How much one year of Labour has cost you
Economists are predicting tax rises in the autumn budget, and restrictions on the amount that you can save tax-free into a cash Isa are also said to be on the cards. So, after 365 days, are you better off under this government — and are your fortunes likely to improve over the next four years? Here's what you need to know.
Labour's economic plan was built around growth. 'Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people,' the party manifesto said.
But in March the Office for Budget Responsibility (OBR) cut its growth forecast for 2025 in half. The official economic forecaster had expected GDP (the value of UK goods and services) to grow 2 per cent this year, but reduced that to 1 per cent, effectively wiping out £9.9 billion worth of budget wiggle room for the government.
The OBR said that the 'economic and fiscal outlook' had become more challenging since the 2024 budget, and that domestic output had stagnated while business and consumer confidence had declined. Critics partly blamed the chancellor's decision to increase employer national insurance contributions, which they said would hamper companies' ability to invest and suppress wages.
All this has had a knock-on effect on your finances. If the economy is growing, businesses are likely to be hiring and investing more, and wages will typically rise. Weak GDP growth means that companies are more likely to cut jobs and wages will be stagnant, leaving households worse off.
The latest figures, for the three months to April 2025, show that GDP grew 0.7 per cent, up from the 0.5 per cent in the three months before the election.
The outlookThings are, however, expected to look up. The OBR has forecast 1.9 per cent growth in 2026 and 1.8 per cent in 2027.
Before the election Labour pledged not to increase national insurance, income tax or VAT. It also said that it would not extend the Conservatives' freeze on income tax and national insurance thresholds, so would raise them in line with inflation from April 2028. These pledges have been kept, so far.
But when questioned in parliament this week, Reeves would not rule out extending the freeze on income tax for a further two years. This came in the week that Office for National Statistics data showed that living standards fell at the sharpest rate in two years in the first quarter of 2025.
The Resolution Foundation, a think tank, estimated in 2023 that the threshold freezes, brought in by the Conservative government, would cost taxpayers £40 billion a year by 2028.
'It can be difficult for people to pinpoint why their finances feel tighter, but a significant reason for many is that they may be paying more in income tax while also seeing inflation push their household bills ever higher,' said Chris Etherington from the accountancy firm RSM. 'This so-called fiscal drag can squeeze your income before you even get it.'
• What is the UK inflation rate and what does it mean for you?
If tax thresholds had risen with inflation at the start of the tax year in April, it is likely they would have gone up 1.7 per cent (the consumer price index inflation figure for the previous September, which is the measure usually used by the government).
The personal allowance — the amount you can earn tax-free — would now be £12,784 instead of £12,570 and the higher-rate threshold would be £51,125 instead of £50,270. Someone earning £60,000 would have paid £11,218 income tax instead of £11,432.
The outlook Workers and pensioners are unlikely to get any relief from fiscal drag until at least 2028. It means most people pay more tax every year, as incomes rise and tax thresholds don't keep up.A clear example of this is the state pension, which under the triple lock is guaranteed to go up by inflation, wage growth or 2.5 per cent a year, whichever is highest. If its annual value goes above the £12,570 tax threshold the government will be handing out state pension just to take some back in income tax.
Capital gains tax (CGT) allowances — the amount you can earn tax-free from the sale of assets such as second homes, art or investments held outside an Isa — were slashed by the Conservatives, from £12,300 to £6,000 in 2023, and then to £3,000 in April last year. The Labour government then raised the basic rate of CGT from 10 to 18 per cent in October and the higher rate from 20 to 24 per cent.
Someone making a £10,000 profit and paying the basic rate of CGT would have paid £400 tax in March last year, but today would pay £1,260.
The government also extended the freeze on the inheritance tax threshold for another two years, until April 2030. The main tax-free allowance has been £325,000 since 2009, and the additional residential allowance, which you get if you leave your home to a child or grandchild and your estate is worth less than £2 million, has been £175,000 since 2020. Any value in an estate above the thresholds can be taxed at 40 per cent.
If thresholds had risen in April in line with the 1.7 per cent inflation figure, they would now be £330,525 (or £508,500 with the residential allowance). An estate worth £1 million would save £3,400.
