two different homes each one.
22:54
Speaker 1: I've already had two or three of those conversations literally
22:57
Speaker 1: yesterday off the basement, having got rid of themmultiple dwelling
23:00
Speaker 1: tax relief.
23:02
Speaker 7: Everybody's put their houses back together again and put.
23:05
Speaker 5: Them off atastic.
23:06
Speaker 1: Yeah, we're moving into a new age of tax dodging,
23:10
Speaker 1: bign any flights.
23:11
Speaker 5: Basically that sort of thing solve.
23:16
Speaker 1: The granny clap problem. I think we'll have an election
23:20
Speaker 1: before then. By the way, I do like that that's
23:22
Speaker 1: the commission. They don't make it because there was an
23:24
Speaker 1: election before it happened.
23:26
Speaker 7: Obviously, I'm sure we all think that council tax should
23:29
Speaker 7: be reformed and that it's a completely use tax at
23:32
Speaker 7: this point. And I guess if I was trying really
23:35
Speaker 7: hard to be somewhat sort of quick sostic about this,
23:38
Speaker 7: I would say they have now Remember we had even
23:42
Speaker 7: the first attempt ed Milliband's attempt to have a mansion
23:45
Speaker 7: tax was the kind of first effort. Now they've actually
23:48
Speaker 7: managed to break the first barricade in terms of saying, okay,
23:51
Speaker 7: we're going to have this high level You're quite right,
23:53
Speaker 7: theren it's going to have lots of technical issues, but
23:56
Speaker 7: there is now an opening if you say, well, okay,
23:58
Speaker 7: if we're going to revalue some of the houses.
24:00
Speaker 5: There's just the.
24:01
Speaker 7: Tiniest possibility that the mess that this causes, the clear
24:05
Speaker 7: need for councils to have a better basis for funding,
24:09
Speaker 7: may coincide into having some kind of cross party effort.
24:12
Speaker 5: And you know who could be the person who would
24:14
Speaker 5: do it be Nigel for.
24:15
Speaker 7: Us, because he has twelve councils now who are all
24:18
Speaker 7: realizing that council tax is completely useless and actually they
24:21
Speaker 7: have a stake in reforming it in lots of different
24:23
Speaker 7: councils across the country. And if he's listening, I would
24:26
Speaker 7: say that would be a really good thing for him
24:28
Speaker 7: to show that they were a serious party that wants
24:31
Speaker 7: to do serious things to help local and central government.
24:33
Speaker 7: When to do something really complicated, I think it's really
24:35
Speaker 7: likely to happen. Okay, interesting pertect a positive almost a
24:38
Speaker 7: positive trying to think that, thank you for happening, and.
24:40
Speaker 3: John, let's talk about isis yes? Right?
24:43
Speaker 1: So you and I've talked a lot about how we
24:44
Speaker 1: don't approve of the twenty thousand pound allowance for tax
24:46
Speaker 1: iceis and this makes no sense and that's too much
24:49
Speaker 1: cash to have if you're rolling it up every zerashizers
24:52
Speaker 1: it's too much. Have you with docs and shares isis,
24:55
Speaker 1: and I think we were hoping and suddenly I was
24:57
Speaker 1: hoping that the cashized will be reduced and the element
25:01
Speaker 1: it was reduced by would be funneled into U k
25:05
Speaker 1: Rriston stocks, and that didn't happen.
25:07
Speaker 6: No, So it's like SINS twenty's still twenty thousand pounds,
25:10
Speaker 6: and I know it's people get quite confused about this.
25:13
Speaker 6: So from April twenty twenty seven, the ISA allowance will
25:15
Speaker 6: still be twenty thousand pounds, but rather than being able
25:19
Speaker 6: to stick it all in cash, you'll only be able
25:20
Speaker 6: to stick twelve thousand in cash.
25:22
Speaker 3: Unless you're an old persson, unless you're over.
25:24
Speaker 6: Sixty five, which is the other thing that we've made it.
25:26
Speaker 6: I mean, it's almost like they can't do anything, just
25:29
Speaker 6: adding a little quirk. And again, I mean I wouln't
25:32
Speaker 6: write about it, but it comes back to that idea
25:34
Speaker 6: that you can't have any losers, and it's like, you know,
25:36
Speaker 6: why are we leaving the three over sixty five? I mean,
25:38
Speaker 6: there's people under twenty who want to be saving cash
25:41
Speaker 6: for a property deposit and they don't need that to
25:43
Speaker 6: be in shares. That's one of the few times when
25:45
Speaker 6: I would say no, you know you need this soon,
25:48
Speaker 6: so you cannot stick it in something with a long
25:50
Speaker 6: risk horizon. But parking that. The only thing I will
25:53
Speaker 6: say is it's at least it's a signal, you know,
25:57
Speaker 6: it's a very again, it's kind of limp.
