Will Rachel Reeves dare to hike income tax?

0:02Welcome to This Is Money, sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Helen Crane today is Angharad Carrick. And coming up, more speculation ahead of the autumn budget. This week, its income tax rises and a two million plus mansion tax. But how will they work and will it be enough? Also stay hope for borrowers as Goldman Sachs predicts the Bank of England will cut interest rates next week. The hated energy bill's standing charges have tripled in six years. Why do we now spend more on fees than ever before? And chocolate shrinkflation. Don't forget to stay up to date with all the latest breaking money news.

0:37Just go to thisismoney.co.uk or download the app. But first, a message from our sponsors. Ever feel like you're second-guessing your money decisions? You're not alone. That's why Charles Stanley Direct have created their financial coaching service. One-to-one time with a real expert who will help you feel confident about your finances. Start with a free 15-minute call at charles-stanley.co.uk forward slash financial coaching. Go on, take that first step. Remember, investment involves risk. Now back to the show. Despite repeated assurances that Labour would not break its election manifesto by hiking income tax, it appears it is under consideration by the Chancellor ahead of the autumn budget.

1:18The size of the£22 billion fiscal black hole driven by the OBR's decision to downgrade productivity forecasts may just be too big for Rachel Rees to ignore. Income tax is a biggie. It accounts for approximately a quarter of the total tax take. So how will it work? How on earth will she get round it? Ang, welcome. Helen, welcome. Ang, firstly, a bit of an income tax 101. one? Yeah, quickly, as you said, income tax makes up kind of the largest portion of the tax that we pay overall. Those who earn less than 12 ,570 a year don't pay any income tax and then it kind of goes up. So up to 50 ,270, you pay the basic rate portion, that's 20%.

2:02And then between 50 ,271 and 125 ,140 pay the high rate. And then anything above that level is 45%. And that covers not just earnings on employment or self-employment, it's also any income that you get from your pension. And if you're a landlord, rental income and savings interest. So it's not that big of a surprise. We kind of knew this was coming, right? Given that the shortfall is as big as it is, I think the only way that she can really properly plug the gap rather than just sort of tinkering out around the edges, which the IFS have kind of said, don't do that, is the biggest revenue raiser.

2:42The question this week really has been whether she'll go for a 1p rate across the board or a 2p rate. So a 1p rate would, across basic, higher and additional, would raise about 10.9 billion and obviously double that if it's 2p. Which covers it, doesn't it, really? Yeah, I think. 2p on it would cover the whole. Yeah, whether or not people will be happy with it is another thing. I'm not sure how politically palatable it is. I kind of think she probably should have done it last year and said, look, this is the situation. We need to do it. And then, you know, they would have had four years to kind of five years to get over it.

3:19There's one thing that was reported that she would actually just raise the basic rate by 1p because that actually raises the vast majority of that kind of 11 billion. So that would mean that basic rate would go from 20 to 21 percent and then higher would be 40 percent and additional 45 percent. And I kind of understand the reasoning there because, I mean, most people will pay that basic portion of their salary, but people will kick off about it. So then if she looked at kind of on the other end by just raising higher rate, that would raise about a billion. And then just additional is 230 million.

3:55So it's not going to be enough to touch the sides, I don't think. There is another option which has been proposed by the Resolution Foundation, who was led by Torsten Bell, who's now in the Treasury, which is essentially increasing income tax by 2p across the board, but then cutting national insurance by 2p. So for most people, it would be a kind of neutral tax move. But it does then mean that the people that, you know, people like landlords and pensioners who don't pay any national insurance would basically get stung by an income tax raise. So it's an option. I think that is probably more likely, just because she's keen to go after pensioners and landlords.

4:40What about raising the personal allowance, Helen? Could that work? And then we've got the issue of, you know, pensioners not being taxed as the triple locks looks likely to stay. Is that on the table? Probably not.

4:55Helen Crane: No, it hasn't really been talked about. It is an option. Seems everything's an option at the moment, though, isn't it? Exactly. And I think it's just so easy to sort of keep the personal allowance the same, keep the thresholds frozen and just let more people slip up and up into those higher tax bands, which is obviously what's been happening since 2021. And I think, you know, a lot of people don't really realise that, you know, fiscal drag isn't a thing that most people kind of on the street tend to talk about. So it's something that's very easy for the government to kind of get away with. Another thing that Rachel Rees could do is to, so the thresholds are currently going to be frozen until 2030.