Homebuyers have also been hit. The Conservative government increased the price levels at which stamp duty charges kick in as a permanent policy in 2022 to boost the market, then quickly made it a temporary measure that would end in March 2025, pushing costs for buyers back up. Labour stuck with that plan.
The 3 per cent stamp duty surcharge paid by second-home owners, introduced in 2016, went up to 5 per cent in Reeves's budget last year. This, plus the lowering of the thresholds, means that someone buying a £300,000 second home now pays £20,000 in stamp duty, up from £11,500 in September.
The outlookThere is more to come. From April 2027 any money left in your pension pots when you die will be included in your estate for inheritance tax purposes. If your estate (including property, cash savings and any investments you have) takes you over the £325,000 threshold (£500,000 including property), your pension pot will be taxed at 40 per cent.
• How much do I need to retire?
Labour's manifesto pledged to bring down the cost of energy, and reduce food prices.
The energy price cap — the limit on what suppliers can charge per unit of gas and electricity to customers on a default tariff — works out at an average bill of £1,720 a year. This is down from the £1,849 level of the cap from April until the end of June. Analysts at Cornwall Insight expect it to fall again to £1,697 in October but, because the price cap is determined by wholesale oil prices, it can be volatile.
Groceries are now 4.7 per cent more expensive than a year ago, according to the analysts Kantar. When it comes to the general cost of living, inflation was 3.4 per cent for the year to May, compared with 3.1 per cent at the time of the election.
Other bills have also been affected. Families who educate their children privately are paying about 14 per cent more in fees since the government levied 20 per cent VAT on public schools. The Independent Schools Council annual census found that the average annual cost of sending a child to a day school was £18,064 last year, so a 14 per cent increase would cost families about £2,500 a year per child.
And about a quarter of pensioners will not get the winter fuel payment, worth either £200 or £300 a year, from this winter. The payments used to be made to all pensioners, but this was restricted to those claiming pension credit after the election last year. Now, after a U-turn, only those with income greater than £35,000 will have that payment clawed back through the tax system.
The outlookThe future picture for inflation looks more positive. The OBR expects inflation to level out at about the Bank of England's target of 2 per cent from spring next year.
But Rachel Vahey from the investment firm AJ Bell said: 'The government has to balance a difficult economic equation and has banked on an improving economy to help boost tax revenues via fiscal drag while still leaving just enough left over to make people feel a little better off.
'Even though inflation has cooled somewhat and earnings are now rising above inflation, the financial pain of recent years will take some time to be erased. Many households, still reeling from inflation that far outstripped wage growth in 2022 and 2023, will feel that they are struggling to get back into a position of financial security.'
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Times
32 minutes ago
- Times
Yes we can! A master of political slogans reveals his secrets
There can't be many people working in politics with a CV like Chris Bruni-Lowe's. One morning in late 2018 the pollster and strategist took an unexpected phone call from his old friend Nigel Farage. Together the two men had taken Ukip from nutty obscurity to nearly four million votes in a general election and the EU referendum victory it had always dreamt of. Now, with parliament deadlocked and Ukip back beyond the fringe, a restless Farage was planning his most audacious heist on British democracy yet: the Brexit Party. Now he needed a slogan. To Bruni-Lowe, a shaven-headed thirtysomething from south London, Farage was insistent: he wanted to promise a 'political revolution'. Saying no to Farage is never easy. But Bruni-Lowe did just that. 'I pointed out to him that the politically explosive connotations of the term made it a risky choice,' he writes in Eight Words That Changed the World, a fascinating and timely history of election slogans – some of them his. Instead he settled on a gentler line with a deliberate double meaning: 'Change politics for good.' Farage won the European elections of 2019, Theresa May was ousted as prime minister, then Boris Johnson got Brexit done. 'We had succeeded,' Bruni-Lowe reflects, 'in choosing the right word for the right candidate at the right time.' A couple of pages after this story Bruni-Lowe recounts another of his professional triumphs. 