25:59
Speaker 5: Is a bit like the three year business.
26:01
Speaker 6: Yeah. And the other thing is people keep talking about
26:03
Speaker 6: who oh yeah, but I can put my money in
26:06
Speaker 6: a money market fund and said, well, that's not the point.
26:08
Speaker 6: To get to the point where you know there's a
26:10
Speaker 6: money market fund into which you can put cash, you
26:13
Speaker 6: need to have grappled to be getting an investment platform
26:16
Speaker 6: and going into their stocks and shares. So that's one
26:18
Speaker 6: thing why I would say that that's not a kind
26:21
Speaker 6: of a reasonable objection to it, because we're actually just
26:23
Speaker 6: trying to get people to engage with investing, which a
26:26
Speaker 6: lot of people in this country currently don't.
26:30
Speaker 4: Do you know why that this has happened with the
26:34
Speaker 4: LIMP measures. It's government by committee, it's a group of
26:39
Speaker 4: it's you know, treasure civil servants, bad others sitting around
26:43
Speaker 4: a table saying okay, right, we're going to definitely do
26:45
Speaker 4: this measure. I know, but hang on, what about this interest? Okay, Well,
26:48
Speaker 4: we'll give them a little bit of it, I know,
26:49
Speaker 4: but what about that long? Okay, well can we hand
26:51
Speaker 4: them back bits this way?
26:52
Speaker 3: Oh no, hang on. That's and that's what's going on,
26:54
Speaker 3: which is why it's leak.
26:56
Speaker 6: Are you saying I'm being on Trea by blaming Martin
26:58
Speaker 6: Lewis for that?
27:05
Speaker 3: It's interesting, yeah, isn't it?
27:06
Speaker 1: Because one of the big one of the groups that
27:08
Speaker 1: pushed back where the building society is you know, if
27:10
Speaker 1: you don't go to the guys, the mortgage rates will
27:12
Speaker 1: go up. So you definitely can't do that, and that's
27:14
Speaker 1: one of the reasons why we ended up with this
27:15
Speaker 1: measure manage.
27:16
Speaker 4: Yeah, and you get the interest group depending how good
27:19
Speaker 4: their lobbying is. And now I thought that was quite
27:21
Speaker 4: a smart angle to take because when you're lobbying, you
27:25
Speaker 4: then need to go for well, what what is really
27:27
Speaker 4: going to worry or upset this government? Oh well, they're
27:30
Speaker 4: quite obsessed about mortgage mortgages and mortgage costs because well,
27:34
Speaker 4: because you know, that was the story for rich Reeves's mind,
27:38
Speaker 4: you know, truss led to higher mortgage rates which led
27:41
Speaker 4: to her losing her job. Yeah, I don't want to
27:43
Speaker 4: do my job, so don't do that.
27:45
Speaker 3: And the one thing we.
27:45
Speaker 1: Haven't talked about is salary sacrifice and how John isn't
27:48
Speaker 1: going to be able to buy the new bicycle they wanted.
27:52
Speaker 7: Oh I didn't supoot that gone and everyone thought it
27:54
Speaker 7: was going to go.
27:55
Speaker 5: Did it go? I think so she didn't. She didn't check.
27:58
Speaker 5: I assumed that.
28:00
Speaker 6: I thought it was just pension wrong. I haven't looked
28:03
Speaker 6: at the absolute microdatail thought.
28:05
Speaker 5: It was okay, you can have the bike up.
28:08
Speaker 6: Can not tell you know, the salary sacrificing. The thing
28:12
Speaker 6: I've been most interesting is the fact is not coming
28:14
Speaker 6: in until April twenty twenty nine. And part of that
28:17
Speaker 6: I'm wondering as if because by even just by signaling
28:21
Speaker 6: she's going to do it, everyone who was using it
28:24
Speaker 6: is going to have to go back and have a
28:26
Speaker 6: chat with her employer. Other employer is going to have
28:28
Speaker 6: to have a chat with her staff and explain about
28:31
Speaker 6: how this is going to affect their overall compensation. And
28:34
Speaker 6: so I'm wondering if it's one of those things that
28:36
Speaker 6: she's kind of thinking, well, this is just going to
28:38
Speaker 6: unravel itself, rather than be something that we need to
28:43
Speaker 6: legislate for aggressively I don't know, but it kind of
28:46
Speaker 6: feels like, I mean, because you're going to start talking
28:48
Speaker 6: about it now because it is complicated, very complicated, you know.