5:37Helen Crane: I mean, she could even extend that further. It would be a bold move. But it's, as Ang said, she's done some reasonably bold things before. So who on earth knows? Well, that's the thing. This is how on earth would you get around this politically? We know that the government have tried a few moves, shall we say, policy decisions that they've had to U-turn on because they haven't gone down very well. But look, how much would this cost us? So if you're currently earning£40 ,000, you are paying£5 ,486 in income tax. If basic rate, you know, everything was hiked by 1p, you're paying nearly£300 more a year.

6:17So just over 20 quid a month. And with a 2%, that doubles. So it's£550 more a year. Obviously, if they only keep basic rate, that's going to be, or they only hike basic rate and leave higher in addition, it'll be slightly less. But it's a fair chunk of money for a kind of average salary. Well, we'll see what happens with that one. Another rumour that continues to do the rounds, but it's just, I mean, they keep coming up, don't they? It's cash ISIS again as well this week, which we don't need to go over. But the mansion tax, this refuses to die down. under the proposals revealed by the mail on sunday owners of two million pound plus homes would face a charge of one percent on anything over that amount so helen how on earth are they going to do this practically if they're going to do it at all of course and what do you think would be the repercussions for the housing market generally yeah it's it's a very difficult one

7:13Helen Crane: so i think ever since we have started having all this budget speculation which seems like absolutely ages can I say I feel like the the first budget story we wrote was in like July if we're still we're still going and there's still a month ago I I can't believe it um but but versions of this mansion tax thing have been cropping up the whole time so first of all is this idea that people who owned more expensive houses would pay um an annual sort of levy to replace stamp duty and people in cheap homes wouldn't pay that we had talk about people uh maybe paying capital gains tax when they sell their main home if their home is particularly expensive.

7:52Helen Crane: And now we've got this mansion tax rumour, which has cropped up. So these proposals essentially say that anyone who owns a home that's worth£2 million or more would face a charge of 1 % on anything above that value. So this would be an annual tax they pay for the privilege of living in a home that's worth£2 million pounds or more. How much would this raise? So I think the figure is about three billion pounds. So, you know, it's obviously nowhere near income tax. And it is, it's still in that kind of tinkering around the edges territory. But it is as these wealth taxes go, it could be one of the bigger money raises.

8:33Helen Crane: As you say that the big problem is how on earth is this implemented? So first of all, where are these valuations coming from? Like, is the government valuing your house? It all sounds a bit like 1984, doesn't it? You know, are they going on a state agent? Are people going to have to get their own valuation and like submit it to the government? Are they going to go on just general house price data for like that street or that post? I mean, what happens if house prices fall? Like I just got notification from Zoopla saying that my house has gone down by a fair chunk. Oh, I'm not in the situation of the two million, but that's not the point.

9:10But yeah, it is really hard to work that out. It changes all the time. What are you going to have one year? Sorry, house prices have gone down, therefore I'm not going to pay.

9:17Helen Crane: And also, knowing the housing market, are people just going to sneak their house under that evaluation? They'll just get a friend of the estate agent. Oh no, your house is worth£1 ,900 ,099, I'm afraid, like under the wire. Exactly. And it would take a really long time to implement this as well. And I think that's the thing about a lot of these proposed tax rises, you know, things like this aren't going to be instant. It takes a long time to put these new processes in when you are changing, when you are bringing in a completely new tax, essentially. This is a problem with anything that I think you have a sort of level when it comes to wealth.

9:51So is it, you know, a wealth tax for people with 10 million, a property tax or mansion tax for people with 2 million? because actually what was supposed to be in the past, things like inheritance tax for the very, very wealthy, is not for the very, very wealthy anymore. You know, income tax bans, the higher rate taxpayer from 50 ,000 plus 10 years ago. Yeah, sure. That was a big amount of money. Nowadays, not so much. Now, my mum is in a situation where she's got a fairly expensive house. She's on her own. It's in Surrey. You know, Hauser is expensive there. It's not 2 million, but in 5, 10 years, you know, it could easily push into that.

