Daily Politics from the New Statesman Middle earners targeted by budget
Nov 27, 2025
Join Will Dunn, the sharp-witted business editor who deconstructs fiscal policies, and Ailbhe Rea, the astute political editor analyzing Labour dynamics, as they tackle the latest budget. They explore the implications of stealth taxes and fiscal drag, which could disproportionately affect middle earners. The discussion dives into how these financial maneuvers might alienate voters and impact party politics. They also dissect Labour's strategies, including the contentious scrapping of the two-child cap, and ponder the broader effects on younger generations.
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Fiscal Drag As Hidden Tax
- Fiscal drag quietly raises taxes as inflation pushes people into higher bands and frozen thresholds.
- Will Dunn warns this is a major post-war revenue source that disincentivises promotions and growth.
Stealth Taxes Hit The Middle
- The IFS finds fiscal drag hits lower earners more than a straight income tax rise, making it regressive.
- Will Dunn warns it mainly pulls money from those earning £50k–£150k and can weaken incentives.
Political Risk Of Alienating The Middle
- Hitting the ‘squeezed middle’ risks political fallout because people feel unfairly treated despite not seeing themselves as rich.
- Anoush Chakelian argues that broken expectations can cost governments electoral support.