28:51
Speaker 7: I think that's the length of time is actually I
28:53
Speaker 7: think they were told that it's just because employers were
28:56
Speaker 7: actually going to have to rework a lot of their
28:58
Speaker 7: contracts and they all systems for their payments and so
29:02
Speaker 7: I think or the internal approach to company pensions all
29:06
Speaker 7: of that was going to have to change. So I
29:07
Speaker 7: think she was told, you cannot rush this, you can
29:09
Speaker 7: ask too hard, but.
29:10
Speaker 5: It should be said.
29:11
Speaker 7: You know, it's way more money, ten times more money
29:14
Speaker 7: than you're going to get from the mansion tax.
29:16
Speaker 5: That's just something that will just probably.
29:18
Speaker 1: Note and something which which doesn't mean much too many
29:21
Speaker 1: people initially. They'll only find out later howlets is going
29:23
Speaker 1: to cost them.
29:38
Speaker 9: No questions from the audience, given the dependence of this
29:41
Speaker 9: country or the income tax on high net worth and
29:45
Speaker 9: super high networths, has this budget done anything to deter
29:49
Speaker 9: people from who are considering leaving but yet haven't from leaving,
29:53
Speaker 9: you know, in terms of capital incentives for their investment
29:56
Speaker 9: to stay.
29:57
Speaker 1: Is there is there any reason given by this budget
30:00
Speaker 1: stay in the UK.
30:01
Speaker 5: Is the question, John, what do you think?
30:02
Speaker 3: I mean, I don't think so.
30:03
Speaker 6: If you were already saying they're doing it, then I mean,
30:06
Speaker 6: there isn't anything. You know, if if you can see
30:10
Speaker 6: that eating on the wall, you know it's going to
30:12
Speaker 6: go left before it goes right again.
30:14
Speaker 5: For one of the words, it's going to go.
30:16
Speaker 6: Big tax before it goes lower tax again. And so no,
30:20
Speaker 6: pretty straightforward, I don't think so.
30:22
Speaker 3: No headshake from Stephan.
30:23
Speaker 7: I mean there have been some pressure, there have been
30:25
Speaker 7: some question marks whether whether you could unpick some of
30:27
Speaker 7: the most damaging changes from the removal of the non
30:31
Speaker 7: dom but she's obviously not listened to those.
30:33
Speaker 6: So yes, I inheritance tax is the big thing. It's
30:38
Speaker 6: like people do not want to give forty percent of
30:40
Speaker 6: the global assist to the UK government just because they
30:42
Speaker 6: stayed here for ten years. I mean, what's his name
30:45
Speaker 6: likes me? Mittau just left and that's why. That's exactly why.
30:49
Speaker 1: Yeah, so that would be a very straightforward fix. But no,
30:51
Speaker 1: it hasn't happened. So I think that that'll be a no.
30:53
Speaker 1: That'll be a no.
30:54
Speaker 3: Can we have back here, white shirt? Please?
30:57
Speaker 5: Thank you?
30:57
Speaker 1: I'm fraid all these questions are depressingly easy to answer.
31:01
Speaker 10: That's great as a London parent who is trying to
31:04
Speaker 10: provide a bedroom for my three children and has just
31:08
Speaker 10: purchased a two million pound house to do that, they
31:11
Speaker 10: still don't have a bedroom because I've got two lodgers
31:13
Speaker 10: to pay the bills. Am I being punished for not
31:16
Speaker 10: having a vasectomy? And is there a ify name that
31:22
Speaker 10: you can give to this tax for my situation? Is
31:25
Speaker 10: it the London family tax or the vasectomy tax or
31:29
Speaker 10: you know what these books?
31:32
Speaker 1: Anyone've got a snappy name for the having too many
31:34
Speaker 1: children in central London and not being on welfare tax?
31:37
Speaker 6: I'm glad my legs are already crossed.
31:43
Speaker 3: Again.
31:43
Speaker 1: I've read that one was depressingly easy to answer as well,
31:46
Speaker 1: and I'm sorry. Maybe you should have bought a tuber
31:48
Speaker 1: house or moved out of London, or personally I would
31:50
Speaker 1: just give up your job at this point, Peter.
31:53
Speaker 11: Here in front, I just want to be go onder
31:56
Speaker 11: John sir, because this does feel awfully like nineteen seventy
32:00
Speaker 11: to me what I mentioned in the panels. Do is
32:03
Speaker 11: this ninety seventy four or is it ninety seventy six?
32:07
Speaker 11: Or is it nine seventy nine where we actually get
32:09
Speaker 11: a revolt against the current services.
32:12
Speaker 1: Oh interesting, nineteen seventy six, Helen, I think what was
32:18
Speaker 1: your nineteen seventy nine?
