Chris Mason: Budget felt cautious despite range of small measures

This Budget can best be described as a collection of numerous minor adjustments. Westminster is currently scrutinizing the 150-page Red Book, which details the Budget measures, alongside the Economic and Fiscal Outlook published by the Office for Budget Responsibility (OBR), the government’s fiscal watchdog and forecaster. The Red Book outlines 98 specific measures, noticeably more than usual and exceeding the number in Rachel Reeves’ previous budgets. However, most of these initiatives have only a modest impact on government finances.

The nature of these measures explains why those involved in preparing the Budget were frustrated by pre-release reports dismissing its significance, while those reports also held some validity. True to expectations, this Budget was smaller in scale regarding overall taxation and spending than many recent ones, yet it introduced a variety of targeted changes. These include increased taxation on savers, landlords, and banks. Given Labour’s commitment not to raise income tax, national insurance, or VAT—the major sources of revenue—raising funds has necessitated targeting certain sectors. This strategy carries political risks, with potentially vocal opposition, as seen in farmers’ strong reactions to past inheritance tax reforms pushed by Rachel Reeves.

John Healey faces the dual challenge of grappling with a strained public financial position and widespread household financial difficulties. The OBR’s commentary reflects a familiar warning: “The UK’s economic and fiscal position remains very challenging.” It highlights recent negative developments such as conflicts in the Middle East, adding that the country’s economic outlook is marked by high levels of debt, tax, inflation, and interest rates. The future remains uncertain, with the OBR emphasizing that markedly better or worse economic outcomes are equally likely. Questions linger about geopolitical events in the Middle East and political developments in the US and Israel, which could influence economic conditions further.

Given these constraints, Healey’s ability to enact substantial change appears limited. The Budget seems designed more to ease hardship than to dramatically improve circumstances. While mitigating difficulties is politically commendable, such measures are costly and may offer limited electoral benefit. As a result, the government is relying on this “fleet” of smaller measures to provide its MPs with policies to promote, even if they are not transformative. Luke Tryl, UK Director of More in Common, noted the Budget’s “softly populist tone,” targeting “groups the public have little sympathy with” such as banks and landlords, while delivering support to hard-pressed households and small businesses. He also praised the chancellor for avoiding direct energy support to benefit claimants, instead offering council tax relief to a wider group to reassure the “squeezed middle.”

Opposition parties from various political perspectives have criticized the Budget as thin and lacking impact. In response, the government presents it as one component of a broader strategy under the new prime minister and chancellor, including plans to support youth employment, reform benefits before Christmas, clarify the UK’s long-term EU relationship, and articulate a 10-year vision championed by Andy Burnham. All told, the Budget comes across as cautious and pragmatic. As one government insider described it, this is a “Mr Sensible Budget”—devoid of flashy initiatives but hopefully free of hidden financial pitfalls. Time will tell if this prudent approach pays off

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