10:25She is absolutely petrified. What do you do? Will she be able to sell her property? It's going to hit a lot of, I think, older people who are stuck with these houses and not knowing quite what to do with it.

10:39Helen Crane: Absolutely. And look, I think we have to say that there are people around the country, so people in the Midlands, people in the North, people in Scotland, Wales, who will look at this and think having a£2 million house is absolutely crazy. That is rich people money. and in many parts of the country they are completely right but as you say there's people in london in the home counties you know even in places like uh the southwest where and you know the east of england where property prices can get you know quite expensive for it for a sort of family sized home there's people who will have bought you know they're saved really hard bought their big family house in i don't know the 80s or 90s and done nothing but live in that house sit on that house and I mean the house price rises we've seen in the last decade have been absolutely insane I mean look at during Covid house prices were going up by like 10 % a year in some cases I mean like crazy price rises and there are people that have just sat on that house that they own in what is now a nice part of the country and you know they do have houses that are worth two million in some cases and you know should they be punished for that that there's an argument that says they shouldn't because, you know, they're asset rich, but they're not necessarily cash rich.

11:55Helen Crane: These can be people on quite normal salaries. There's maybe an argument that it could free up the housing market a bit. You know, if people are moving out of these houses, maybe downsizing, if you say, like your mom, she's in a big house on her own, would that perhaps encourage her to downsize to a smaller house and something under that kind of tax band? You know, people shouldn't have to do that if they don't want to. But there's always an argument in the housing market, it's good to have fluidity and people moving into houses that kind of fit them better. And that allows people to kind of move up and move down.

12:24Helen Crane: But it would certainly be something that I think, especially in the south of the England, people would be quite angry about. There's already all this stuff being levied at labour, you know, you're anti-wealth, you're anti-growth. We need these rich people because they pay more tax and you don't want to drive them away. So I think on the surface it looks like you know this is a tax for rich people actually it could have sort of wider implications. I would love my I've said it on the pod before I would love my mum to be able to move but she's a woman in her 70s and absolutely petrified of doing it by herself but also she's petrified that no one will want to buy her house if she thinks in the next 10 years it's going to be over this 2 million mark and that's the thing people who are in 3 million 4 million houses will probably just take it on the chin but people who are in that sort of boundary well what are you going to do with those homes apart from knock it down and give it to developers?

13:14I don't think it's going to have quite the consequence that the government is hoping for.

13:19Helen Crane: Well that's the thing with any of these property taxes isn't it that operate on a set level it creates these real crunch points around that price point. I mean look at stamp duty anything that's under the stamp duty threshold especially the first time buyer one right say the 300 ,000 there's a real gap between people are trying to get under that or get substantially enough over that to make it worth it. It really sort of distorts the market around those edge prices. So it's something I think that the Treasury needs to think about because the property market's honestly not doing great anyway and anything that makes it more sluggish has a knock-on effect.

13:59Helen Crane: I mean people moving houses good, it creates jobs in different parts of the economy, you know, people are building trades people to do stuff to their houses. People moving out has a good sort of generally positive effect on the economy. And I think that's something that probably needs to be considered. I would also like to say if any of our friends in the north are sitting there rather smugly, which I don't think they will be, particularly if you're in places like Manchester, they will be seeing that houses prices are going up at something of a clip. I was talking to someone the other day about£2 million flats in Manchester city centre.

14:31I used to live in Jesmond, anyone who lives in the northeast will know that's a rather poshy area. I was not living in a poshy shared house, that's for sure. My house down south would cost the same in Jesmond. So there are pockets and I'm sure those pockets will become more plentiful around the north as well. So don't think this ain't coming for you too. Right, moving on. Could interest rates be about to come down? A bit more of better news perhaps. Goldman Sachs reckons they will and as early as next week, providing relief for millions of borrowers. Analysts at the investment banking giant argue that fading inflation pressures and sluggish growth will open the door to a move sooner than most other analysts and traders expect.

15:11It comes after the Fed cut US interest rates for the second meeting in a row this week, even though inflation was up. So, Ang, good news for borrowers, I suppose, here. What makes Goldman Sachs, and they've got a fair few intelligent people there who sort of know a thing or two, what makes them so confident the Bank of England could cut next week? Yeah, they've definitely put their head above the parapet here because everything that we've heard sort of since over the last few months is that we'll probably get one more rate cut this year and it'll be December or into January. And I think even now the market is still pricing in one in three chance of a cut next week and then 50-50 December.