32:20
Speaker 4: No, well, no, I'm thinking what was it year with
32:21
Speaker 4: the two elections nineteen seventy four? Yes, well, I mean
32:25
Speaker 4: it's nice to do the historical parallels, and actually it's
32:27
Speaker 4: good because we need to think that that when everyone
32:29
Speaker 4: gets frustrated with politics, it's quite useful to know there
32:32
Speaker 4: were other times when things were very fractious for very
32:34
Speaker 4: understandable reasons. But I think you know, history rhymes doesn't repeat,
32:39
Speaker 4: does it. So the key thing now, of course, is
32:41
Speaker 4: dead to GDP at one hundred percent, So we're still
32:44
Speaker 4: actually sitting on a knife edge here of at any minute.
32:48
Speaker 3: I know she's built in more headroom.
32:49
Speaker 4: I mean the ABR sensitivity SOD I think it was
32:51
Speaker 4: a one percentage point moving guilt yields would clear that headroom,
32:55
Speaker 4: and last time I think it was point six, So
32:56
Speaker 4: you know, she has got more space. But we are
33:00
Speaker 4: in a greatly volatile world, Assel has admitted, and so
33:06
Speaker 4: the House of cards could fall apart politically.
33:08
Speaker 3: And economically at any moment.
33:10
Speaker 4: So I think actually it's not quite analogous to the seventies,
33:13
Speaker 4: not least because news travels so much faster, markets move
33:18
Speaker 4: everything so much quicker, quicker. Yeah, crypto markets ripened on Saturdays.
33:21
Speaker 4: And of that ninety seventy six.
33:24
Speaker 5: There is something.
33:26
Speaker 7: I mean, I certainly if you look at the dynamic
33:27
Speaker 7: in the Labor Party currently, there is something that feels
33:30
Speaker 7: a bit reminiscent of that whole period. I don't know
33:32
Speaker 7: if i'd dated to whatever, but where you started to
33:35
Speaker 7: have you could imagine a leadership battle at some point
33:38
Speaker 7: we might disagree about when it is that that show
33:41
Speaker 7: that is the sort of establishment center, sort of Callahan
33:45
Speaker 7: type figure or Heally as it was then and the
33:48
Speaker 7: Michael foot You can imagine that kind of battle happening
33:51
Speaker 7: quite easily, actually, given the concerns around the support for
33:55
Speaker 7: Green Party.
33:55
Speaker 5: And I did think yesterday's quite interesting.
33:57
Speaker 7: I mean, we look, you know, obviously run econoised politics globally,
34:00
Speaker 7: we're used to thinking right and left are no longer
34:03
Speaker 7: the key fractures in politics.
34:05
Speaker 5: It's much more complicated than that.
34:07
Speaker 7: And that's all true, and we see that when we
34:09
Speaker 7: look at the opinion polls. But actually yesterday was opened
34:12
Speaker 7: up a very old fashioned space for the Conservative Party,
34:15
Speaker 7: which actually I think Kemy did quite a good job
34:17
Speaker 7: of walking into. You know that we're suddenly back to,
34:19
Speaker 7: at least between the two main parties are very old fashioned.
34:23
Speaker 7: Do you want to spend more on high tax and
34:24
Speaker 7: welfare or do you want to shrink the state? And
34:27
Speaker 7: if she if the Conservatives kind of lean into that,
34:30
Speaker 7: that actually makes it quite difficult for a form I think.
34:33
Speaker 1: Yeah, thank you, right, more questions that they've got one here,
34:37
Speaker 1: Given the number.
34:38
Speaker 12: Of policies that were trailed in advance of the budget
34:41
Speaker 12: around the housing market, there were rumors about stamp duty,
34:45
Speaker 12: potential capital gains being applied to primary residents, an all
34:49
Speaker 12: new annual property tax, council tax pans being doubled at
34:53
Speaker 12: the higher end, and then on the big day it
34:57
Speaker 12: was a big nothing.
34:58
Speaker 5: That was a surprise to me.
34:59
Speaker 12: I wondered if and also surprised that there was very
35:01
Speaker 12: very little that happened in the housing market, given what
35:04
Speaker 12: a big impact the housing market is having one way
35:06
Speaker 12: or other almost everybody's lives.
35:07
Speaker 6: Yeah, John, I mean I support that didn't surprise me.
35:11
Speaker 6: And as much as they're not going to want to
35:13
Speaker 6: do in that kind of makes housing like house prices
35:16
Speaker 6: go down any more than they already are in real terms.
35:20
Speaker 6: The mansion tax is obviously just a sop to the left.
