Inflation and the Budget - are things about to get better or worse?

0:02Welcome to This Is Money podcast, sponsored by Trading212. Download the Trading212 app today and open a cash ISA with promo code TIM to get the 12-month bonus promo rate of 4.83%. Terms apply. I'm Georgie Frost and joining me in Simon Lambert today is Rachel Rickard Straus. And coming up, inflation is surging again. Simon tells us how to stop it ravaging our finances. We'll have a bit of budget chat. Is there anything you should be doing with your money right now ahead of the big event next week? Also stay at the rent tribunal that's got landlords frothing. And where are the luckiest regions if you want to win big and the premium bonds draw?

0:40Don't forget to stay up to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, in case you hadn't noticed, stuff is getting more expensive again. Inflation spiked to 3.5 % in September. the highest level in 11 months, thanks largely to fuel prices and energy bills. Heck, even fun stuff is going up again. The rapidly rising cost of living spells bad news for our standard of living, savings, mortgages and taxes. But is there anything we can do about it? A very warm welcome, Simon. A very warm welcome, Rachel. What is happening, firstly, Rachel, to inflation and why?

1:22Why is it going up? What is going up? Why is it going up? I mean, everything is, but the big driver is fuel. No surprise that's to do with Straits of Hormuz, the same problems we've been having now for some months and conflict in the Middle East. That doesn't look like it's abating any time soon, although you never really know. These things can turn on a dime, but that means that we're probably in it now for a little while. OK, Rachel, so we're going to be stuck with this for a while. Before we get in, though, to what we can do about it, I noticed a picture of Oasis on your article. Even the fun stuff is going up.

2:04So it's not just fuel, Oasis?

2:07Simon Lambert: Yes, this was actually cited in the ONS report, not Oasis specifically. It said that recreation and culture also pushed up inflation. Now, obviously, the fact that we spend less of our monthly, weekly, annual spend on recreation and culture, and in particular on live music prices, means it didn't push up the overall inflation number by that much. But it was enough for the ONS to mention. And it was live music ticket prices that was flagged in there. And it's not entirely clear whether Oasis ticket prices for Nedworth, starting at£170, are to blame for this. but I do wonder whether the fact that you know, so Oasis are doing what is it, six nights at Nebworth, that's 750 thousand tickets at Nebworth alone and then you need to add in all the other tickets that were sold for the other venues that they're doing and those were all sold in September in this sale and the prices were high, as I said It starts at£170 to go to Nedworth and then there are ticket prices above that.

3:22Simon Lambert: This isn't the first time that this has happened, OK? So this is the first time I've noticed live music ticket prices flagged in there. But one of the things that drove up inflation not last year but the year before in one of the months was hotel prices. And it was put down to the Taylor Swift Eras Tour. And the cost of hotels going up as people went to places around the country to stay in those hotels to go off and see Taylor Swift. So there is actually an effect that does come from these kind of mega tours that you get and the amount of money that is spent not only on tickets but on things around them.

4:03How does inflation affect us beyond just tickets at Nebworth?

4:08Simon Lambert: Well, it affects us in a way that it reduces the spending power of the money that we have. So the cost of living crisis is pretty much ended, you could say, two years ago, right? But over the last two years, even though inflation has been lower than it was, it's still been above target. It's been above target for two whole years. And the effect of that is that the value of what£100 would have bought two years ago is now only£92. And that illustrates how you lose your purchasing power. And persistently high inflation takes away your purchasing power faster. And so what you need is you need your wages and your savings to be going up by more than inflation.

4:58Simon Lambert: but of course you need to do that after tax and the higher the inflation number is the harder that is and the higher the tax is the harder that is and as we've talked about in the podcast before there's more people being pulled into 40 tax so that makes it more difficult personal savings allowance the tax-free savings allowance hasn't been increased um since jesus was a boy uh and savings rates are the interest on savings is about to go up so you need to get your money into an nicer so it's all those things but in the pocket it hits you sometimes in really lumpy and obvious ways and one of the things i flagged in my column was the fact that it cost me 127 pounds to fill up the car with diesel last saturday and i have obviously registered this more times than last saturday but it's eye-watering how much money it costs to fill up the car it's a family car it's got a big tank but it's not particularly huge tank but i looked at the numbers it would cost me£75 to fill that up in February before prices started spiking off the back of the Iran war.

5:58Simon Lambert: So that's£50 more every time we fill up the car. I reckon that we fill up the car on average twice a month. It's probably less, slightly less than twice a month. So that's£50 on both of those times. That's£100 a month more on that. And then you compare your household costs to say like five years ago before the energy price spike we're paying 100 pounds a month more for our energy personally that's what we're paying 100 pounds a month more for our energy then you've got the fact that due to higher inflation interest rates have gone up we're paying last september we started paying 500 pounds a month more on our mortgage probably your monthly food bill's gone up by at least 100 pounds add all of those things together and what you have is less money in your pocket and it's the reason why people are talking about things like, well, I can't afford to take the family to Wagamama anymore or you have less money to spend on expensive Oasis tickets.