15:52I think basically Goldman Sachs looked at the last inflation reading, which was a bit of a surprise. It stayed at 3.8%, which is still double, pretty much, the Bank of England's target. But it was better than expected. I think we sort of expected a bit of a jump and it sort of stayed the same. Core inflation is still not where it should be. Services inflation isn't where it should be. But the jobs market is cooling, which means Goldman Sachs thinks that that means that we'll cut sooner than expected. I think the big thing is the budget they've said the budget which you know is going to be probably tax rises and spending cuts will mean a contraction in the economy essentially it's almost like the budget is kind of doing the work for them I mean I don't know any better than Goldman Sachs but I would kind of think that maybe wait until after the budget and that seems to be where the market generally thinks it'll go we'll probably get something in December but what do I know I mean more than most, I'd suggest.

16:53But the situation, Helen, when Ang talks about a cooling jobs market, you basically mean people are losing their jobs. And people are losing their jobs because taxes on business have gone up. Confidence isn't great. A cut to interest rates might be sort of like a shot in the arm for businesses, despite what happens in the budget.

17:12Helen Crane: Yeah, there has a sort of rise in unemployment, and particularly among young people as well. A lot of the places where jobs have been lost have been in these sectors like retail and hospitality that have been really hit by the rise in employers' national insurance contributions, which I think is something that happened at the last budget. So, yeah, that does have this sort of strong knock-on effect, which is still happening. But you're right, it does also make people's mortgages a bit cheaper, which is already happening, actually. So we've seen this week already Barclays is cutting their mortgage rates.

17:48Helen Crane: You can't quite say it's off the back of Goldman Sachs saying the base rate is going to come down. But there seems to be a bit more positive feeling about inflation now. You know, I think previously was definitely, definitely not a cut in November. And now it's, I think, a one in three chance and 50-50 for December. So, you know, people said, oh, definitely, definitely not this year, maybe February. And now that seems to have been brought forward. So, you know, it is positive news for borrowers, it seems like, although, you know, it's never just one thing, is it? So if you're someone who needs remortgage or maybe wants to buy a house, okay, great, your mortgage rate might be a bit cheaper.

18:30Helen Crane: But what's going to happen in the budget? Are you going to have to pay a new stamp duty tax if your home is worth over 500 grand? Are you going to maybe pay capital gains if you sell your house? There's a whole range of things that feed into it and that people just don't know. So I think Anne's right in saying it would seem, again, not an economist, but it would seem a bit crazy to do anything with the interest rate just ahead of the budget. But could happen. I'm sure Andrew Bailey has his reasons. So we'll see what happens. That's it for part one.

19:09Helen Crane: I'm joined now by Lisa Kaplan of Charles Darnley Direct for our weekly Investing Explained feature. Lisa, we've got a question from a podcast listener today who's about to start a new job and he says he's been thinking about taking stock of his old work pensions. Should you consider combining them into one pot? What's your take? It's a good question and I actually get asked this question quite often by people I speak to. In general, yes, I think you should take stock and look at where your pensions are and consider putting them all together in one place. It's not always the case that it's good to put them all together, but I think everyone should at least think about it.

19:48The advantages are just easier to coordinate the investments within your pensions if it's in one place. Things to look out for is make sure that you don't have any valuable guarantees that you would lose on transfer. and I'm thinking about final salary sorts of pensions. But there are others as well. And the other thing to think about is costs. Actually, you can save money by putting all your pensions together. The real advantage, though, is you just don't lose track. But there is, I think it's£31 billion of unclaimed pension money or£3 million pots. And this is their last when people move jobs.

20:25So it's important to keep track of them.

20:28Helen Crane: That is an awful lot of money and a very good answer. Lisa, thank you very much. My pleasure. Welcome back. As the winter months draw in, the heating gets whacked up and so do our energy bills. But even the most committed jumper-wearing Scrooge can't save on one part of their energy bill, and that is the standing charge. It's nearly tripled since the introduction of the energy price cap six years ago. While the amount customers pay for each unit of electricity and gas has stabilised after, of course, reaching record highs in 2022, do. Standing charges have continued to rise. So, Ang, just firstly, what exactly is the standing charge?