'I was advising Milojko Spajic, a former finance minister in Montenegro … He had resigned from the government six months earlier to found a new political party called Europe Now! and he wanted my help to win the presidential election in March 2023.' Pardon me? What now? Europe when? We thought you were the Farage guy. But no: here is Bruni-Lowe, settling on the slogan 'It's time' to help another upstart party 'overturn some deeply entrenched attitudes' and win an election on a pro-EU platform. It worked. Just how does he do it? In an age of volatile electorates and unpredictable polls, this stuff is more important than it has ever been. At their best, slogans capture the zeitgeist and express in not even a sentence the essence of a politician's mandate. Just ask Keir Starmer. 'Change', one of Bruni-Lowe's eight words, spoke to the anti-Tory mood of 2024, but is proving rather difficult to substantiate in office. Few people know all of this better than the author, a gun for hire whose work has taken him to almost every democracy in the world. There is a little bit of memoir in this pacey, breezily written history of a much misunderstood political art — I almost wanted more — but it is short on baccy-stained anecdotes about Farage. Instead, this short book's great strength is in its breadth and depth. Those eight words are people, change, democracy, strong, together, new, time and better, with a chapter for each — and two bonus choices, great and future, as our introduction and epilogue. Some are invariably more effective, ambiguous and elastic than others, but it of course depends where you are. As the Liberal Democrats have learnt from a century of banging on about proportional representation, lecturing UK voters about 'democracy' is likely to put them to sleep. In embattled states like Taiwan and Ukraine, however, it means something real. Parties that look knackered, meanwhile, can be reinvigorated by the judicious use of a single word. Old rogues like Recep Erdogan in Turkey and Viktor Orban in Hungary have both used the word 'time' to present themselves afresh to exhausted electorates. Political journalists like me are constantly discovering that there's really nothing new in our line of work — and that is also the lesson here. Not least the word 'new', which turns out to belong to rather more people than Tony Blair. Vladimir Putin, Erdogan and the Belarusian dictator Aleksandr Lukashenko all used it to win the elections that would, in time, turn them into very old-school strongmen. The best slogans are a repository for millions of diffuse — and very different — hopes and dreams. • The 9 best politics books of the past year to read next Take Barack Obama. 'Yes we can' was his clarion call to a restive America in 2008. Even I, the sort of tragic political nerd who watches old Michael Cockerell documentaries on holiday, didn't know that Alex Salmond had used the same slogan for the SNP in the general election of 1997. As Bruni-Lowe notes, drily and wryly: 'It is plain to see that Alex Salmond and Barack Obama had different qualities.' It wasn't so much the slogan that mattered, but the time and place in which voters were reading it. 'The words can work,' he writes, 'but only if they're used by the right person at the right time.' See also: Winston Churchill. Almost absurdly, given how intimately he was then known by the British public, Churchill told voters that it was 'time for a change' in 1951. Despite knowing him only too well — just as they knew Farage by 2019 — they happened to agree. But when the Republicans ran Thomas Dewey against Franklin D Roosevelt with the same slogan in 1944, Americans laughed him out of the room. Yes, Roosevelt was running for an unprecedented and controversial fourth term — but the business end of the Second World War was not, it turned out, the ideal time for a change. Perhaps my favourite one of all is the frankly deranged slogan employed by the Japanese Social Democrats in 2021: 'Change is fun!' That may be the implicit logic of every 'change' line, but in this case the voters did not agree. They won one seat. As South Africa prepared for its first multiracial elections in 1994, Nelson Mandela — not a man we imagine as a ruthless electioneer — learnt a similar lesson. He told his American strategists, Stan Greenberg and Frank Greer, that he had come up with the ideal slogan for the African National Congress: 'Now is the time.' They duly polled it and found it resonated only with hardcore activists from the ANC. Mandela, 75 but ever conscientious, did not much like that. 'He really wanted to unite the country,' Greer, one of many gnarled veterans to speak on the record, tells Bruni-Lowe. 'I've never been a candidate,' Mandela would say. 'I want to learn how to be a candidate.' That resulted in a slogan befitting of a father of the rainbow nation: 'A better life for all.' • Read more book reviews and interviews — and see what's top of the Sunday Times Bestsellers List As Bruni-Lowe rightly concludes, the election slogan has never been more important. With everything up for grabs in British politics, his comrades in the polling fraternity should study his book. I bet Farage will. And if that scares you, read to the very end. The author's parting shot should terrify well-meaning liberals even more than the prospect of a Reform government. The reader we should worry about isn't an unscrupulous politician but ChatGPT. The future, Bruni-Lowe warns, is a world of 'hyper-targeted slogans', written by AI, mashing his eight words together in different orders for each individual voter and smashing our national conversation into tens of millions of pieces. That's certainly new. It will be a change too. And it's about time politics caught up with technology. But is it democracy? Eight Words That Changed the World: A Modern History of the Election Slogan by Chris Bruni-Lowe (Biteback £20 pp272). To order a copy go to Free UK standard P&P on orders over £25. Special discount available for Times+ members