6:57Absolutely right. Rachel? All of that cascades, doesn't it? For every£50 that you're spending on fuel, you're not spending it on something else. That's a business that's not getting those receipts from you as well. And so it just clogs everything up and you end up with people with less money to spend on discretionary items. And it's difficult, isn't it? I mean, the worst elements of inflation, you could argue, are those core things, are things that people have to spend on and so they have to just suck up. But when inflation on those rises, all of the discretionary things get cut back So then it will hurt hotels and B &Bs and wagamama and all of those things that people would like to spend money on.

7:47And it puts us in a bad mood as well because you just, when things are difficult anyway with your finances, and then you don't have that bit of extra discretionary spending to spend on the little pleasures, or the little pleasures become things that you resent because suddenly your Netflix has gone up and you can't afford to go to the cinema or it makes you more angry having to pay out for the price of popcorn at cinemas than it brings you joy by going in the first place. It all has an impact on sentiment as well.

8:22Simon Lambert: And I think that whilst obviously it's the essentials that really matter and we're talking about this from a very privileged position, okay, where inflation really really hurts people is people who are on low incomes and who are scrabbling to get by and they don't have enough left at the end of the month and they can only dream of spending 170 pounds on an oasis ticket or potentially even can only dream of being able to stick 50 pound a month in a savings account or something like that but where it affects a lot of people and where you really start to feel it over the long term is the fact that it depletes your standard of living because the essentials are more expensive and you've got less money to be able to spend on enjoying your life and let's face it most of us don't go out to work every day just so we can cover the essentials we do it so hopefully we can enjoy life you start to see your the things that you can do whittled away and if that happens every year for a prolonged period of time it becomes a real grind and that's what's going on at the moment is we feel like this is just never going to end.

9:26Simon Lambert: Nobody feels like they're getting any richer. Nobody feels like they're able to enjoy their lives more. And in fact, most people that you speak to basically will grumble that they actually felt much better off, you know, five years, ignore the pandemic, but they felt much better off five years ago. And that actually their ability to go out and do stuff that they want to do has been substantially depleted since then. Can I bring in the role of government here? because as you say, we're going to have a budget next week in which we have a chancellor and a prime minister very committed and vocal about wanting to tackle the cost of living.

10:04It's an issue that is to a large extent out of their control. The things that are driving it up are not things that government has anything to do with. However, we've got a lot of government debt is linked to inflation, is linked to the cost of living. So as that goes up, so does government debt. The more of that we have, the less we have to spend on other things. So the less support there can be from government, while simultaneously, we have a government under pressure to provide support to people struggling with the cost of living, that is absolutely desperate to announce things like freezers on the cost of bus fares and whatever they can do.

10:48And probably there'll be some sort of help with energy bills, which is going to be one of the biggest stresses next year. That all costs money. And we have this continual loop that the government is struggling with, whereby it wants to spend more to provide more help, which increases the cost of government debt, which then decreases the amount of money that it has to spend on things like helping people with cost of living. I don't envy that Chancellor. On Rachel's point there, Simon, is there something that could have been done related to fuel? Because surely the government's tax take has been gone up if the price of fuel is going up.

11:24Could they not have given some of that back?

11:26Simon Lambert: They're on a really sticky wicket there because a lot of the cost of a litre of petrol or diesel is tax. You've got And you've got fuel duty, which is charged at a flat rate per litre. You've then got VAT charged on top of that. So you're paying. It is an example of one of the places where you pay tax on tax. Now, as the price of oil has risen and the price of petrol and diesel has risen, the government has been taking in more per litre in tax. What you would expect is that the cost going up would reduce the demand somewhat, obviously not completely, but there is an elasticity there. And you would find that potentially there's less fuel being sold.

12:16Simon Lambert: But net net, government's probably profiting from this. The difficult situation they're in is that fuel duty was meant to have been rising and has, you know, a long time ago and has been meant to have been rising. and it's been put off and it's been put off and it's been put off and it's been frozen it's been frozen um so they're already in a really difficult position and in fact you know it was meant to be unfrozen and then that can's been kicked down the road but they've also got the issue where the increasing shift towards electric cars means that there are more and more motorists who aren't paying fuel duty because their cars run on electricity and electricity only has a small amount of vat on it So that's why they've introduced this pay-per-mile scheme that's going to come in for electric cars and also very controversially for hybrid cars as well.

13:07And this EV pay-per-mile system that's going to come in has got a lot of people's backs up because then they're saying, well, we did what you told us to do.

13:17Simon Lambert: We bought an electric car and now you're going to charge us more money. So it's really difficult, the fuel duty thing. And actually, because so much of our petrol and diesel prices are tax, we feel the price rise due to the oil price less than somewhere, for example, like the United States, where they have much lower tax on fuel. But therefore, it means that people really feel it when they go to the pumps. And that's, you know, something that Donald Trump is having to deal with at the moment. But then you could argue that some of this might be his fault anyway. Actually, can I ask you a question?

