The Wealth Data Just Arrived – And Labour’s Budget is in Meltdown!

Right, so you can always tell when a government is about to pick your pocket because it spends the entire week insisting it’s doing you a favour. This time around, they’ve spent the last month doing that and that’s exactly what Rachel Reeves has done with this budget. She calls it a plan for ordinary working people, she used that phrase, as if the numbers haven’t already shown it’s the workers who are paying for it. She’s hauled in tens of billions by freezing thresholds, taxing wages by stealth, nudging commuters for a bit extra, and leaving renters exactly where Westminster always leaves them: paying more and getting nothing. Meanwhile the people who actually hold the wealth barely feel a tap on the shoulder. Property stays protected. Capital stays sheltered. Markets stay reassured. And the government congratulates itself for being fair. So let’s drop the performance and say it plainly: this is a budget for owners, funded by earners, all dressed up as responsibility. Labour is just another Tory Party, having completely abandoned the working class that created it and this budget stamps that truth out in triplicate.
Right, so Rachel Reeves has delivered a budget she insists is built around working people, and the funny thing is she says it as if nobody is going to bother reading the numbers despite all the analysis that gets done, yet so much of it has framed this as yes being high tax burden, but implying she has come after the rich. She really hasn’t. The truth does sit there in the numbers, and it’s not subtle, it shouldn’t need interpretation but it does need some honesty. What she has set out is a budget for people who own things, people who sit on assets, people who live off investments and inherited value, and it is being paid for by people who get up, do the job, take home the wage and hand over more of it every year because the tax threshold never moves. She has raised tens of billions through the parts of the system that fall on wages and consumption, and she has protected the parts of the system that store wealth. It is not complicated. It is just unpleasant to admit, which is why Labour tries not to.
The UK tax burden is rising to its highest level since the war and that matters less than the way she has chosen to get it there, because you can raise taxes fairly or you can raise taxes quietly, and she has chosen quietly. She has frozen the income tax thresholds all the way into the next Parliament, which means every pay rise you get under this Labour government will push you further into tax you never voted for, and it is astonishing how normal that tactic has become because it is the cleanest way to tax workers without ever announcing you are taxing workers. The tax threshold freeze brings in around eight billion a year by the end of this forecast and that is not income from the wealthy, it is income from ordinary PAYE earners who never asked for this and who cannot avoid it. So when Labour says it is on the side of working people, you can ask the simple question: which ones? Because these measures don’t land on the asset-rich or the investment-heavy or the pension-insulated. They land on anyone who does not have wealth to hide behind.
The mansion levy, the thing Labour points to when challenged about fairness, is so small it feels designed as a talking point rather than a tax. It raises a few hundred million in a system measured in billions and it does not alter the shape of property inequality, it does not rebalance the distribution, it does not change anything fundamental about how wealth operates in Britain. You can see that in the way the property market reacts, which is not to react at all, because this levy has been pitched at a level so gentle it is almost ceremonial. It is the sort of measure you reach for when you want the political benefit of saying you taxed the rich while ensuring the rich barely feel it. If Labour wanted to rebalance property wealth it would revalue council tax bands or align capital gains with income tax or tax second homes properly or do any one of the things every serious independent institute has proposed for years, and it has chosen none of them, because asset owners remain the group no major party wants to upset. They’ll leave the country they bleat. Well let them go, they can’t take property with them.
The biggest tax change on income that is not stealth is the two-percentage-point rise on dividends and savings income, and even that comes in far smaller than the sums pulled from wages. It raises just over two billion, and that is not nothing, but it still leaves the UK in a position where income from wealth is taxed less heavily than income from labour. If Reeves truly wanted to tax fairly she would begin by equalising the two, because the gap between them is the gap that allows people with assets to live comfortably while workers fund the state, and that is the thing no government seems prepared to touch. You cannot talk about fairness and leave untouched the basic rule that returns on capital are treated gently while returns on labour are treated as the default fiscal sponge, but Labour is leaving it untouched because the whole economic model depends on wealth being sheltered, and this budget has no interest in altering the model.