35:22
Speaker 6: It may or may not happen. I mean, the real
35:26
Speaker 6: problem is obviously the innability to get you know, house's
35:28
Speaker 6: being built, and that is partly a function of the
35:31
Speaker 6: fact that house prices aren't going up anymore. And probably
35:35
Speaker 6: the main focus if she wanted to help the housing
35:37
Speaker 6: market was more in pushing back against inflation so that
35:40
Speaker 6: interest rates can come down a bit. And to be fair,
35:42
Speaker 6: I mean, one thing it did happen yesterday as a result,
35:44
Speaker 6: like gult yield's going down, is that you've you've actually
35:47
Speaker 6: seen mortgage rates take ever so slightly lower over the
35:50
Speaker 6: last two months. And I suspect that, I mean, that
35:53
Speaker 6: will continue for as long as you know, the boind
35:56
Speaker 6: market remains roughly kind of happy with what's going on,
35:59
Speaker 6: so we'll see. But yeah, no, it didn't surprise me
36:03
Speaker 6: because there's so much other stuff, and I think you
36:06
Speaker 6: could raise a lot of money from those in the
36:08
Speaker 6: market in a way that we wouldn't meet the voters
36:10
Speaker 6: just abail.
36:12
Speaker 5: Also, I mean, a.
36:13
Speaker 3: Lot of the rumors were obviously nonsensical.
36:15
Speaker 1: I means, we're never never going to abolished down duty
36:17
Speaker 1: for example, It's never going to happen.
36:18
Speaker 5: That was a very bizarre float.
36:20
Speaker 1: I know we'd all love it, but it's never gonna
36:21
Speaker 1: get worst worse tax in the UK give will take
36:23
Speaker 1: and there's a lot of competition right with another one
36:26
Speaker 1: in the front here.
36:27
Speaker 13: Yeah, if I could just come back to John's comments
36:29
Speaker 13: about cash ices and whether that's actually going to work,
36:35
Speaker 13: I would have thought that if Rachel Reaves wants ordinary
36:38
Speaker 13: working people to invest more in stocks and shares, and
36:43
Speaker 13: you mentioned that you've got to get your head around
36:44
Speaker 13: the money market sort of approach to do that, wouldn't
36:47
Speaker 13: it make more sense to do that in the safest
36:50
Speaker 13: long term way, which is to put more money in
36:52
Speaker 13: their pensions through salary sacrifice. And yet that seems to
36:55
Speaker 13: be cut So I don't know if you have any
36:57
Speaker 13: insight into those two seem to work against each other,
37:00
Speaker 13: you know they do.
37:01
Speaker 6: I mean, so there's absolutely doubts, a completely confused.
37:04
Speaker 5: So it's not confused.
37:05
Speaker 6: It's basically again it's a sock to the idea that
37:08
Speaker 6: they support investment, but everything that they're doing in the
37:11
Speaker 6: tax system pushes against that. You know, it's kind of
37:15
Speaker 6: you know, so the tax on savings interest properly, we
37:19
Speaker 6: could basically got NI imposed on earned income yesterday. You know,
37:24
Speaker 6: We've got lots of measures that the dividend taxes, that
37:28
Speaker 6: sort of thing.
37:30
Speaker 5: And you know how.
37:32
Speaker 6: The fact that pensions constantly have the rug pulled out
37:35
Speaker 6: from under them is another thing that militates against private
37:38
Speaker 6: sector pensions constantly. So I think nothing's absolutely right. I
37:45
Speaker 6: think that if we spent more time focusing rather than gimmicks,
37:48
Speaker 6: making the tax system simpler, but that's not going to
37:51
Speaker 6: happen because I think yesterday had something like I should Bloomberg.
37:54
Speaker 6: I did it up and it was like over eight
37:55
Speaker 6: hundred different measures unless I'm getting that long, but we
37:58
Speaker 6: had a chat. I need to get my glades when'm
38:06
Speaker 6: leading these charts. But it's just just it was more, exactly,
38:10
Speaker 6: it was more than anyone for a very long take.
38:13
Speaker 6: And they have been getting more and more complicated as
38:15
Speaker 6: we go on, and again that's partly duck in difficult decisions,
38:18
Speaker 6: but just.
38:19
Speaker 5: The direct response.
38:19
Speaker 7: So I was just checking it in the thinks, not
38:21
Speaker 7: that I'm a Treasury spokesman but it's the cost of
38:24
Speaker 7: the salary sacrifice are predominantly I mean, was going up
38:29
Speaker 7: to eight billion, and a huge chunk of that was
38:32
Speaker 7: going to not just higher rate taxpayers, but the very
38:34
Speaker 7: higher end. You know, people who are putting their bonuses
38:37
Speaker 7: in other things. They claim, judged on the current thing,
38:40
Speaker 7: at seventy four percent of basic rate taxpayers will be
38:44
Speaker 7: protected by the CAT because they're not saving, they're not
38:46
Speaker 7: putting more than two thousand pounds in.