13:54Simon Lambert: So you are spending quite a bit of your time in another country. Yeah. In Canada. In a few countries, but yeah, particularly in Canada, yeah. In Canada, okay. So when I think of Canada, I think of a country that's probably doing better than the UK economically at the moment, if only because I keep seeing their teacher's pension fund buying up bits of our country. But I think of it as a country that's probably doing economically better, where the vibe would be different, where people would be feeling a bit more confident, you know, not feeling this grind as much. Is that actually true? Now, I don't know if this is a national sentiment thing, but I think the Canadians in that regard are very similar to the Brits.

14:41They are quite a navel-gazing, dare I say it, somewhat pessimistic, very polite, but somewhat pessimistic country. I actually went to an event the other day, a book club event. You know, someone had written a book about Canadian prime ministers and said, oh, you know, the world is loving Mark Carney. At the moment, it won't last. We won't give him enough time. Give it two years. Give it two years. It was very negative. Even though fuel prices, for example, are half the price in Canada as they are here, they have gone up a little bit recently. And there is a lot of negativity here. I do think, though, this is around the world problem.

15:18I don't think we are exclusively the only ones that are complaining about things like cost of living. It is happening here. Rents are extortionate. The cost of services are so much more expensive here. Anything like getting your hair done or going to is more expensive. So sentiment, I would suggest it is very similar here. Whether the actual economics are very different, I don't really think they are. That's my experience of being in Canada. But I'm not here, I think, enough. or, you know, I don't drive around here. I don't go for big shops. I don't experience what it's like on a day-to-day basis.

15:56All I get is every morning I go to a coffee shop and I hear what they're saying in the coffee shop, which is pretty negative. And also bearing in mind, they've just had tariffs slapped on them. There's the threat from America at the moment. There's a lot of strong feelings, I'd say, in Canada. And they're also going through an election cycle at the moment.

16:14Simon Lambert: That's interesting. And I think you're right. It is a bit of an everywhere problem. I mean, apparently people in France aren't that happy right now either. No, so I noticed. Just before we move on to some tips we can have from you, Simon, the Bank of England, Rachel, are we going to have rate rises? It's more than likely. I mean, we were quite close in the last Bank of England rate decision. It was split 6-3, so 6 wanted to hold, 3 wanted the rate to increase. Next one's on 5th of November. A quarter point percentage point increase is is more than likely because of the inflation that we've been talking about.

16:55In many ways, it may feel like the absolute most counterintuitive thing to do. You know, we're talking about costs being high already, families already struggling. And then to put up interest rates, which inevitably puts up mortgage rates and all sorts of other costs as well, that's going to hurt. But the Bank of England is probably more fearful of rising inflation. And by putting up rates, you sort of take this as if you take oxygen out of the economy. You stop things from heating up quite so quickly. It might not do that if inflation was rising, but wage growth wasn't keeping up, or if we were seeing a huge situation with rising unemployment.

17:42And while there's a bit of that, actually, the labour market is proving remarkably resilient. It doesn't look like that to me when I'm looking on LinkedIn. It looks like an absolute bloodbath. Probably that's to do with my algorithms and partly the industry I'm in. And also there are a lot of scary headlines at the moment. We've seen this week Barclays cutting 5 ,000 jobs due to AI. We see those sorts of figures regularly in the headlines. So there's a lot going on in some pockets and certainly in some demographics as well. You know, we talk about the issues that young people in particular are having.

18:23And it's no consolation at all for individuals who are facing difficulties finding work to talk about these broader macroeconomic figures and how the labour market is resilient. But that is what the Bank of England looks at. So if it's seeing that the labour force is looking OK, but that inflation is rising, it'll probably go for it and put up interest rates a little bit. this year and then more than likely more yet next year as well. So beyond Simon, probably the most dystopian vision of the future, banking collapses, government failures, all that sort of thing. Let's be more positive on the sort of things that we can do.

19:11So as we've been saying, I think since the pandemic, we live in unprecedented times. Unprecedented is the watchword. But volatile is also the other watchword. And it does, as Rachel says, feel like even if we get over one hump, there's another one coming down the road. So what can we do to protect ourselves for whatever may come, but particularly with relation to inflation? Is there anything that we can do?

19:37Simon Lambert: There are some things that we can do. So to go back to just some of the pinch points I was talking about there, right, fuel prices. Obviously, there's not really a lot that you can do about that. You can use your car less, but if you do need to get places, that might be a bit of an issue. But even, you know, things like getting on your bike or walking to the shop rather than just randomly driving five minutes to the shop will make a difference. But obviously, for many people, a lot of their journeys are essential. So there's not a lot you can do about that one. But what you can do something about is your energy bills.

20:10Simon Lambert: Now, energy bills went up at the start of October when the energy price cap rose. that's not in the September inflation figures. It's going to be in the October inflation figures. But there is a warning that the price cap is going to spike again in January. It is, however, still possible to fix your energy bills and save money, both on the price cap now and on the January price cap. And I would seriously consider doing that. You could be very optimistic and decide that actually energy bills are going to go down and so you'd be fixing at a higher level. But I think it would be a decent bit of insurance to fix your energy bills.