Telegraph
36 minutes ago
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Sweden invented ‘flight shaming'. Now it is begging airlines to return
The country that invented 'flight shaming', a concept championed by climate activist Greta Thunberg, has scrapped its air tax in a bid to boost its ailing economy. As of July 1, Sweden has dropped the levy of 76–517 krona (£5.50–£37.40) per passenger per flight, an eco measure introduced by the centre-left government in 2018. The U-turn will be seen as a disaster by environmentalists, and it exposes a tension at the core of the aviation versus climate debate. When jumbo jets disappear emissions drop, but other things begin to dwindle too: regional growth, connectivity and – it appears in Sweden – public support for eco concerns. The emptying of Swedish skies Sweden introduced its air tax in the same year that a 15-year-old Greta Thunberg organised her first solo climate protest outside Swedish Parliament. In a short period of time the 'flight shaming' ('flygskam') movement took hold. A survey in 2019 showed that nearly a quarter of Swedes were abstaining from flying in a bid to reduce their climate footprint, up from 17 per cent the year before. The impact on Sweden's aviation industry was stark. Swedavia AB, which runs 10 Swedish airports, saw passenger numbers drop for seven consecutive months in 2019. The country witnessed its slowest growth in airline passenger numbers for a decade. Meanwhile, state train operator SJ saw passengers leap to 32 million citing 'big interest in climate-smart travel.' In the seven years that followed, international flights dropped by a third. Smaller airports, particularly in the wild and remote northern regions, saw fewer arrivals as airlines scaled back operations. Ryanair ceased all domestic flights in Sweden, while the domestic-focused Bromma Airport near Stockholm came to the brink of closure. Today, only one regional airline, Västfly, still uses the airport. The pandemic was the catalyst for change. The country suffered a recession in 2023 and the economy shrank by 0.3 per cent between April and July 2024. It was within this economic climate that the new right-wing government, elected in 2022, said that there were 'few reasons to feel flight shame' as they announced plans to invest £76m into the aviation sector and drop the air tax entirely. Airlines were quick to praise the decision. Ryanair promptly re-introduced two new aircraft to its Swedish fleet and added ten new routes. EasyJet said 'we strongly welcome the abolition of taxes on passengers to help keep flying affordable' and Norwegian announced it would add new routes from Norway to Sweden. 'We congratulate the Swedish government for abolishing the aviation tax. It is excellent news, which recognises that taxation of air passengers is counterproductive economically and ineffective environmentally,' was the international aviation body IATA's response to the news. The climate lobby, however, is disheartened by the news. Justin Francis, co-founder and executive chair of Responsible Travel, tells The Telegraph: 'Some governments' short-term attitudes to regulating aviation have shifted, but the science hasn't, and aviation will account for an ever-increasing percentage of total global carbon emissions and the massive costs of climate change to business and society.' The European countries banning domestic flights No doubt politicians in neighbouring countries will be watching keenly from the sidelines to see how Sweden's U-turn plays out. That's because since Sweden introduced its eco-war against aviation, other countries have followed suit. In 2020, Germany increased its domestic and intra-European flight taxes by 75 per cent, while Belgium imposes a €10 'boarding tax' for flights of less than 500km (310 miles). In the Netherlands passengers must pay a departure tax of €29.40 per flight, regardless of the destination. Denmark is the latest to join the party. As of January 1 this year, passengers have had to pay 50DK (£5.73) for intra-European flights, 310DK (£35.83) for medium-haul and DK410 (£47.55) for long-haul flights. Ryanair was quick out of the blocks to criticise the tax. The Irish airline publicly described it as a 'discriminatory, fake eco-tax', criticising Denmark for penalising short-haul passengers