Treasury rules out capital gains tax rise as Badenoch attacks tax burden

The Treasury has ruled out a rise in capital gains tax in next week's Budget, ending speculation that the Chancellor, John Healey, would target the tax on the sale of shares, second homes and other assets. The decision was briefed ahead of the Budget and is seen as an attempt to reassure business and avoid spooking the markets. It also settles a Cabinet argument. Some Labour figures, including Louise Haigh, wanted CGT rates raised to bring them closer to the tax on work. Supporters of the change argued it was a matter of fairness and that unearned wealth should carry a heavier burden. Healey's emphasis on wealth creation and the importance of profits appears to have won out.

Kemi Badenoch used a pre-Budget speech to argue that the country must live within its means and that the cost of government debt is crippling. She said spending cuts pencilled in for later years are a fiction and should be brought forward to significant cuts now. She attacked the overall tax burden, saying Britain's tax burden has never been higher. She listed taxes on heating, petrol, car insurance, holidays, buying a home, living in a home and passing on a home, and said this is not working because Britain does not feel better off.

Badenoch was challenged over the previous Conservative government's record, which also raised the tax burden. She said she had disagreed with that approach, that collective cabinet responsibility meant she had followed it, and that the economy had not grown. She also outlined around £60bn of spending pledges and tax cuts, but only half were funded, leaving a £33bn gap. She argued that John Healey could be worse than Rachel Reeves, pointing to £70bn in new tax rises across two budgets.

Separately, official figures showed another fall in job vacancies, the biggest since the start of the year, as smaller firms cut back on recruitment. The figures came ahead of the Budget and the government's review into youth unemployment. Other pre-Budget positioning continued, with the Liberal Democrats calling for more taxes on banks to pay for cost of living help. The political argument now turns on the size of the state, debt, and how far the Budget should raise taxes or cut spending.