38:48
Speaker 5: So, just as a direct response.
38:50
Speaker 6: That always it comes back to this thing people not
38:53
Speaker 6: seeming to realize that the fort basically tax pills, know,
38:56
Speaker 6: aren't basically tax pills for the entire lives. And it
38:59
Speaker 6: was like the number of people who hit forty and
39:01
Speaker 6: hit forty five during their life cycle is much greater
39:04
Speaker 6: than the current number. And so what we're actually doing
39:07
Speaker 6: is we're punching people in the face when they get
39:09
Speaker 6: to the point where they should be when they're at
39:10
Speaker 6: peak earnings and should also be at peak savings, because
39:13
Speaker 6: that's kind of the big issue. You know, everyone probably
39:16
Speaker 6: hits kind of forty or fifty and starts to look
39:18
Speaker 6: at their pension, assuming they're not working for the public sector,
39:21
Speaker 6: and goes, oh my god, I'm going to be poor
39:23
Speaker 6: when I retire, and that's why you need that kind
39:26
Speaker 6: of thing when people are on forty or forty five percent.
39:29
Speaker 6: So it's not enough for the government tongue and say,
39:31
Speaker 6: oh yeah, but we're protecting this lot. We're getting to
39:34
Speaker 6: the stage where, I mean, the minimum a lot.
39:36
Speaker 7: Of money did that say, is getting to people who
39:42
Speaker 7: were on maybe half a million.
39:44
Speaker 6: It's just as sorry, but I think that there's too
39:47
Speaker 6: much of this again. It's that sort of zero some
39:52
Speaker 6: thinking as opposed to why don't we stop worrying about
39:55
Speaker 6: how this guy's got this and start thinking about, you know,
39:58
Speaker 6: why is the econ source and complexities?
40:04
Speaker 7: All in these I mean, I'm partly saying Devil's advocate,
40:07
Speaker 7: but in these conversations we do tend to think of
40:09
Speaker 7: tax relief spending as great spending that is somehow very
40:14
Speaker 7: different from other forms of public spending. You're deciding to
40:17
Speaker 7: spend eight billion because you're foregoing that you could have
40:20
Speaker 7: spent it or something else you are spending. You're deciding
40:22
Speaker 7: to spend eight billion on people being able to do
40:25
Speaker 7: these pension savings.
40:26
Speaker 5: Well, we all just remember that it is exactly I'm
40:28
Speaker 5: going to stop this one here. This is extent.
40:32
Speaker 1: Extent to which how much easy you have an event
40:34
Speaker 1: and all that kind of thing. We'll come back to this,
40:36
Speaker 1: but we've got a very enthusiastic question answer at the
40:38
Speaker 1: back here.
40:39
Speaker 3: Hi, good morning.
40:40
Speaker 7: Thanks.
40:41
Speaker 6: You are now selected as our new chancellor and you
40:47
Speaker 6: have one wish.
40:48
Speaker 5: This is pre budget.
40:50
Speaker 3: What would your one major policy be cut welfare spending?
40:57
Speaker 1: Yeah, exactly what I was going to say, Just fine,
41:00
Speaker 1: in a way to cut welfare spending.
41:03
Speaker 4: Or try and even do what she tried to do,
41:04
Speaker 4: which was reduce the rate of growth, which is what
41:07
Speaker 4: she was trying to on that.
41:09
Speaker 5: John, Yes, it's a good question.
41:12
Speaker 6: If I'm trying to thank you, Paul, I'll see then
41:15
Speaker 6: I mean something I've always been mainly attracted to as
41:17
Speaker 6: I can align the value tax.
41:18
Speaker 1: And if you no, no, no, no, no, no, nor John.
41:23
Speaker 7: Definitely I think you have to. I mean, well, it
41:26
Speaker 7: has to be welfare. Although do you think of this
41:28
Speaker 7: ships in particularly.
41:29
Speaker 1: If there was outside wealth for one thing that I
41:31
Speaker 1: would really would have loved to see and it wouldn't
41:33
Speaker 1: have been hard and it would have sent a brilliant signal,
41:35
Speaker 1: would be the full abolition of the stamp duty on
41:37
Speaker 1: equity trading, and we've talked about it on the podcast.
41:40
Speaker 5: Over and over and over.