while not taxing transfer passengers travelling far greater distances. The airline has scrapped its services from Billund and Aalborg, in response. Other countries are clamping down on short-haul aviation through other means. In 2023, France passed a law banning domestic flights on routes where the journey could be made by rail in less than 2hr 30m. While this was hailed as a 'domestic flight ban', effectively ruling out air travel between Paris Orly and Nantes, Lyon and Bordeaux, some argued they could have been more ambitious by extending the train travel time to four hours, or to measure from city to city rather than airport to airport. In its current form, where you can still fly from Paris Charles de Gaulle to Nantes, Lyon and Bordeaux. Because of this, the domestic flight ban has been criticised for being more gestural than anything else. Spain is considering mirroring the policy, banning flights where you can make the same journey in 2hr 30m. This would rule out 11 domestic air routes, reducing the country's domestic aviation emissions by an estimated 10 per cent. But, as in France, climate activists said it didn't go far enough, with the group Ecologistas en Acción describing the measures as 'purely symbolic'. The question is where these countries will go next. Clearly the Swedish U-turn highlights the complexities around marrying green policies with national interconnectivity and regional prosperity. 'Until electric planes and emissions-free aviation are viable options, we all need to fly less,' says Justin Francis. 'Aviation fuel needs to be taxed in line with other transport fuels. The industry has had a free pass here for too long, and the proceeds need to be ring fenced for investment in lower-carbon aviation and improving rail infrastructure.'
Telegraph
36 minutes ago
- Telegraph
The battle to save a high street giant from Woolworths' fate
The new owners of WH Smith's high street shops have vowed to arrest decades of decline after swooping on the business in a cut-price deal. Trading under the fictitious new name TG Jones, hundreds of stores are poised to be revamped with postal and banking services as part of a bold attempt to emulate Boots and become 'a vanguard retailer' that is part of the 'lifeblood' of communities. The changes are at the centre of a comprehensive restructuring plan put together by the investment firm Modella Capital, which completed a takeover of WH Smith's estate of 464 shops on Monday. The deal excludes branches in train stations and airports, which will continue to operate under the WH Smith name. Modella's buyout followed months of intense negotiations, including a last-minute reduction to the price tag after a deterioration in trading. The shops will continue to be run by Sean Toal, the managing director of WH Smith's high street arm since 2019. The introduction of vital services alongside everyday products is 'really important', if the shops want to become more relevant and the business is to avoid the same fate as other high profile retailers that fell out of favour, said Steve Curtis, Modella's chairman. 'We think there's a really exciting story here for a business that could have been Woolworths Two…There's no reason why, with the proper love and care and a bit of support, it should ever close. It should be in rude health,' Curtis added. Woolworths was a familiar presence on British high streets for more than 90 years until its collapse in 2008. Toal said: 'The high street is crying out for more services. There is a sense that the average high street is sort of being hollowed out. And a lot of the stuff that really makes a high street is just kind of fast disappearing.' Curtis added that the Post Office already has counters in nearly 200 branches, but the ambition was to have one 'of some size in every single one of our stores'. Modella points to the way Boots has managed to remain an enduring feature of town centres by providing prescriptions, vaccinations and advice for minor health ailments. Shops will be further rejuvenated through tie-ups with Hornby, the toymaker behind brands such as Airfix and Scalextric, as well as fantasy games sensation Warhammer. There are also plans for a fresh push into music after WH Smith reintroduced vinyl last year following a 30-year hiatus. Pick-and-mix – once a staple of Woolworths' shops – could make a comeback too. Curtis likened its ambitious plans to pointing a 'great old tanker' 'in a slightly different direction'. The changes will 'take a period of time' but 'by the time you get to the end of it, it's going to look quite different – it'll be a different vibe'. 