21:06What's the point of it? What makes it up? So, the standing charge is basically the bit of the bill that charges you just for having electricity or gas. So, it's a fixed fee. You pay it out every day and it covers things like suppliers sort of operating costs, like call centres, that sort of thing. It also covers policy. So the warm home discount scheme is kind of covered by standing charges, various green initiatives, that sort of thing. The way it's kind of been calculated has changed, which is sort of why it's kind of increased over the years. It's partly because more people use electricity than gas.

21:46So they kind of shifted some of that over kind of makes sense what doesn't make sense is the fact that it's the gas and electricity standing charges used to be 28p a day and they're now 90p a day yeah which is astonishing i don't understand how it can possibly have increased that much in just six years as well so i think what essentially what happened was in the energy crisis obviously a lot of small firms went bust and the bigger firms took on those customers. And that costs money, right, to transfer people over. Those costs, the suppliers didn't pay, even though they were getting more customers and therefore more money.

22:30That ended up kind of coming into our standing charges. So we saw a massive jump then and they just haven't come down. It's also based on inflation and it's 15 months out of date. So we're sort of lagging behind on that. And I think we did kind of ran the numbers and saw the price increase. But I think the most interesting part was actually the proportion of the bill, because our unit rates, they're still high, but they've come down quite a bit from the sort of peak a few years ago. And in sort of 2019, when the price cap came in, the electricity standing charts made up 29 % of your bill. it's now nearly 50 percent of your bill this really riles me up because i i wrote a column about it so i have a i'm part of a heat network which is not regulated by off gem currently they supply my heating and hot water i pay a standing charge to them but i also have to pay a standing charge to my energy supplier so i'm paying double standing charges yeah and we don't use a lot of energy you know we're often out of the house and I worked out that over 50 percent of my bill is now on standing charges which is ridiculous there's nothing you can do about that I really understand you've got to pay for the supply of electricity into your home I get that but it doesn't need to be for me it's nearly two pounds a day for most people it's going to be about pound a day so it works out that you know you could go a whole year without turning your heating on or anything and it would cost you over£300.

24:04I think it's just absolutely ridiculous. Yeah, because it hits those people hardest who are trying to cut back. Is there anything, Helen, that has been suggested to help here? What is the regulator doing?

24:17Helen Crane: I mean, you absolutely can't change your standing charges. It's, as I said, it's an uncontrollable part of your bill. And I think people don't really understand it either. So I quite often get emails from people saying, I live abroad for half a year or, you know, I was in hospital for a month and I came back and I still had an energy bill, but I turned everything off and I wasn't using it. And I think people just do not understand that so much of their bill is for essentially these kind of admin costs. It is something that maybe Ofgem should take a look at, but are they going to be able to do anything?

24:53Helen Crane: Because so much of it is covering these costs from all these firms going bust and transferring over these customers. you know, those costs do have to be paid. I think the interesting thing is, will they come down once those costs are covered? Because that has to end, right? The energy market is, that isn't happening anymore. Companies aren't going bust anymore. So it would suggest that they would go down after, yeah, after those costs have been met. But will they? I mean, seems unlikely, doesn't it, I think? And people are a bit used to paying higher energy bills now. So will firms be able to kind of get away with it?

25:28Helen Crane: You know, people know their energy bills a one I sort of sneak in a bit of a higher kind of standing charge I mean completely possible not a chance will they bring it back down not a chance well no exactly well you know prices never come down do they in in so many areas of life and I do think knowing in general it's a really good time coming into winter for people to take a look at their energy bills actually there was an announcement out from Ofgem today warning people or reminding people that they should check how much credit they have in their energy account. So apparently there's£240 million of credit lying in people's energy accounts.

26:07Helen Crane: So this is when, you know, people obviously overpay a bit in the summer and sort of store up credit for the winter. So they've got money lying spare on their account. And also, obviously, you know, these recommended amounts that your supplier gets you they can be a bit higher than your actual usage so people do often end up with a bit of cash sitting around in their account now it is really important going into winter that you know you do have enough to cover your higher bills but some people have hundreds of pounds sitting in there you can ask for that money back whenever if you know you do have enough of a cash buffer in there your firm has to give it to you so it's definitely worth checking that you haven't got a little a little cash pile sitting with your energy company because they earn interest on it as well.

