Cheat Sheet | Budget Day, scrapping jury trials and the 6-7 trend

0:01Wilf Simpson:Hello, you're listening to Cheat Sheet, the podcast that gets you up to speed with what you need to know in just 10 minutes. I'm Sophy Ridge.

0:08Sophy Ridge:And I'm Wilfred Frost. It's Wednesday, the 26th of November, also known, finally, as Budget Day.

0:15Wilf Simpson:So we'll talk you through about what's already been announced, what we think is going to be announced, and then, of course, give you the context of it all as well.

0:22Sophy Ridge:And hopefully we can explain why everyone keeps saying the word smorgasbord. Lots to get through on the budget. We're also going to talk to you about some new plans to tackle the court backlog, which are seen as very controversial.

0:37Wilf Simpson:I'm going to try and find out why even Keir Starmer has got in on the 6-7 trend.

0:44Sophy Ridge:So it's budget day. We're finally there, Sophie. And we will find out later today what all of the individual line items in the budget are. The big headline point is that taxes are going up. And we just wanted to start by reminding you what Rachel Reeves said in May last year on the campaign trail before the election.

1:06Wilf Simpson:And Keira and I have been really clear. We want taxes on working people to be lower. But we need to always account for how we would pay for any promises that we make. So we've committed to not increase national insurance or income tax. And if the money is available, of course, as we've said, we would like taxes on working people to be lower.

1:25Sophy Ridge:I think the big question to set this up is, will there be an explicit break of the manifesto pledge? That looks highly unlikely. But will they still take a lot of political heat for now, two years in a row, putting up taxes when that was the framing before the election? And Sophie, I guess linked to that, my question for you is, what is this term, this black hole that we keep talking about? because today we'll find out how big it is and how much she has to annoy voters, how much she has to put up taxes.

1:53Wilf Simpson:Yeah, just on the income tax thing for a start, because I think this is really important. Most people would say if you're paying more income tax as a result of the budget, income tax has gone up. That I think is what most people would think. However, what we're expecting, it's always risky to predict just hours out of a budget, But what we're expecting is that the headline rate of income tax isn't going to change, but more people will be paying more income tax because of a freeze in the thresholds, which basically means more people get dragged into paying high rates of income tax, right? So taxes are going up.

2:32Wilf Simpson:As you say, that is the kind of big headline rate that's going on too. We're going to see some changes to benefits as well. I think those are some of the really big things, another big headline thing that's going to impact an awful lot of people on the two-child benefit cap being scrapped, that we're expecting that to happen in full. And we're also expecting to see a rise in working age benefits as well to the tune of kind of five or six billion pounds. So these are things that haven't been confirmed, but we're pretty sure they're going to happen.

3:01Sophy Ridge:And it comes back to the point, what does this all cost? As you said, scrapping the two-child benefit cap, that would be an extra$3 billion to find, possibly increasing the national living wage, which is expected to go up by 4.1 % from£12.21 to£12.71. That's going to cost more money. By the way, it might also be inflationary. And I think this is the key question to me coming into it. Does this mean$10 billion,$20 billion, or$30 billion? of tax rises is necessary. And it just gets so, so much harder each time you step up through those levels. And it will lead to more and more of these taxes to offset it, which will annoy more and more different groups of people.

3:51Wilf Simpson:My kind of big takeaway from what we've got so far is that, to me, this feels like a budget that is going to be aimed at Labour MPs, right? If you look at some of the things that they're doing, putting up taxes there's speculation around property taxes as well right more funding for the NHS that's going to be the priority there the minimum wage going up we're also seeing of course more spending on benefits on welfare which the public are I think it's fair to say not in the same place as most Labour MPs and I think that tells you something about how stable the Chancellor and also the Prime Minister are feeling you know there's been an awful lot of speculation about leadership challenges, hasn't there?

4:34Wilf Simpson:And for me, it feels that this is actually a budget that is going to be designed to shore up support in their own backbenchers, almost like making sure they're going to be there to fight the next election rather than actually win it.

4:47Sophy Ridge:The big question to me is how big is that number, 20 or 30? And if it's under 20, they might get away with it. If it's over 30, it's so hard to make the sums work for the economy. The other is the narrative. because last year she could say two things. We're putting up taxes because the last government screwed things up, even if she slightly exaggerated that black hole argument, and because we're going to invest in the NHS, which got a massive boost in spending, and we're going to invest in the infrastructure and the roads and the airports that will help this country grow. This time she can't make either of those arguments.

5:26Sophy Ridge:There's not a significant increase in spending coming. There might be a bit around the edges, as you've mentioned. And she can't not effectively blame the last government. And I think if she tries, by the way, it will look even worse. On top of that, growth forecasts will probably be downgraded. Again, we rest too much on growth forecasts, but the real proof will be, does this work in two or three years' time? And we can all argue where tax rates should be, should they be higher or lower. But what is definite is tax rises going up without any increase in spending is a bad thing for the economy.