41:41
Speaker 1: It's not a big money thing five billion here or there,
41:43
Speaker 1: and it's a huge signal to the rest of the
41:45
Speaker 1: world that we were taking our equity market seriously. That
41:48
Speaker 1: would have been I think that the one and so easy,
41:51
Speaker 1: so easy, so quick, such a signal here in the front.
41:54
Speaker 5: You've had your hand up a long time.
41:55
Speaker 2: Thank you, given that physical drag seems to be a
41:59
Speaker 2: very good way of raising revenues without letting people know
42:04
Speaker 2: you're raising revenues. How long, particularly given what's happening in
42:07
Speaker 2: the States with do we have Kevin has it coming
42:10
Speaker 2: in as a fetchair? How long until we have QE
42:14
Speaker 2: back in the UK?
42:15
Speaker 5: Ooh?
42:16
Speaker 7: Definitely, really long time, I think actually, I mean that's
42:20
Speaker 7: one of the things. That's one of the missed opportunities, right,
42:22
Speaker 7: I mean, inflation has narrowed her room for maneuver in
42:27
Speaker 7: some ways. And obviously she was sort of punished a
42:30
Speaker 7: bit for doing things last year that increased inflation because
42:33
Speaker 7: then that slowed interest rate cuts. But one of the
42:37
Speaker 7: advantages we have in the current environment from the higher
42:40
Speaker 7: inflation is that the Bank of England has plenty of
42:42
Speaker 7: room to cut and if you look at the revisions
42:44
Speaker 7: that were made in the next few years growth, I mean,
42:47
Speaker 7: one of the reasons why we haven't got into the
42:50
Speaker 7: fact that she wasn't faced with a hole to fill
42:54
Speaker 7: thanks to the Office of Budget Responsibility, because their reset,
42:57
Speaker 7: their lowering of real growth was actually largely offset by
43:00
Speaker 7: them deciding actually inflation and wages were going to be
43:02
Speaker 7: higher over the next few years, and that they hadn't
43:04
Speaker 7: fully factored that in in their nominal GDP cash GDP estimates.
43:09
Speaker 7: So without getting too much into the sausage making, I think, yeah,
43:12
Speaker 7: I don't think Q. Well, we can see in a
43:15
Speaker 7: few years time, but I don't think q's on the horizon.
43:17
Speaker 5: Helen Quey coming.
43:18
Speaker 3: I think it could come back.
43:20
Speaker 4: Sorry not q E, but as it purchases could come
43:23
Speaker 4: back if we do get to a dysfunctional point in
43:25
Speaker 4: the bottom market, which I do still yet to see
43:28
Speaker 4: there being a risk of purely because huge amounts of debt,
43:32
Speaker 4: as we know throughout the world, huge amounts of issuance.
43:36
Speaker 4: Inflation broadly speaking is higher now than it was in
43:40
Speaker 4: the sort of fifteen year decade before fifty a decade,
43:43
Speaker 4: fifty a period before and so at some stage, you
43:48
Speaker 4: know there's going to be a serious case of indigestion,
43:50
Speaker 4: and then they may well need to sort of step
43:52
Speaker 4: in with bomb purchases just to stabilize things.
43:54
Speaker 3: Okay, not qui all.
43:56
Speaker 1: Right, there's a sort of maybe for you more questions
44:00
Speaker 1: on the aisle here that's close by.
44:03
Speaker 8: Thank you, thanks, Yeah, it's just a quick question on unemployment.
44:07
Speaker 8: So unemployment rate's been ticking up the last two years,
44:10
Speaker 8: even a little bit before the last ge, from like
44:13
Speaker 8: four percent to five percent. Given John mentioning the minimum
44:17
Speaker 8: wage going up and everyone mentioning the fiscal drag, do
44:21
Speaker 8: you think this budget is going to sustain keep ticking
44:24
Speaker 8: up an unemployment rate, will perhaps even accelerate it.
44:29
Speaker 14: Anyone wants to say anything beyond yes, Well, don't you think
44:33
Speaker 14: that there's We've not been much discussion of recession risk there,
44:37
Speaker 14: but a lot of stuff talk about procesession in the US.
44:40
Speaker 3: I mean, I know, were sort of bumbling along at
44:41
Speaker 3: pretty much zero a bit above it.
44:44
Speaker 4: OBR said, this doesn't really change the growth outlook that
44:47
Speaker 4: much this budget, but you know what if there is
44:50
Speaker 4: some sort of shock, could be external could be here.
44:52
Speaker 3: What if on the salary sacrifice.
44:54
Speaker 4: Element, I think that's going to be a hit to employers.