26:50Helen Crane: So don't them do that. You have it in your account making interest for you rather than in your energy firm's account making interest for them. Quite. I've got about£400. And the reason I've got £400 is it keeps saying to me, you need this extra, you need to pay extra during the summer so that you have plenty in the winter. And if you don't, then you're not going to be able to cover the winter. So that's what encourages people just to think, oh, well, I do have a bit of a buffer, but we are on the cusp of some really cold weather. And so I better keep it in there. But Ang, just briefly, listening to you talking there about, not sneaky, but it kind of is.

27:22I feel like whether it's insurance premium tax, which is Lee's favourite, standing charge, water bills, it's almost like they go, should we just stick a little bit extra in? There's nothing they can do about it. I've lost faith. And I think a lot of people have in our bills, I don't even know what they mean anymore. All I know is they're very expensive and there's very little we can do about it. And as personal finance journalists, we're always asked to come on and talk and say, oh, what can you do to lower your energy? And I feel like a bit of a fraud because really, if you're paying 350 without even doing anything, I mean, what hope have we got?

27:55Yeah, it's so easy to get depressed about the whole thing. And I think we've all got, as Helen said, we've all become so used to paying over the odds for our energy. I think to be fair to the regulator, I actually think that they're far more effective than other regulators, namely the water regulator. They've done loads of consultations on standing charges. They are going to introduce lower standing charges. Tariffs. Which is great. But then you kind of you look at them and realize actually what they're going to do is just hike up the unit rate. So for me, it works really well because we don't really use that much energy.

28:29But actually, it's still going to be ridiculous. You know, there might be a really cold winter where you end up having to pay more. And I think there are serious issues about kind of energy security. But yeah, I completely agree. It's really different. We all went through the insulating your homes and buying an electric blanket. And, you know, our energy bills are still really high. Yeah, I bought an electric blanket on Helen's recommendation. I loved it. Unfortunately, so do my dogs. Never saw that blanket again. They're not going to electrocute themselves, don't worry, because it's not plugged in because I don't know where the charger is.

28:59anyway you have an article on your website tempted by those adverts it says helen for electric heaters that claim to slash 90 % off your bills well angie's just pointed out there's not a lot you can't slash 90 % off your bills can you i haven't actually seen those adverts so this was a new one for me explain what's this about what are these electric heaters that claim to slash

29:20Helen Crane: 90 % off your bills so i have seen these adverts they pop up on social media on your internet browser and they have a picture of this little heater that looks very sort of glowy and warm and inviting and they're claiming that it uses this is a heater designed by a British student using a perpetual heating loop and the Joule-Thompson effect which is a theory in physics to warm space at 90 % less cost than conventional heating methods so sounds great sounds like one of these nifty little devices that can apparently save you a lot of money on your energy bills and we've looked into that in an investigation and that appears to be not true at all.

29:59Helen Crane: So sounds good to be true. A Cambridge professor says the claim appears to have rewritten the laws of physics. So it actually goes quite deep. So this is a really interesting story. I do recommend having your look at it on our website if you can. So we've uncovered evidence that links to these adverts several companies with Lithuanian businessmen who are UK based and appear to be able to act with impunity. So some of the problems with these heaters, first of all, they are cheap heaters made in China. The UK charity Electrical Safety First has said they're unsafe. Some people have said they've ordered one and they haven't received it.

30:39Helen Crane: Another cross against their name there. The Advertising Standards Agency has also wrapped some of these companies because their claims to save you 90 % on your heating bills are absolute gubbins. So if you do see one of these, do not buy it, maybe buy an electric blanket, as I did, and I recommended to Georgie, very good way to heat yourself and not your house, save a bit of money. But do not, do not go for one of these magical 90 % energy saving heaters because claims are made up. This student Jason from London University is made up and they will not save you any money whatsoever. Lovely. You said gubbins.

31:22Is that like a Midlands thing? Might be. I have not heard it for a long time. Anyway, thank you, Helen. It's that time of year when the supermarket shelves are decked with tubs of quality streets and roses and across the nation, the exasperated cries ring out as we come together to moan about shrinkflation. Yes, things really were better when you were younger. If better means more chocolate for less money, which generally means better in my books. But Shrinkflation isn't just for Christmas. No, no, no. This Is Money have produced the shopping basket of items worst hit by Shrinkflation. So, Ang, what is in the basket?

