Cheat Sheet | A ‘survival’ budget, Washington DC shooting and Royal Fawlty Towers fans

0:01Sophy Ridge:Good morning and welcome to Cheat Sheet, the podcast where we do the work so you don't have to. I'm Wilfred Frost. And I'm Sophy Ridge. It is Thursday the 27th of November and this is what's happening today. We will be unpicking the Chancellor's historic budget. Was it one to satisfy Labour MPs rather than you? A man's been arrested over the shooting of two National Guard members in Washington DC close to the White House. And Prince George and Princess Charlotte have a new favourite sitcom. So, budget. An awful lot has happened. £26 billion of tax rises. And also there have been some pretty difficult forecasts of weaker economic growth as well.

0:46And look, the tax rises is really where people will keep coming back to. Because the Chancellor has admitted she's asking ordinary people to pay a bit more. but she says taxes on working people have been kept as low as possible. I mean, there's two main kind of tax rises going on here. The first is the freeze in the thresholds, which means more and more people are going to be dragged into paying a higher rate of tax, right? That's going to be a big earner for the Chancellor and a big squeeze on working people. And I think the second one that is really interesting as well is the pension changes that I know that you want to talk about as well, Wilf, right?

1:22So it's an awful lot going on here.

1:25Sophy Ridge:And do you think with both of those, she's escaped the political costs that she would have paid if she'd done income tax, for example? I mean, the question, I think, on the politics, I think it's fair to say is, will people punish her and Labour still for putting up taxes? so the more i've been thinking about this because yesterday was a mad day right and we were all kind of trying to digest it particularly with the fact that the obr accidentally published the whole thing before she'd even had a chance to say it by the way i was annoyed that wasn't like a sort of cheat sheet exclusive i feel like that leak should be on cheat sheet next time guys it was mad just to say what happened as well like the first because i was broadcasting on air when it all happened the first we realized was this kind of reuters snap uh saying that the obr uh had given these growth forecasts.

2:15I was like, this is weird. Like, this is a bit leaky from the OBR. And then Ed Conway noticed that the bond markets were completely crashing and falling everywhere. And then we realised that the thing had been published, I think before the actual OBR did themselves as well, by the way. So the whole thing was completely mad. Coming back to your question there, I think my main takeaway, weirdly, is that I'm just not convinced this is the budget Rachel Reeves actually wanted to give at all, right? You know, if you think about it, she was someone who's been so strong saying that welfare needs to come down.

2:51People were sacked for voting in favour of getting rid of the two-child benefit cap, you know, last year. So she's been forced into this position by her own MPs. I also personally think she would have preferred, as you say, to have gone for the straightforward rise in income tax, but again, couldn't do it. She was boxed in for political reasons. Is that Rachel Rees trying to protect her own skin? Is it perhaps Keir Starmer who is more worried about, you know, the politics on his own leadership? But I think this is a survival budget. This is a budget that is designed to make sure that Keir Starmer is able to fight the next election or get to it the next election rather than actually win it with the voters.

3:28Sophy Ridge:The first big point I want to make is the markets are calm. The bomb markets are calm. So fair play to them on that. That was a big risk coming into this. I'm unsure if that will last. And this is the big point for me. Everyone's seen that headline. Taxes, overall, the tax burden, the percentage of taxes, the percentage of GDP, by 2030 will be the highest in peacetime since World War II. It's going to hit 38 % of GDP. Normally, when that sort of thing happens, you'd be like, okay, great, well, we're going to balance the books again. That's going to be because we're offsetting spending. Well, actually, there was more spending increases in this than people expected.

4:08Sophy Ridge:Welfare spending is going up by 16 billion pounds per year by 2030 more than expected. And when you look at the same metric on overall government spending by 2030, it's not really changing at all in total. It's going to be 44%. So that's the difference. 38 % tax of GDP by 2030, still spending 44%. So we haven't really said to the world, we get it, guys. We're going to balance the books overall. And I'm therefore quite surprised at how calm the bond markets have been. And we'll see if that lasts kind of going forward. Can we talk quickly about these pension changes? Because I'll be honest, when I saw how much money they were due to raise, which I think was 4.7 billion, I was pretty shocked.

5:00That's a lot of money. That means a lot of people are going to be paying this tax.