6:06Sophy Ridge:So it's just, what is her narrative? How does she sell this set of policies today? Incredibly tall order for her.

6:14Wilf Simpson:Well, it's probably worth just rattling through a couple of the other things that we know are definitely happening. Tourism tax, so visitors to English cities and regions could face a new tourist tax to fund local projects. In Manchester, they've actually started doing this already. They made£3 million in one year. So it's effectively like a pound or two if you're staying on a hotel.

6:34Sophy Ridge:It's got some devolution to it too, which pleases people because exactly it's the government saying that mayors are allowed to do this in more areas. Milkshake tax, which is going to target pre-packaged dairy and coffee drinks that are high in sugar, similar to what some fizzy drinks already have. So the other ones, which we do know are coming, we mentioned the increase in the national living wage. Obviously, something happening in the opposite direction. A few others that are worth looking out for, a cut to the amount you can save in your ISA from£20 ,000 per year to£12 ,000 per year, possibly reducing the amount you can pay into your pension each year without paying national insurance contribution on that contribution to your pension and that property tax, which I'm really interested in.

7:19Sophy Ridge:I think it's certainly coming in some shape or form. Exactly how it's structured will be interesting, but it's rumoured to be some kind of extra annual levy on people whose homes. are worth over£2 million. This is why, Sophie, this long list that we've just been going through is why people are using the term smorgasbord of tax increases. I googled exactly the perfect definition of smorgasbord. It says, a range of open sandwiches and delicacies served as hors d 'oeuvres or a buffet. I don't think it's the right word because that sounds very appealing.

7:48Wilf Simpson:Sounds great. I agree. A delicious smorgasbord of small bites.

7:52Sophy Ridge:I'd love a little open sandwich right now. Quite fancy, a little smorgasbord. Yeah, some hors d 'oeuvres. I think this is great PR by the government to use this word.

8:06Wilf Simpson:Now, we do need to talk about another story that if it wasn't the budget today, we'll be leading all the headlines, which actually, by the way, makes me suspicious because I always think, why has this been out on this day, right? Because it's going to get less coverage than it deserves because this is a massive potential story. Because it's understood that ministers have been briefed about plans to scrap jury trials for most crimes in England and Wales. And so according to the sleek memo, only murder, rape and manslaughter would actually be tried by jury. And it is just worth taking a step back to say what a huge, huge change to the way we do justice in this country this would be.

8:43Wilf Simpson:Massive.

8:44Sophy Ridge:So this obviously comes because of a massive backlog in cases. 78 ,329 cases awaiting completion in crown courts in England and Wales at the end of June. That's more than double the 38 ,000 at the end of 2019. So it's monstrous, the backlog. Sir Brian Levinson did a big report into this. He also noted that the amount of time taken up in court before a jury starts to hear the case has doubled from 11 hours in 2001 to 22 hours last year. So there is a case, and he makes the case in his independent report that came out months ago, to reduce how many trials have juries. But this leaked report from David Lammy goes further than this report from Sir Brian Levinson that already got criticism because, as you say, this fundamental change to a principle that so many people care about.

9:36Wilf Simpson:The Ministry of Justice, I should say, said, no final decision has been taken by the government. Did you see the Prime Minister try to go viral? I mean, it wasn't really coming from him, I guess. He was kind of sucked into this pervasive number trend that is everywhere.

9:52Sophy Ridge:Which we have tried to research and understand on this podcast before. I've tried again. I still don't understand it. And what I love about it is the kids kind of do and they can kind of mock all of us, including the Prime Minister, in the process.

10:17Wilf Simpson:For anyone who's not watching on YouTube, what is happening there is there is a very, very cute and mischievous girl sitting next to the Prime Minister who sees 6 '7 in the book that she's reading and immediately starts juggling her hands around. and the Prime Minister does it too. So she, I love the confidence of this, by the way, that she just, yes, there's PM just casually sitting beside her. I'm going to try and get him to do six, seven. Amazing, amazing.

10:40Sophy Ridge:Amazing. And then the PM gets, you know, in a bit of trouble from the teacher because obviously teachers are having to ban this because it's so distracting. A little bit tough for the PM, a little bit mocked. I think he's going to have a tougher time in Parliament today though.

10:53Wilf Simpson:No matter how annoyed everyone is at Keir Starmer and Rachel Reeves, the one good thing he's done is that he's made 6 '7 so deeply uncool that hopefully no one will ever do it again. So thank you very much, Kizdama.

11:05Sophy Ridge:Trend over. That does it for your cheat sheet today. Make sure to get in touch with us, cheat sheet at sky.uk or follow us on our social media platforms.

11:26Wilf Simpson: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.