Renters come out of this budget exactly as they went in, which is to say overlooked and overcharged. You can see it in the way every major relief either targets homeowners directly or protects asset categories indirectly and in the way the cost-of-living measures assume you have a property and a bill to adjust. Renters get no structural help. They get higher transport costs through VAT reform. They get the full brunt of fiscal drag because wages are the only lever they have. They get nothing to hold landlords to account, nothing to reduce rents, nothing to stabilise a market that has been allowed to become predatory, and nothing to help them accumulate anything resembling security. If you designed a budget that systematically ignored the conditions of renters it would look like this one, because it mostly pretends they do not exist except when it needs their tax contributions. Labour knows renters make up a rising share of the electorate, but renters do not own the assets the party is afraid of touching, so their interests come second every time.
Transport measures tell their own story. A rail fare freeze is welcome because this system has been ripping people off for decades, but it is one year of temporary relief wrapped around a structure that remains expensive, fragmented and above all private. The bus fare cap is another small win, but it is a sticking plaster on a deregulated system that hits the poorest hardest. Meanwhile the new tax on electric vehicles is structured in a way that penalises people who were told to switch to EVs in the first place, and that tells you something about how the Treasury views commuters: as predictable, captive revenue sources. The tax has been pitched as future-proofing the system, but it is another example of Labour pulling money from the places easiest to pull from because the alternatives would require political courage. If you wanted to make transport fair you would reintegrate the system, you would rebuild regional infrastructure, you would stop funnelling subsidies into private operators, but this budget has chosen continuity.
The two-child benefit cap is the one genuinely progressive measure in the entire package and it is long overdue. It will lift hundreds of thousands of children out of poverty, which tells you how cruel the cap was in the first place. Labour knows it, they voted to keep it a year ago and suspended several MPs who refused to comply. Now they celebrate lifting it because it was cruel. Do not give them props for this therefore. Especially since even that decision comes with a catch because while ending the cap is welcome, its cost is funded indirectly by the same workers Labour claims to defend and many of the people affected by the cap, despite right wing mouthpieces claiming they are useless breeders, will themselves be working. It is entirely possible to support the decision and still see the contradiction because the government could have paid for it by taxing wealth, taxing property, taxing unearned income, or taxing the sectors that have done well out of political stability. Instead it chose to fund a progressive policy with regressive tools, so the net effect is bittersweet. A socially decent outcome paid for by the very people who have been dragged into higher taxes by stealth, which means the redistribution is complicated and the politics are not as simple as Labour wants to pretend they are.
The energy bill reduction coming in 2026 is another example of small relief pitched as big generosity. A hundred and fifty pounds off bills in a market where prices have soared for years is marginal, and it comes late, and it comes without structural reform of the energy companies or the contractual model that created the crisis in the first place. The government has chosen to adjust levies and subsidies instead of challenging privatised profit, so the consumer gets a small adjustment while the corporations that dominate supply lines continue unchallenged. If Labour wanted to challenge the system it would create a public energy company, as it once promised - not GB Energy if that sprang to mind, because that is structured in a way that still channels public money through private investment models - or cap generation profits, or re-enter the retail market with publicly owned supply, but it has backed away from all of those options because it does not want to frighten markets. So you get a token bill reduction without any shift in energy ownership or control, which is exactly how the system protects itself.
The pension triple lock remains intact because older homeowners are the last protected constituency in British politics. Their incomes rise automatically while workers’ take-home pay shrinks through fiscal drag, and nobody in Westminster touches that imbalance because the electoral map is built around it. You can argue that pensioners deserve security and you would be right, but you can also argue that the system is biased toward those who already hold property and assets, and you would be right as well. This budget protects the well-off retired by raising the national living wage far less sharply in relative terms than pension increases and by refusing to tax property wealth. So you end up with a situation where older asset-holders see their incomes protected while younger workers and renters absorb the load.
