Particle.news
Download on the App Store
32 ARTICLES
·
last mo.

Reeves Confronts an ‘Impossible Trilemma’ as £41bn Tax Shortfall Looms

Economists urge moderate sustained tax rises through measures such as a VAT levy on private healthcare to rebuild the Treasury’s fiscal buffer

Image
British Chancellor of the Exchequer Rachel Reeves attends the annual Mansion House dinner in London, Britain, July 15, 2025. REUTERS/Isabel Infantes/File Photo
Image
Caption: Neil Kinnock has called for VAT to be added to private healthcare (Source: Tom Pilston)

Overview

  • The National Institute of Economic and Social Research warns of a £41.2bn shortfall on Reeves’s stability rule by 2029-30, describing her stance as an “impossible trilemma” between fiscal rules, spending pledges and a tax freeze for working people.
  • NIESR recommends building a larger fiscal buffer via moderate sustained tax increases to reassure markets and protect investment spending under current borrowing rules.
  • Former Labour leader Lord Kinnock proposes removing the VAT exemption on private acute healthcare, with Good Growth Foundation analysis estimating that a 20% levy could raise more than £2bn.
  • Good Growth Foundation polling shows 55% of adults back a windfall tax on private healthcare firms to bolster NHS funding.
  • Chancellor Rachel Reeves reiterates her manifesto pledge not to raise income tax, National Insurance or VAT on working people, restricting the scope for new revenue measures.