The phantom crisis pushed by Rachel Reeves will not sit well with people in Yorkshire - Alan Lazenby
The Chancellor told us the public finances were in crisis, with a black hole of up to £30bn requiring tough decisions. On November 26 she announced tax rises worth around £30bn a year – mostly on employers, the self-employed and investors. Yet days later the Office for Budget Responsibility revealed that, weeks before the Budget, it had informed Ms Reeves that the finances were already in surplus.
As someone who has advised Yorkshire businesses and families for 30 years, I have rarely seen such a gap between the narrative presented to the public and the facts known in the Treasury.
The timeline is damning. On October 3 the OBR told the Chancellor there was a £2.5bn gap, but this was fully offset by higher tax revenues from wages and inflation. By October 20 it showed a £2.1bn surplus. On October 31 – before her warnings escalated – the forecast was a £4.2bn surplus. The final post-Budget figure published last week? Headroom of £21.7bn, only £6bn down from the £9.9bn surplus she had in March.
None of this was disclosed before the tax rises were locked in. Business owners face higher costs from April 2026 with the national minimum wage rising, hitting hospitality and retail hard – sectors that employ one in five here, according to local chambers. Dividend tax rates increase by 2 per cent from April 2026, squeezing SME owners who rely on these for income. Enterprise schemes see tighter rules, making it harder to attract investment in a region already lagging in growth.
The three-year extension to the income tax threshold freeze drags more working people into higher bands. A median earner in Yorkshire could pay £400-£500 more annually by 2029 as wages rise but bands don't. With inflation at 2.3 per cent, this fiscal drag erodes take-home pay for van drivers, shop workers and teachers who keep our communities running.
Retirees aren't spared. From April 2029, salary sacrifice pension contributions over £2,000 will incur National Insurance, chipping away at retirement pots. Many on fixed incomes face higher effective taxes from the threshold freeze, while benefits tweaks like scrapping the two-child cap – funded by £3bn of the new revenue – offer little direct relief to pensioners.
The Chancellor says the money funds the NHS and infrastructure. No one in Yorkshire would dispute the need for better services, but the justification rings hollow when OBR data showed no urgent hole. If revenues were already improving, why the largest tax hike in years?
This erodes trust. The OBR exists to provide transparency, yet Ms Reeves's team hyped a crisis – rejecting a £50bn gap in September, then citing £20-30bn threats in November – while ignoring surpluses. Tory leader Kemi Badenoch has called for her resignation; even neutral observers see it as misleading to push through predetermined rises.
Yorkshire folk are pragmatic. We accept taxes sometimes rise. What we won't tolerate is being told of a dire shortfall when the watchdog had already signalled stability.
The next few months will reveal how these tax changes filter through to wages, investment decisions and regional growth. As independent analyses surface, questions about how the Budget was presented, and why warnings persisted despite improving forecasts, are likely to intensify.
Ms Reeves could still pivot in the Spring Statement with relief for small firms or the self-employed. However, until then, households and businesses here will pay for a phantom crisis.
Alan Lazenby is managing director of Lazenby’s Financial Services.