The treatment of the financial sector in this budget says a lot about who Labour is speaking to behind the slogans. A stamp duty holiday for companies listing on the London Stock Exchange is a clean signal that the City is still the core audience, and the avoidance of any financial transactions tax or windfall levy shows the same priority. These choices are not accidental. They exist because Labour wants to demonstrate credibility to investors and because the leadership has decided that market reassurance is the overriding condition of government. That means taxes on wealth are off the table, taxes on corporate profit are barely touched, and anything that might redistribute power is treated as a risk. Everything Labour supposedly stands for, but not anymore. So wages become the thing you can tax, renters become the people you can ignore, and those with assets become the people you protect. You can see the logic if you follow the incentives. The party wants stability as defined by the markets, not fairness as experienced by the public.
The OBR headroom tells its own story because Reeves has doubled it over the forecast, which means she had room to manoeuvre and chose not to. That headroom could have been used to reverse the most damaging cuts in local government, or to rebuild early years funding, or to take pressure off the NHS, or to scrap the worst parts of Universal Credit, or to undo the damage done by austerity, and she chose instead to bank it because she wants the markets to see Labour as disciplined. The irony is that she is copying the Conservative strategy she claims to reject because this idea that the markets must be placated at all times is the central dogma of the last fifteen years, and Labour has adopted it wholesale. What it tells you is that the space between the parties on economic management is now narrower than ever, because both are operating under the assumption that the state must be shrunk and the burden must fall on workers, and the only difference is how politely they describe it.
When you look at the things Labour could have done instead, the contrast becomes even starker. Equalising capital gains tax with income tax would have raised at least as much revenue as the threshold freeze, but Labour won’t touch it because it would upset investors. A modest tax on wealth above a high threshold would have generated several billions, but Labour has ruled out wealth taxes entirely. Revaluing council tax would have modernised one of the most regressive taxes in the country, but Labour won’t go near it because it would upset homeowners. A proper windfall tax on banks and energy companies could have funded real redistribution, but Labour talks about growth instead of fairness because growth is a word that reassures the markets, but we never see the benefits of. Again and again the pattern repeats: anything that touches wealth is avoided, anything that touches wages is embraced, and anything that invites the markets to question Labour’s orthodoxy is blocked before it reaches the final draft.
What this budget really shows is the deep continuity between Labour and Conservative fiscal architecture. Different slogans, same machinery. The Conservatives spent years shifting the burden from wealth to work and Labour has walked straight into that model without altering a thing because it has internalised the same fear of capital flight and the same belief that economic credibility is something granted by financial institutions instead of voters. So fiscal drag becomes permanent, wealth protection becomes standard, corporate reassurance becomes the goal, and rhetoric about “ordinary working people” becomes the cover for a system designed to keep labour cheap and capital safe. The public did not vote for austerity by stealth, but they are getting it all the same, because the party that promised change has decided that change is too risky for the people who already hold the keys to the economy.
It is impossible to write about this budget without talking about renters because the political neglect is so extreme it stops being accidental. If you are a renter in Britain right now you face rising rents, insecure tenancy, minimal rights, and landlords who can offload mortgage costs onto you while the tax system shields their returns. Nothing in this budget changes that. There are no rent controls, no eviction protections, no measures to stop corporate landlords buying entire developments, no support for local councils to expand housing stock, and no plan to shift the balance of power in the housing market toward people who actually live in the properties. Labour has made a calculation, and it is obvious when you look at the decisions: it believes protecting property ownership is politically safer than protecting renters because ownership is still the core marker of security in this country and the party does not want to be accused of undermining it.
You can see the same dynamic in the handling of local government funding because councils have been pulled apart for more than a decade and this budget does not reverse that. Councils are still expected to run statutory services with insufficient funding, they are still cutting support for vulnerable groups, they are still unable to meet basic demand in housing, transport and social care, and Labour has chosen incrementalism. There is talk of efficiency, talk of flexibility for mayors, talk of targeted investment, but no recognition of the scale of the crisis that has built up under austerity. Reeves had the brass neck to say austerity is over, but it damn well isn’t The result is another year where essential services are held together with short-term grants and patched budgets, and communities face the consequences. This is not what change looks like. It is what political cowardice looks like.