20:49Now, I fix mine and I never fix my energy bills.

20:53Simon Lambert: I am an eternal optimist who never fix their energy bills. But I fixed mine just after the Iran conflict kicked off because I was like, yeah, this is not going to get any better. And I'm now looking at it and thinking, I wish I'd fix for longer. So look at your energy bills, your savings. Inflation is the silent killer for your wealth, right? So make sure that your savings are on the best possible rate. Inflation is 3.5%. You can get an easy access cash ISA that pays you 4.83%. People who were listening closely at the start of the show might remember that one from the podcast sponsor Trading 212.

21:30Simon Lambert: Other ISAs are obviously available. You can also fix your rate. But you can beat inflation with your savings. But only if you do something about it. Because if you don't do something about it, there's a high chance that your bank or building society is paying you a piddling rate. So go to thisismoney.co.uk forward slash save to find our independent Best Buy savings tables and just do it. Move your money. If your mortgage fix is due to end soon or in the next 12 months, look into this, right? So if you've got one that's due to end within the next six months, you should be able to find a new deal now.

22:05Simon Lambert: and potentially if rates come down between now and then you can shift to another deal. The trick is to add the fees to the loan, right? Do then pay them off when you take the loan out, otherwise you end up paying interest on them. And to speak to a broker. Lots of people when they go and speak to their own mortgage lender get told that they can't look at their mortgage fix yet because they can only do it within three months of when it's up. But if you speak to a broker, for example, Broker This Is Money Works with L &C, you can do it up to six months in advance add the fees to the loan get them to double check keep an eye on rates hopefully they'll come down but if they go up you've at least locked into a decent deal now go to thisismoney.co.uk forward slash mortgages to find out more investing investing is the best way to grow your wealth long term and it's been proven to be the case there will always be a reason not to invest there will always be a worry and there's lots of worries at the moment the stock market is going to crash.

23:01Simon Lambert: I cannot guarantee you that the stock market is not going to crash. But zoom out, right? And you will see that even those crashes are bumps in the road. If you put it off and you put it off and you put it off, you miss out on the gains that happen while you're putting it off. So inflation might be three and a half percent over the past year, but the FTSE 100 is up 14%. So there you go. And I tell you, a year ago, you still would have had a reason not to invest. And finally, as I said earlier, make sure you do as much of this as you can within the shelter of an ISA, where you are keeping your money safe from tax.

23:35Simon Lambert: Because what you do not want is like desperately trying to beat inflation, and then the government taking a slice of it, when it's partly the government's fault that we've got the bloody inflation in the first place. Quite. Talking of the government, Rachel, the budget. We've mentioned it a couple of times already in the podcast. I'm sure you'll be mentioning it quite a few more times in the run up to the big event itself. Households, businesses bracing themselves for what might be in it. So what is likely to be in? What has definitely been ruled out? But even if, as Rachel says in her latest piece, the Chancellor doesn't announce any tax raising measures, you still need to steel yourself for a series of budget time bombs that are already lying in wait and set to go off between now and 2031.

24:22But before we get there, Rachel, I just want to ask you, I've been very frustrated in previous years with the budget. I don't know how much this has got to do with potentially, you know, let's hand on heart our trade because, you know, if there are stories, we should report them. But also it felt like there was a lot of leaks, a lot of speculation. People ended up doing irreversible things, taking money out of their pensions, etc. How do you think it's been handled thus far by the government? Pretty good. I mean, if you compare to the last one, then it comes out looking very favourable. Probably the best thing that this Chancellor has done is announced a budget at the end of October instead of the end of November.

25:13It's a small thing on paper, but that's four weeks of speculation that we don't have. And it was that vacuum of information before what was expected to be one of the biggest budgets with a lot of warnings ahead of it that the state of the economy was terrible. There was this 20 billion pound black hole to fill that things would have to be done that really set the speculation going. And as you say, that was at best unhelpful and at worst very damaging for individuals. So pretty good in that there hasn't been that kind of level of leaking of speculation and of hanging around and waiting for it. What I've also noticed is when we have had some speculation and a lot has been around capital gains, for example, it does feel like someone's come out, the Chancellor or whoever, and said, no, that's not going to happen.

26:14So what has been ruled out of the speculation?

26:17Simon Lambert: Just before Rachel answers your question there, can I just say that actually it's interesting this, isn't it? Because the speculation thing, right? Keir Starmer and Rachel Rees were very keen to come out with the line from the Treasury. We don't comment on speculation and blame the speculation on the press, both last budget and the budget before. and it was widely said, no, no, no, no, no, no, we're not leaking things. It's all the press. It's all the press. It's funny how now they're not here. That's not been the case, isn't it? And that there's been much less speculation and much less kite flying and much less of that.

