This is Money Podcast Should Rachel Reeves keep her tax promises - or just break them?
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Oct 17, 2025 Rachel Reeves faces a daunting £30 billion budget shortfall. The discussion revolves around whether to break tax promises or find alternatives without raising major taxes. Insights from the Institute for Fiscal Studies highlight potential policies that could plug the gap. The conversation also touches on millennials becoming landlords and the practicality of doom-prepping finances amid market uncertainties. Lastly, the race for driverless taxis in London reveals exciting tech advancements and future possibilities.
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Perverse Incentives From Piecemeal Tax Changes
- The UK tax system now skews behaviour with many perverse incentives like the 60% effective tax band and VAT registration thresholds.
- Continued 'edge tinkering' risks making the system worse without solving base problems.
Prefer Structural Reform Over Small Hikes
- Reforming and simplifying major taxes (like council tax and inheritance) would reduce distortions and raise revenue more fairly.
- The IFS recommends structural shake-ups rather than many small, targeted hikes that complicate the system.
Edge Measures Versus Core Rate Increases
- The IFS modelled specific measures (council tax surcharges, inheritance tweaks, bank surcharges) that could raise ~£20bn without touching core rates.
- But raising the big three by 1 percentage point each would yield ~£30bn, showing trade-offs between politics and revenue efficiency.