Oh Rachel, where did it all go wrong? Would it be harsh to suggest it was the day you accepted the job? The Chancellor delivered her latest budget at the end of November and set the scene for the new year and several beyond. Rachel Reeves remains as Chancellor at the date of writing this article, but political pressures are such that she may not be by the time you are reading it.

It wasn’t so much the content of the new measures that made the headlines; it was the context in which it was delivered. Reeves told us there was a big black hole in the nation’s finances that needed to be filled by tax rises. The Office for Budget Responsibility, which feeds the Chancellor her numbers, subsequently explained that the figures were rather better than the Chancellor stated in her speech.

The tax rises were used instead to fund greater welfare benefits. There is nothing wrong with that; it’s the way in which her party runs the economy when it’s in power. It’s the fact that she needed to deceive us that has caused the controversy.

The measures the Chancellor announced fell well short of what most ‘experts’ thought she might do in order to increase the tax take. From that perspective, many people breathed a sigh of relief.

The biggest tax raising measures in a generation

That said, most of them were still reeling from the announcements in the 2024 Budget. You remember that one, don’t you? The biggest tax raising measures in a generation, which the Chancellor assured us were one-off and that she wouldn’t need to come back for more. Of course, she didn’t need to come back for more; she chose to, in order to curry favour from her backbenchers.

Perhaps the strangest element of the Chancellor’s changes were that these tax-raising measures don’t take effect for anywhere up to five years’ time. What happens in the meantime, Rachel?

Maybe she thinks her unearned income surcharge of 2% on rental, dividend and interest income will do the trick, but I can’t see that it will be enough. The option to increase tax rates was available to her and probably would have yielded more, and sooner.

Some commentators, often those with opposing political views, suggest Reeves could be the worst Chancellor of all time, and that she is way out of her depth. It sounds harsh, but the country’s finances will be under some pressure if the pundits are anything like right.

Have a Happy and Prosperous New Year.