26:58Simon Lambert: I mean, is it just that the press are being nicer to Andy Burnham and John Healy? I guess maybe if you were Keir Starmer and Rachel Reeves, you'd argue that's the case. But when you speak to the lobby journalists, and it's the lobby journalists, a lot of these things get floated out via and leaked out via. They didn't seem to share the view that this stuff wasn't being leaked out to them and floated and bits of kite flying going on under Keir Starmer and Rachel Reeves. And it is funny, once you combine all those two things together, that it has seemed to have stopped this time. So we're sitting here now saying it's going to, I think we're saying, I'm certainly saying that it's going to be a relatively quiet one.

27:36that we haven't had that sort of the speculation or the briefings of brace yourself for what's coming. It would be a shocker if they did, though, wouldn't it? Because we, certainly in the personal finance press, we go through this circus every single year, whereby the possibility is raised, for example, that pension tax relief might be cut. And the personal finance press and the investment industry goes absolutely wild, saying how awful it would be and how it should never happen. And previous chancellors have tried it before and there's a very good reason why they've backed off. And so it's not happened.

28:14And then that would put any chancellor off, we would hope, meddling with pension tax relief. And so the whole charade is complete. We haven't done it this year. We haven't sort of gone through these cycles as we might with that one. There was one last year that perhaps the most damaging around the pension tax relump sum and whether that would be impacted. There are a lot of areas that just have not been talked about. And I suspect that's because nothing will happen. But there is also pressure on this Chancellor, especially this year, to balance the books, to find extra funding for things that Andy Burnham wants to pay for and for the defence budget.

29:02there is that kind of pressure and there's also a political pressure to show how this cohort diverges from the last lot and for this lot to show that they're different and while the public may have had reservations about Keir Starmer and Rachel Reeves they're different and they have a new vision and this 10-year plan and it's all going to be very different so it's not impossible that this Chancellor would stand up and do something more radical than we're expecting. I doubt it, and he doesn't seem like the type so far, but I wouldn't rule it out. Like the sort of George Osborne rabbit in the hat moments.

29:47Well, he showed signs, though, didn't he? He definitely showed signs of liking the theatrics, of enjoying announcing things in governments, in, for example, budget statements before consultation with the industry, which is really often where we find out about these things in advance, or mooting it in the traditional channels like the House of Commons. He liked that sort of drama. Healy, we know less about in this role, and he's been around for a long time in government, but we know less about him as Chancellor. but he certainly doesn't seem like he possesses those qualities. Yeah, I would suggest that he doesn't strike me as that sort of chap.

30:33But we never know, like you say. Simon, how much is the Chancellor, we hear this all the time, in hock to the bond market, to investors related to government borrowing, to balancing the books, because one of those, I suggest, would be the welfare bill. Would we expect anything to be done there? And the other is business. And just from reading and the noises that you're getting, the Chancellor has been, I wouldn't say cosying up to business, but certainly saying some better things that business might want to hear. Are we taking a new tap that is more promoting growth, less massive sweeping tax rises that we've had in the past two budgets of like 40 and 20 billion or something outrageous in the last two budgets?

31:27What are you expecting, Simon?

31:29Simon Lambert: I think that Andy Burnham and John Healy, John Healy in particular, have done a good job in the run up to this budget. I think it has been a much better run up to this budget than it was under Rachel Reeves and Keir Starmer. And maybe some of that was Rachel Reeves being treated unfairly. And also some of it is because they're standing on the shoulders of what she did. She took some seriously unpopular decisions and she took a lot of grief for it. But she stuck by, you know, her fiscal rules. She didn't do what people in general wanted her to do, which was to give them more money and stop raising their taxes.

32:06Simon Lambert: And she made a lot of bad decisions as well. But it does mean that our finances, whilst not in the greatest place, are not in a terrible place. And we have benefited substantially over the last month from the Moron Premium being somewhat replaced by La Moron Premium. as everyone has turned their eyes towards France and decided that they need to freak out about French government bonds instead. And that's given them a little bit more breathing space. Are we in hock to the bond markets? Of course we're in hock to the bond markets. We're going to spend about£135 billion on debt interest this year.

32:48Simon Lambert: You can't stand up and say we're not going to be in hock to the bond markets anymore if you're in that position. If you're in that position, you are. What you need to do is you need to get yourself into a position where you're not. We do need to get ourselves out of this making policy by spreadsheet, trying to hit the numbers, working on the OBR projections, which run into the long term and are almost certainly going to be completely incorrect instead of doing what's right for the country. as I said bad decisions you know the national insurance rise employers national insurance was a terrible decision and it was done to try and pretend that we weren't raising national insurance which was in the manifesto although it is actually national insurance you know the manifesto was a problem in the first place and so on and so on I think the idea is they just want to steady as they go budget and I think they have they have bought over since Andy Burnham came to power put John Healy as Chancellor, they have bought themselves some credibility.

33:44Simon Lambert: There were real concerns that it would be, boom, tax and spend. They have bought themselves some credibility. They are desperate to maintain that credibility to then try to go on with what they need to do. There are difficult decisions that are being kicked down the road. The triple lock, fair play. He stood up, said he was going to do something about it. He kicked it down the road till after the election. But he said, we can't do anything about it now. It was in our manifesto. Social care, he stood up, he said he's going to do something about it. Again, it has been somewhat kicked down the road.