'Grand old institution' WH Smith has faced enduring ridicule for allowing its stores to become tired and rundown. Eventually, the neglect became the inspiration for a Twitter account called @WHS_Carpet, which dedicated its time to naming and shaming the shabbiest premises. she's a beaut — carpet (@WHS_Carpet) June 19, 2025 When its plans to exit the high street were unveiled in March, industry figures expressed fears that as many as half its shops would be quickly jettisoned – but the opposite is true, Modella promises. A longstanding policy of shrinking the estate by shutting the worst-performing stores will be paused. Some are now in line for a much-needed facelift. Modella, which also owns Hobbycraft and the Original Factory Store, will pay £40m to take control, down from the £52m that was agreed when the deal was first unveiled, for a business that made £15m of operating profit in the preceding six months. Its revival rests on an ambitious cost-cutting plan in which landlords are persuaded to sign up to more affordable rents, and suppliers agree to more favourable terms. Money saved will then be reinvested in the turnaround. 'We're going to need help from a group of stakeholders to help us rebuild this grand old institution into something that it deserves to be,' Curtis said. 'Who the hell is TG Jones?' With the WH Smith name still appearing on hundreds of shops at airports, train stations and hospitals, Modella was forced to come up with a new brand for the shops, which have operated under the same name since the first WH Smith shop opened in Mayfair, central London, in 1792, when George III was on the throne. The 'TG Jones' name was invented by Modella directors. Marketing experts have cast doubt on the rebranding exercise, while the reaction of shoppers suggests it will be a battle to convince some that the business still has a future after its relaunch. A goodbye video posted on WH Smith's official Instagram account prompted a flurry of negative responses: 'Yeah, you've just killed the whole business mate. Nobody is going to TG Jones,' one reportedly said. 'Who the hell is TG Jones?' asked another, while a third described the redesign as 'horrific'. In a letter to staff, Modella said: 'As a very well-known surname in the UK, Jones feels like a worthy successor to Smith and carries the same sense of family.' With a logo made up of the same blue and white colours that have long been a feature of the WH Smith branding, customers will soon be won over, Curtis predicted. 'If you're in a town, you've lived there all your life, and you've walked down that street all your life, and the cover facia is still exactly the same white, exactly the same blue, you probably won't notice it,' he said. The signage on the stores will be changed to 'TG Jones' over the coming weeks and negotiations with landlords will begin in earnest, with Modella hoping to persuade them to grant more affordable rents. Shop owners will be coaxed with the offer of longer leases than they've become accustomed to under WH Smith. Building a future Around 350 stores are on leases of less than two years but Modella believes that by signing up to longer contracts – perhaps 10 years – landlords may agree to an initial period that is rent-free, which would release cash to re-invest in refurbishments. 'If we go to that landlord and say ... 'We'll use all that cash and we'll make that shop look really beautiful'… what that's doing is improving the asset. It also gives us a long-term partnership. So it's investing together,' Curtis said. 'Vacancies on UK high streets are running around about 14pc ... There's a lot of vacant units, so if they [landlords] can work with a partner that's prepared to put a long-term commitment down ... For some of these landlords these are pension funds for their families ... it creates security,' Toal said. There are even plans for several new store openings. 'We're not in Manchester city centre ... We should be ... and we're under-represented as a retailer in London,' Toal said. The last time WH Smith opened a store on a UK high street was decades ago. 'We want to send a message to the market ... We want to open stores where it's viable to do so,' Curtis said. Modella is betting that suppliers will be similarly receptive. 'I think suppliers thought this business hasn't got a future. They now think, 'boy, has it got a future' ... which is brilliant for them, because rather than supplying 100 stores in three years' time, they're hopefully going to be supplying 500 – that's massive for them,' Curtis said. This optimism isn't necessarily shared everywhere. Some retail figures believe the business has a slim chance of survival. Meanwhile, the Communication Workers Union has expressed fears that Modella could even be 'looking to asset-strip it'. Such suggestions are rejected. 'It generates cash. It's got a solid level of profitability ... There's much more value for us here in growing something that makes X today, and Y tomorrow ... If we are on the up in 10 years' time, there's no reason why we couldn't float this business, because it could be worth a lot of money,' Curtis said. 'We could easily just say that they should quietly close this over the next couple of years but you don't need to ... and we don't want the high streets of this great nation of ours to be proliferated with charity shops, vape shops and coffee shops,' he added. 'We're in a lot of locations. If we're not there, then who else is going to come in?' Toal said.
