𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Having been fed the possibility of every tax rise under the sun, yesterday’s Budget may have seemed a bit of a relief. There was no manifesto-breaking rise in rates of income tax, nor an increase in VAT. A new council tax premium will hit homes above £2million, but spare people lower down the property ladder.

The Budget season was a triumph of what in politics they call ‘expectations management’ – condition people to think that things are going to be really bad, then when they turn out to be merely bad you hope that voters will be pathetically grateful. But if Rachel Reeves thinks she will be off the hook after yesterday’s performance she will be sadly disappointed. Nothing will disguise the pain that £26billion worth of tax rises is going to cause millions of taxpayers.

The freezing of income tax thresholds for another three years might not technically break Labour’s manifesto promises. But, thanks to inflation, it will mean that, year on year, ever less of our income will be spared tax and ever more people will be dragged into higher tax rates. The higher inflation – and the OBR actually increased its forecasts for inflation yesterday – the worse the effect of freezing tax thresholds becomes.

No less harmful was Reeves’ sneaky attack on savers. She invented a new basic tax rate of 22% applicable to interest on savings accounts as well as dividends and income from rental properties. Higher rate taxpayers will pay 42%.

Then there was the decision to limit cash ISAs to contributions of £12,000 a year. According to the brokers AJBell, out of a total of 22.23 million ISA savers, 14.3 million choose to invest their ISA money entirely in cash. They are not wealthy people – their ISAs are worth an average of just £13,500 – but Reeves has decided to clobber them anyway.

Her argument is that by encouraging us to invest money in stocks and shares instead we will improve our returns and enjoy a wealthier retirement. Yet putting our money into the stock market also exposes investors to dramatic losses. Between 2000 and 2003 and again between 2008 and 2009 the stock market lost nearly half its value.

Buy the wrong shares and you can lose your money altogether. It is little wonder so many savers prefer the safety of cash. Reeves was put up to reducing the ISA limit by the City of London which eyed up extra commissions. But realistically, many ISA savers will continue to keep their money in cash – it is just that they will be paying more income tax, almost certainly robbing them of the opportunity even to protect their savings from the ravages of inflation.

Cutting the cash ISA limit is nothing more than a stealth tax on people of modest means who have tried to do the right thing and put money aside. So much for Reeves’ parroted claim about keeping the tax burden on the “broadest shoulders”.

Does the Government want us to drive electric cars or not? Just weeks after announcing the return of grants for buyers of new vehicles she has punished those who fell for the bait with a three pence per mile annual charge – although only from 2028.

She extended the freeze in fuel duty but only for six months, which means that drivers of petrol and diesel vehicles will be paying more from next September.

There was at least some good news on energy bills. From next year the Government will transfer many of the social and environmental levies which have been pushing up bills onto general taxation. That should mean a drop of £150 a year on domestic bills.

But, with the exception of the ECO scheme, which was damned in a recent report by the National Audit Office for ruining homes with poor insulation and which will now be ended, we will still be pay green levies through our general taxes. The high cost of Ed Miliband’s green energy dream will be disguised.

Anyone hoping for a ‘rabbit out of the hat’ moment in yesterday’s Budget – a surprise giveaway left until the end – was disappointed. The Chancellor’s speech instead dribbled into an anticlimax. Reeves herself was left looking like the rabbit, staring into the headlights of a fiscal crisis which many economists still believe lies around the corner as public spending continues to spin out of control and tax revenues fail to fill the gap.

The question is how long before Keir Starmer loses patience with his unpopular Chancellor, does a Mr McGregor and puts her in a pie.