34:13Simon Lambert: So, you know, they are in a difficult position, but ultimately we probably do just need to get ourselves through this one, not put up any more taxes. And as you said, not annoy business. And I think that he's not just paying lip service to that on the business front. I think he really does genuinely mean it. The unpopular move in business that's coming in is this bank tax that's been widely rumoured to come in. But it's really only unpopular with the banks. The banks say you're taking money off us. That's less money to go into the economy and so on. Banks are making very big profits at the moment.

34:48Simon Lambert: These kind of windfall taxes are always dangerous, though. Look at what the windfall tax off the back of the last energy price spike has done to, you know, North Sea and stuff like that. it turns some producers from being profitable into making a loss after tax and so on. Banks argue, well, we might be making lots of profits now, but when times are bad, we make big losses. It's a complicated area, but if you're going to take money off someone, I think most people would go take it off the banks. There's still this big push from the Parliamentary Labour Party and a lot of people who are campaigning for some kind of tax on wealth to be increased.

35:26Simon Lambert: We already have lots of taxes on wealth, but they want, you know, one wealth tax. I think we're probably going to avoid that. But like Rachel says, there is a part of me that would not completely rule out a surprise, totally radical budget and one that could go either way. like I could just as easily see a totally radical budget as we didn't expect it and actually they did do a wealth tax and a you know cut the pension allowances and did all this other stuff but I could also see potentially a totally radical budget where they went right tax systems in a complete mess and we're going to start sorting it out removing tax traps all that kind of thing because you know it does feel like there is that kind of vibe that like they're probably just going to do this sensible thing but they could surprise us there was healy said this week he used this phrase that i found remarkable talking about the budget next week and who is going to help and he talked about wanting to help bloody-minded entrepreneurs that's strong it's not sort of aspirational entrepreneurs or the dreamers or the makers or you know something soft bloody minded says I like capitalism says I like profit it sort of it has all of those connotations and we don't yet know what he means by that he's not yet told us what kind of of tax policies are otherwise he's planning for that I mean we know there's something coming that possibly coming that's contrary to that about taxation when you're selling on your business when you retire So to counter that, what is he going to do for bloody minded entrepreneurs?

37:18How interesting our interpretation of that. I'd just be thinking in very, you know, small, really hardworking. Capitalism doesn't really come into my head on that one. But look, we don't know. We shall find out. What I would just quick one on the bank tax, Simon. Wasn't it talking about George, George Osborne? And wasn't he the one that brought it up to 8 %? And then it was Jeremy Hunt that reduced it when he increased corporation tax to 25 % so that banks wouldn't be hit with 25 plus 8. So it's kind of like it would be going back to where it was under the Conservatives.

37:57Simon Lambert: It's funny how these things happen, isn't it? For example, the reason why the lower capital gains tax rate, the flat rate, was brought in, was because indexation was got rid of, taper relief was got rid of, so that you couldn't benefit from lowering your tax bill by holding assets for longer. It's just like, no, everybody gets a low flat rate. And then over the years, the rate's gone back up, crept back up, but the taper relief has never been brought back in. And someone decided to slash the tax-free allowance. And it happens in other places as well. So yes, it's funny how these things just go around in circles.

38:36Isn't it just? Rachel, you did say in your piece, though, look, even if it is steady as she goes, boring budget, there are still things lying in wait for us between now and 2031. Of course, we have something that we've mentioned quite a few times, pensions, inheritance tax, mansion tax. Tell us what's coming down the line anyway. Unless they change it, of course. I mean, we've not ruled that out. That could happen. That's true. You could row back on them. I've identified five that are currently waiting for us. And they're big changes that we're probably wise to start planning for now. So one, as you say, is that pensions will start to be considered part of your estate when calculating your inheritance tax bill.

39:27Huge change that will affect a lot of people and see substantially more people paying inheritance tax. Then we've got one that really isn't being talked about yet, I suppose, because it's only coming in in 2029, but will have a big impact on pension savings. so there'll be a£2 ,000 cap on salary sacrifice which is a way of you paying less national insurance on pension contributions and your employer paying less on theirs into your pension as well it's funny isn't it just when everything should be done to encourage people to save more into their pensions when we say that we've got a huge problem with people not saving enough there'll be that restriction coming in in 2029 Then there's the ongoing one, which is also frequently overlooked because it's just sitting there in the background the whole time.

40:24But the freeze to the income tax thresholds, frozen until 2031. If you think it's rubbish now, there'll just be over 5 million more workers and pensioners paying tax on their incomes for the first time as a result of it since it was introduced. And we can't just blame Rachel Reeves, by the way, that it was frozen in 2021, but it was she who froze it all the way to 2031. I mean, we'll have forgotten that it ever used to increase by inflation by the time someone hopefully does increase it at some point in the future. Rachel, thank you very much for that. Now, this podcast had a bit of an international flavour.