44:56
Speaker 4: The cost for them will be going up, you know,
44:58
Speaker 4: the minimum wage as you mentioned. So, God, I now
45:02
Speaker 4: sound really gloomy. I didn't mean to sound. I mean,
45:04
Speaker 4: obviously we be going to a session. We'll have loads
45:06
Speaker 4: of bagging and rate cuts, so that will that will help.
45:09
Speaker 5: But we have in the new workers riots, et cetera.
45:11
Speaker 3: So there's a lot going on.
45:13
Speaker 1: Of course that doesn't necessarily move in the direction of
45:16
Speaker 1: making people think themselves. Got I'll go and employ another
45:18
Speaker 1: ten people next week exactly.
45:20
Speaker 3: Yeah, I think it's a risk.
45:22
Speaker 7: I mean, I think you've obviously one of the big
45:24
Speaker 7: factors that's been supporting employment has been immigration, and if
45:27
Speaker 7: that we're now on, so that's something which is kind
45:30
Speaker 7: of offsetting some of this.
45:33
Speaker 5: But you know, we get back to the welfare reform thing.
45:35
Speaker 5: It's not the unemployment rate that matters. It's the huge
45:38
Speaker 5: number of people in activity rate active inactive.
45:42
Speaker 1: Okay, because someone please ask a question which we can
45:44
Speaker 1: give an upbeat answer. Can we go in the front here, Well,
45:50
Speaker 1: whatever the question is, we're going to have an upbeat answer.
45:52
Speaker 5: Okay, I'm not sure if this makes sense of them.
45:55
Speaker 1: I wrote it down, how much is fiscal drag affecting
45:59
Speaker 1: how much people spend, especially since households have a high
46:02
Speaker 1: like marg margin oppropunity to consume. Well, I mean, any
46:07
Speaker 1: any reduction in your income is going to affect how
46:10
Speaker 1: you spend, right.
46:11
Speaker 6: Yeah, I guess it's because it's kind of in the
46:13
Speaker 6: future that people maybe don't think about it in the
46:17
Speaker 6: same way. Because actually, going back to your point the
46:19
Speaker 6: Henry the point about fiscal drag, I think people are
46:23
Speaker 6: aware of it, but I do not think that they
46:25
Speaker 6: fully understand what it means in kind of number terms,
46:28
Speaker 6: and so I don't think that people will sit there
46:31
Speaker 6: and think, in five years time, my income is going
46:33
Speaker 6: to be lower by this amount, therefore I'm not going
46:36
Speaker 6: to spend today. My own view tends to be that
46:38
Speaker 6: if people have got money in their pockets, they spend it.
46:42
Speaker 6: But I'm not an economist, and I know the economists
46:45
Speaker 6: have slightly different views of expectations. I think people are
46:48
Speaker 6: a lot more short term perhaps than economists.
46:52
Speaker 1: And I'll say this is an interesting one because it
46:54
Speaker 1: means people need to have an understanding of how inflation works.
46:56
Speaker 5: To understand how physical drag works.
46:58
Speaker 3: It's visible either.
46:59
Speaker 6: It's like inflation. You go to the supermarket every week
47:03
Speaker 6: and that's why the Bank of England people care about
47:06
Speaker 6: food place inflation because when the place of food goes up,
47:09
Speaker 6: people do notice it and they will change their behavior.
47:14
Speaker 6: Beyond that, some of this longer is kind of hard
47:16
Speaker 6: to do, especially if your wages have grown up as
47:18
Speaker 6: well and you can't quit work. Got how much more
47:21
Speaker 6: you get and compare to how much more your life
47:23
Speaker 6: course than you It was a good question.
47:26
Speaker 7: Sorry, just on the comparison, because there was a lot
47:28
Speaker 7: of discussion around whether they would raise the basic rate
47:30
Speaker 7: of tax and then offset that with a reduction in
47:33
Speaker 7: the National insurance and that would have actually been slightly
47:37
Speaker 7: better for lower income All sort of basic rate taxpayers
47:41
Speaker 7: actually people in the lower brackets and they tend to
47:43
Speaker 7: spend more. So on your point, I think this is
47:45
Speaker 7: going to have a bigger impact on spending potentially than
47:50
Speaker 7: if they've gone that route.
47:52
Speaker 1: I apology to those you didn't get your question asked, Well,
47:55
Speaker 1: we'll be around for a few minutes afterwards, so do
47:57
Speaker 1: ask them then. And all there is to say, thank you,
48:00
Speaker 1: So much for joining us today.
48:01
Speaker 3: Hugely appreciated it and thank you you wonderful gust.
48:16
Speaker 1: Thanks for listening to the special post budget episode of
48:18
Speaker 1: Merrin Talks Money. If you like us show, rate, review,
48:21
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48:24
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48:26
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48:32
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48:36
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48:39
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48:41
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