Budget 2025: Reeves’ Scene Setting Speech

At extremely short notice, Rachel Reeves recently delivered what the Treasury described as a ‘Scene Setter speech’. With the Budget just three weeks away, the speech was expected to be a numbers-free pitch-rolling exercise ahead of unmentioned large tax increases. In that regard it did not disappoint.

While there were no explicit references to Budget measures, it was notable that the Chancellor began her speech by saying:

“My Budget led by this government’s values of fairness and opportunity… 

…and focused entirely on the priorities of the British people: 

Protecting our NHS,

reducing our national debt, 

and improving the cost of living”. 

That the NHS is at the head of the list suggests a strategy pinning justification of tax increases at least partially on further NHS spending. Polling has found that this remains an area with wide public support. However, the public may be less happy when it realises that the NHS Confederation reckons £3bn is needed THIS year to cover redundancies (£1bn+, some from the sudden abolition of NHS England), higher drug prices (£2.5bn) and the fallout from recent strike action (£0.3bn).

‘Reducing national debt’ may not be an obvious priority of Joe Public. Rachel Reeves pointed to national debt at £2.9tn (95% of GDP), even though her debt target– public sector net financial liabilities – is different and was chosen to allow greater borrowing. Realistically, she is not going to cut debt any time soon – the last Economic and Financial Outlook (EFO) from the Office for Budget Responsibility (OBR) had debt falling from 96.3% to 96.1% in the final year of its forecast (2029/30). More importantly, the focus in the next few years is more likely to be bringing down the cost of debt servicing, which, Rachel Reeves reminded her audience, was £1 out of every £10 of tax collected. 

‘Improving the cost of living’ is an interesting choice as the third priority, given that it is now widely agreed that her last Budget had the opposite effect via increased employment costs. A Chancellor aiming to improve living costs will not want to increase VAT as that would feed through directly to inflation (and her borrowing costs, via index-linked gilts). It also points to well-trailed moves to reduce energy costs by, for example, eliminating 5% VAT and/or moving some of the levies built into pricing away from the cap and into general taxation. Again, this would help lower debt borrowing costs by its deflationary impact.

The pitch at the time appeared to have been a set-up for income tax rises, albeit they may be tempered by a corresponding reduction in the employee National Insurance (NIC) rate.

Over the next couple of weeks in the lead up to and immediately after the Budget on 26th November we will be providing insightful commentary and advice for those in later life. This can be best accessed reviewing our regular blog articles and commentary on the Harold Stephens website and social media channels. Search for ‘Harold Stephens IFA’ on You Tube and subscribe to the channel to get the very latest videos direct from Richard Higgs, later life financial planning specialist.

Finally, register and reserve your place at one of our 2 post-budget Later Life Financial Planning live events to be held on Wednesday December 3rd 2025 by emailing office@haroldstephens.co.uk or calling 0117 3636 212. Details below:

Wednesday 3rd December - 1.30pm - 2.30pm - St Peter’s Church, The Drive, Henleaze BS9 4LD

Wednesday 3rd December - 6pm - 7pm - Stoke Lodge, Shirehampton Road, Stoke Bishop BS9 1BN