41:05You know, we've visited France, Canada, but throw in United States, Germany, Spain, Netherlands, Sweden, Ireland. What have they got in common? They all have rent controls, but not the UK. Or is that true? The government is being accused of introducing rent controls by the back door after a landlord was forced by a tribunal to drop the rent by£200 each month. Now, their tenants have successfully challenged a£50 increase, but the judge went that step further and reduced it. So, an example of Labour standing up for renters with the Renters' Rights Act, or another nail in the coffin for landlords.

41:51Simon, tell us about this case.

41:52Simon Lambert: This is really interesting because it involves this element that is usually excluded when you bring in a new tax or a new law or something like that, which is things looking retrospectively. Now, in this case, as you said, the tenants successfully challenged a£50 increase for rent from£1 ,650 per month to£1 ,700. And they did that under the Renters' Rights Act. But after listening to their arguments, the judge ruled that actually the market rent was£1 ,450 and forced the landlord to drop it by£200. Now, it's not that the landlord had to give back the money they had already charged. So it's not retrospective in that sense.

42:39Simon Lambert: But it is retrospective in the sense that the tenant had agreed previously to a£1 ,650 per month rent. and they were happy with that. They had taken the property on that basis. And to go back and say, actually, well, no, the market rent was lower than that, so you should have been charging lower. That's a really interesting concept because the market rent, well, the market rent is the average rent. Maybe this property is nicer. You know, maybe it's in a better location. You could walk two streets and it would be easily justifiable as to why you would pay£200 more to rent somewhere. But are there enough properties being rented on the individual street that is more expensive to judge that it's worth more than the one that's less expensive?

43:29Actually, if there's

43:31Simon Lambert: less properties being rented on that street, so it's harder to gather the market rent for that street, it's more likely that it would be more expensive to rent there because there's less supply of rental homes. It might be that it's a street that's almost all owner occupied and that one house on the street that's rented, people really, really, really want because they want to live on that street. So they're willing to pay up for that. But the tribunal has decided otherwise. And we could see a lot of this going on under the Renters' Rights Act. The housing minister, Matthew Pennycook, took to X to highlight the case as an example of how Labour is standing up for renters and was instantly absolutely pasted by people on X.

44:19Anyway, this is really interesting because, you know, the landlord argued that the proposed rent

44:24Simon Lambert: of£1 ,700 a month was based on similar properties in central Manchester, as well as it benefiting from being the largest in the building and situated on the top floor with lots of natural light. So they put forward reasons why the rent should be more expensive. However, it's not all, sweetness and light because the tenant also said that they agreed to sign up to the initial 1 ,650 a month because they were desperate for housing when they took on the tenancy in August 2025. Well, that's their own personal situation. You can't really blame the landlord for that one. But they said the flat had basic and dated furnishings and gave examples of comparable properties within the same building and nearby developments which were advertised between 1 ,400 and 1 ,500.

45:04Simon Lambert: They also complained of past maintenance issues, including a problem with the dishwasher, extractor fan as well as a mouse issue and they said the rent increase would put them in financial difficulty my questions would be did the landlord fix the dishwasher and the extractor fan and send someone around to deal with the mice fairly quickly because if they did well I don't think you could hold that against them but if they didn't bother to fix the dishwasher or the extractor fan and went well the mice are your problem maybe they're in the wrong oh Rachel this is this is a This is a case, isn't it?

45:36But just explain to me, what are rent controls and what do we have in the UK at the moment? So how is this able to happen? What I find so curious about this case is that we're talking about the market rate, the market rent. And to my mind, that's what the market decides is the fair value. And that's decided by whether or not people are willing to pay for it. So normally that sort of all comes out in the wash because you won't get tenants if you overcharge because they could go elsewhere. Shopping around is not the same when it's your home. I can see that that's very different because you don't want to have to every year shop around to get the best deal and move if you don't get it.

46:23So having a tribunal that you could go to to thrash it out instead sounds appealing. but I think it says something about how the market is moving as much as anything else that as they said it was a year ago that they moved because they were desperate to they were looking for somewhere and now things have calmed down a bit they're seeing the situation very differently but I'm sure that we're seeing those sorts of trends a lot at the moment where in certain pockets it's easier to rent and in others it's harder because landlords are leaving the market And that's all the market forces that until now have largely determined the state of the rental market.

47:06I'm just blown away. Friends in Manchester, by the way. Two bedroom, six full flat in central Manchester for£1 ,700. Well, things have changed since I lived there. All right, then finally, Manchester flat prices may be pretty high, but is Manchester the place where premium bondholders are winning big? This is Money, have gone digging, crunched the numbers to find where in the country are consistently luckier and win more prizes than other areas. And what did you find? So Lee Boyce did an absolutely stonking bit of data crunching. Never been done before. We now know why it's never been done before.

47:49it's really hard to look at over the last few years where the winners have been of the big prizes in comparison to how many people hold premium bonds in those areas so you don't just end up with the luckiest places being where people have lots of premium bonds the surprise that came out of it was that australia came up came out really well which i think lots of people would be surprised that people in Australia hold premium bonds, but you can hold them if you live abroad so long as you've got a UK bank account and you have to be aware of the local rules around holding these products and taxation.