There is a lot of talk about stability in this budget, and stability is the word you reach for when you do not want to admit you are avoiding decisions. The government says it wants stability for households, stability for businesses, stability for investors, but stability for whom? Because if you look at the distribution of gains and losses it is stable for asset owners and unstable for renters, stable for pensioners and unstable for the working-age poor, stable for companies and unstable for local services, and the only group carrying more weight is the one Labour keeps claiming to champion. It is a strange kind of stability that asks workers to pay more every year while refusing to take anything significant from those who hold unearned wealth, but it is consistent with the politics Labour has chosen.
The part of the budget that talks about fairness is the part where the contradictions become unavoidable though. Fairness would involve taxing wealth at least as heavily as labour. Fairness would involve relieving renters in a market that rigs the odds against them. Fairness would involve undoing the structural advantages handed to property owners. Fairness would involve challenging privatised utilities and landlords who act without restraint. Fairness would involve recognising that people with little wealth cannot absorb the same blows as those with a lot. But this budget uses the word fairness while refusing to align the system with it. They call it fairness because it sits better in a speech than the truth, which is that the budget continues the long trend of extraction from labour and protection for capital, and Labour has decided that this is the safest political choice.
If you zoom out and look at the broader economic picture, it becomes obvious that the UK has an economy built around property and financial assets, and this budget reinforces that model. House prices remain central to household wealth. Pensions depend heavily on market performance. Corporate ownership shapes the labour market. The tax system privileges investment over work. And governments, Labour included, behave as though this structure is absolute. You can see that in every decision Reeves has made. The system rewards ownership, and the budget protects owners. The system punishes renters, and the budget ignores them. The system relies on wages as the primary source of tax revenue, and the budget doubles down on that. The system treats capital as too important to tax seriously, and the budget treats it the same.
There is a point where you have to stop pretending the choices in the budget were constrained by economics because they were constrained by politics instead. Labour had the room to do things differently, and the independent numbers prove it. A more progressive mix of taxes was possible. A shift toward wealth taxation was possible. A challenge to the property market was possible. A change in transport ownership was possible. A serious reversal of austerity was possible. But all of these things were avoided, and that avoidance tells you more about the government’s priorities than any speech about fairness. What’s happening here is not ideological neutrality; it is ideological obedience to a model that treats economic power as untouchable. It is a cowards budget.
When you look at this budget through the eyes of someone on PAYE or self employed, it feels like a tightening belt dressed as responsibility. Wages are squeezed by tax freezes. Bills rise and fall arbitrarily depending on when the government needs a headline. Rent goes up because nothing is done to stop it. Services decline because local government is starved of funds. And the promise of a better life remains tied to asset ownership that most people under forty and a great many above that too will never achieve. The government keeps telling people to work hard because working hard is the one lever it is comfortable pulling, but it can’t explain why the system keeps getting harder for the people who do the work while getting easier for the people who own the assets. That contradiction sits at the centre of British politics, and this budget does nothing to resolve it.
The verdict is simple because the budget is simple. Labour has chosen to raise money from workers instead of wealth, to protect property instead of renters, to stabilise markets instead of communities, and to talk about fairness while preserving one of the most unequal tax systems in the developed world. They did not have to make these choices. They chose them, because they have no balls. And the country will feel the consequences long after the speeches are forgotten because this is not a budget built to fix anything; it is a budget built to avoid confronting the people who have benefited most from the last fifteen years. Cowards the lot of them.
Where Labour run scared of taxing wealth, they also seem to be afraid of all of us having a decent legal system to protect us too, as long as we keep paying more for it though of course. We’re about to lose 800 years of the right to trial by jury it seems, but this is something that was tried before and failed horribly, yet it seems Starmer’s lot are prepared to make this mistake twice. Get all the details of that mess here.
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