5:02Sophy Ridge:So I think the first thing people have pointed to on that is it's another stealth tax. You haven't raised the flag to say you're doing it. Explain why. Just quickly, it's a salary sacrifice scheme, right? So you're kind of capped at£2 ,000 the amount that you can put into your pension pot tax-free. But before then, the government adds national insurance contributions to it, which previously didn't happen for those types of pension contributions. So not only is it stealthily a tax, businesses don't like it because last year the national insurance rate went up to 15%. Now the amount of money that that 15 % tax is applied to is increasing.

5:37Sophy Ridge:They were told it was one-off last year. But it's also the very definition of a short-term policy to fill a hole, but probably bad long-term policy. It's a disincentive to people to save and invest for retirement, which we don't do enough of either. But it's also a choice that the Chancellor's making. It's putting public sector workers first who don't have these types of pensions over private sector workers. It's putting older people ahead of younger people. In particular, it's young people who are trying to do the right thing, who are doing what they've always been told to do, save for your retirement.

6:14Sophy Ridge:So you're not a burden on the public sector when you're older. And, you know, you have these arguments, those with the broader shoulders should pay more tax. I think most people, when they think of that, are thinking of the people who are going out buying Ferraris. not the people who are trying to save for when they're 75 years old so that they don't have to lean on the public sector so it just is the very example of a policy to fill a hole in the short term that doesn't make sense in the long term right next up two members of the u.s national guard have been shot and wounded close to the white house in washington dc the law enforcement officials say that they've identified 29-year-old Afghan national Ramnullah Lakanawal, who entered the US in 2021.

7:02Sophy Ridge:He was shot in the incident and is in custody receiving treatment in hospital. There's been very, very strong responses from the Secretary of Defense, Pete Hegseth, and President Trump. And it's very politicized this because I'm sure you'll remember President Trump sent the National Guard, a military unit, into Washington DC to try and clean up the crime levels that he said were too high. And it's two members of that National Guard that have been shot. It's also an Afghan national, and you can imagine all therefore of the politicization around it. I think this is, you know, something that we'll watch as to what then the political response is long term.

7:45Sophy Ridge:But in the short term, President Trump has said it's a monstrous ambush style attack and that the shooters should pay the steepest price possible.

7:57So at least 44 people have been killed in a huge fire that's ripped through apartment blocks in Hong Kong. And another 300 are reportedly missing. So look, you know, that number of course of deaths could sadly rise even further. It is a huge blaze. More than 800 firefighters had to try and tackle it. It's blazing the buildings in the northern Taipo district. And at the time of recording right now, it had been burning for over 18 hours. So I think that gives you a bit of a sense of how hard it's been to try and get this blaze under control. Apparently, it's been spread by the presence of bamboo scaffolding and also phone maintenance materials.

8:38So I'm sure there'll be a bit of an inquest into trying to find out if there's anything that can be done in terms of these building materials and lessons learned. Three men from a construction company have been arrested on suspicion of manslaughter.

8:53Sophy Ridge:Are you a fan of faulty towers? Yeah, I am a fan, yeah. Oh, you feel like only half-heartedly a fan. Yeah, no, I do like faulty towers. I think it is one of the most brilliant, enduring British sitcoms. Yeah. And highlighted by the fact, by the way, that there's only 12 episodes. I think people assume there's more because it's so good and you've watched it so many times. But I think it's absolutely gold dust. Quit on there ahead. Yeah, exactly. I think it was also hard to keep the band together. There was some good stories about that back in the day. Anyway, Prince William has revealed that Prince George and Princess Charlotte are big fans of it.

9:30Sophy Ridge:John Cleese was at the Tusk Conservation Awards last night with Prince William as well and Prince William made that revelation. Well, I mean, I love that old school, I think 70s it was, sitcom appealing to the new generation. That is the sign of an enduringly high quality comedy that appeals to kids and adults alike many decades later. You should go back and watch it. That's what I need to do. It is a great way to lift the mood, I think, at the end of a bruisingly hard week of work. I think we should all watch a bit more 40 Tats. Well, that's it for today's Cheat Sheet. If you've got a story that you want us to cover and your feedback on what we've been talking about today, email us.

10:12The address is cheatsheet at sky.uk.

10:15Sophy Ridge:And make sure to tune in again tomorrow with Kamali and Anna. Thanks so much for listening.

10:22How does a banana trigger a CIA-backed coup? Do AirPods herald the arrival of a new global order? What do LED lights say about the future of humanity? I'm Ed Conway, and in each episode of my new podcast, Stuff Matters, I take an object, crack it open, and reveal the world-shaping forces hidden inside. This is economics told through the things we think we understand. Search Stuff Matters on your podcast app to listen and follow.