48:28But Australia came out pretty well. He also did a second dive into the stats to look at how much people should be winning depending on how much they held, which I think is really useful because we get every time we write about premium bonds, we'll get emails. Sometimes we'll get letters and we'll get lots of comments as well online underneath the stories themselves from people saying, I've never won. It's a fix. Or I know someone who wins all the time and I don't. So it's unfair. so his numbers show roughly how often and how much you should be winning depending on how much you hold and this is based on the most recent the current prize rate that will change of course if if the prize rate changes but if if you have the for example the maximum which is 50 grand which growing numbers of people do because I think they're probably worried about tax on their savings if you hold 50 grand you should be winning oh but sorry about 1.4 million people have the maximum that's huge isn't it you should in any draw the chance of winning is about nine in ten so that's a nice surprise most months isn't it but if you're winning sort of 25 quid and you're sitting on 50 grand and as Simon says you can get what four point eight three percent 83 % on your savings, that's not so enticing.

49:59But it's a really useful piece for premium bond holders to benchmark themselves. It was rant of the week. I mean, you've caught me on a Friday afternoon, so I have so many. But I'm going to channel it all into red tape. We had an embargoed release from the Treasury last night, embargo till midnight about red tape announcements I think they'll be in the budget all this red tape that the government has managed to identify and is going to strip away and the costs that that will save businesses and individuals they've put a pounds and pence figure on it as they always do but I cannot remember and I've covered a lot now I cannot remember a budget in which the Chancellor hasn't managed to identify some more mysterious red tape and announce that the answer to absolutely everything will be that they'll just get rid of it, snip it away and everything will be fine and I completely see why they would because it doesn't appear on the books.

51:12You don't have to pay any money to get rid of red tape and you can come up with I'm sure what must be totally made up convoluted numbers forgive me but 800 million pounds how on earth really do you put a pounds and pence figure on the cost of these bits of red tape and that's fine go ahead but at the same time in the same government we are guaranteed to have more red tape endless red tape that just makes things even even more complicated And if they were really committed to it, they'd go for the big hitters. They'd go for things like income tax and national insurance and putting them all together and coming clean on what we pay.

51:55And not do weird things like put caps on cash ices, the amount that you can put into cash ices every year as we have coming up. And they wouldn't do things like put a£2 ,000 cap on salary sacrifice, which is already convoluted and full of red tape. So presenting this, every single budget is the answer to everything because it's cheap for them to do so, while simultaneously making so much more convoluted and confusing for people is an ongoing farce that doesn't do them any favours and I just think is embarrassing and unhelpful to us as well.

52:39Simon Lambert: Can I add my own personal regular budget grumble, right? OK, Rachel just reminded me of this. Potholes. Every budget we announce we're going to spend some money on filling potholes is the same money, they just keep announcing it, but they never fill the bloody potholes. Maybe they could fill them with the red tape. That's a lovely idea. Do you know, this crackdown on cash ices, that's coming in next year, so you'll only be able to pay 12 grand of your 20 grand allowance into a cash ISA, it's going to cost the industry 6 million pounds to sort of get their ducks in a row to sort of do the admin.

53:24That's what they've got to do. And then also HMRC will inevitably have a cost because they'll have to get all of their systems in place as well. Is it going to do anything really to help save us, to encourage investing? Probably not. Will it boost the UK economy because we'll have more investment? According to the government's own forecasts, no, it will make no difference whatsoever. So all we do have is more red tape that makes saving and investing more complicated, which is precisely what you don't want to do, plus a six million pound. And I know, you know, small violins, I'm sure that the industry can afford it.

54:08But it's just like a little bit here and a little bit there. For what? While crowing about this. Oh, it's often a bonfire, isn't it? I suppose because of the time of year. Crowing about the latest bonfire of red tape. I asked the question. You did not fail to deliver, Rachel. Rachel's round to the week. Thank you very much. That is it. Thank you, Rachel. Thank you, Simon. But you can keep up with all this breaking money news. Just go to thisismoney.co.uk or download the app. And if you have any comments or questions of the team or anything you would like them to look into, Simon.

54:43Simon Lambert: You can email us at podcast at thisismoney.co.uk. And in fact, send us your budget grumbles. What is the thing that really annoys you about budgets that happens time and time again? And also, I had a wonderful vision for the future just there where I thought if we can keep this podcast going long enough. Don't worry, not this episode, but like the podcast itself. I saw a vision of the future where we're all sat in front of a fire with blankets on our laps, maybe with a couple of good bottles of red wine, just going, and another thing. So, yeah, that's what you've got to come in 30 years' time.

55:19While throwing red tape onto the fire, I'm sure deeply carcinogenic, we'll have to get the eco version, especially in London, because you're quite restricted as to what you can burn. All right, that is it. if you like our podcast why not rate us wherever you found us helps other people find us too