31:59I'm so glad someone's finally looked at this. It's been bothering me for so long. So it's quite a range of products, actually. Toothpaste is a big one, which I've definitely noticed. So one aquafresh toothpaste went from£1.30 to£2. but the actual amount in the bottle fell from 100 millilitres to 75 millilitres. And the most outrageous one that I saw in this article was Sainsbury's Scottish Oats. So the bag halved from a kilo to 500 grams and the price basically doubled. And oats are worth like pennies anyway. I know. And also, sadly, chocolate has also been a victim of stringflation. Years, years.

32:43Yeah, exactly. And KitKat apparently has cut their multi-pack and increased the price from£3.60 to£5.50. So it's across the board. It's kind of every type of product across most supermarkets, it seems. I have a serious question for our listeners, or indeed for you too. I ate Cadbury's buttons for the first time the other day. Have they shrunk or am I just used to eating the big ones because I am a bit greedy?

33:10Helen Crane: Honestly, they were teeny. Completely non-scientifically. Yeah. I agree. So I swear to God, I know they're for children. I know chocolate buttons are for children. But the last time I bought a pack of chocolate buttons, I swear I could barely even fit my hand. Like, they're so small. It only touches your tongue to taste it, you know? I agree. And buttons aren't for kids. Why should the kids have them? No, they're for everybody. I enjoy a button. But talking from your kid, though, one of the things that shocked me most from this shrink fashion article, which is based on a survey that Witch did, asked people about what they'd noticed shrinking most, which is a really interesting way to do it, I think.

33:51Helen Crane: But one of the things they brought up was, remember club bars and penguin bars, the little chocolate biscuits? Got some in my cupboard. Do you? Oh, Georgie, come to your house. So I remember these from school lunchboxes. Absolutely love it. Love an orange club bar or a mint club. I don't know if kids still eat them these days. I mean, they probably eat something much more healthy. But these bars, so you would call them a chocolate biscuit, but they actually can't call them a chocolate biscuit anymore because they contain more palm oil and shea oil than actual cocoa. So they have to call it a biscuit with a chocolate flavour coating rather than chocolate biscuit.

34:27Helen Crane: How depressing is that? Cadbury's had this recently, didn't they, where some of their goods couldn't be called chocolate because there wasn't enough chocolate in it or cocoa in it. Oh, dear. I remember when biscuits used to be actual chocolate only only 10 % palm oil but that's a good point though isn't it because it's not just shrinkflation it was something called skimpflation I think it is that we saw a few years ago come in and this is where they the companies downgraded the quality of their ingredients and I am definitely noticing that and I'm definitely noticing it also at restaurants and it's got to a stage where you're thinking what is the point in me coming somewhere to eat out if I feel like the quality of what I'm getting is nowhere near what I could produce myself.

35:10Helen Crane: Agreed. I mean, look, perhaps we should just stop eating chocolate biscuits. But I mean, where's the fun in that? I mean, look, on a serious note, I guess the reason these things are going up is it's not just companies being greedy, although it's possibly partly that. The cost of some of these raw ingredients is going up hugely. So the cost of cocoa has skyrocketed because apparently there's been some bad harvests of cocoa, sort of driven up demand in Ghana and the Ivory Coast, which are the two main suppliers. But also manufacturers, all these companies are suffering from some of the same pressures as all companies are, you know, increased employee national insurance taxes and things like that.

35:53Helen Crane: So, you know, these companies are businesses and they're under the same kind of pressures as all businesses, but not good when it reduces the quality of your chocolate club. But this goes back to the bills situation is I get it. I think most of us get it. Prices are rising. Just be honest. That is it for this week. We'd love to know what you've noticed shrinkflation. But you can keep up to date with the latest Breaking Money news. Just go to thisismoney.co.uk or download the app. And if you have any comments or questions for the team, anything you'd like them to look into, Helen? You can email us at editor at thisismoney.co.uk, follow us on x at thisismoney or join the debate in the reader comments.

36:34And if you like our podcast, why not rate us wherever you found us? It helps other people find us too.