If I Were Chancellor for a Day…
National Insurance Up; State Pension Reformed; Pensions Ring-fenced Under an Independent Body
With just a month to go until the Autumn Statement, we’ve entered full-blown Budget Bingo season — speculating on what Rachel Reeves might unveil when she steps up on 26 November.
Rumours of tax changes are swirling, fuelling plenty of uncertainty. So this week, I’m stepping into the Chancellor’s shoes. This isn’t a fantasy wish list — we’d all like higher growth, lower taxes, and better public services — but rather a recognition that the UK’s public finances are in a tight spot. Some difficult choices will be needed to restore fiscal stability without derailing long-term growth (and ideally, to strengthen it).
I’ve set myself a challenge: to find £40 billion of savings or revenue to help fund the essentials — healthcare, education, and the social safety net. This is with the help of the excellent ‘Be the Chancellor’ website by the Institute for Fiscal Studies (click here) - a simulator that lets you tweak spending, taxation and investment settings to see how they affect the projected 2029–30 budget balance (the Chancellor’s ‘fiscal rule’ requires a surplus by then).
Here goes.
1. Private Pensions: End the Uncertainty, Drive More Saving
Few areas cause more anxiety for savers than pensions. Once considered the cornerstone of financial security, the system has become not just complex, but increasingly unstable — with constant speculation about rule changes undermining trust and discouraging saving.
I see this first-hand. Despite the generous tax advantages of pension saving, younger clients are increasingly reluctant to contribute, convinced that “the government will tax it all away by the time I retire.”
It’s not hard to see why. In recent weeks, a flurry of pension rumours has circulated — each one further eroding saver confidence:
Reduction in tax-free cash limit: The 25% tax-free lump sum could be capped at £150,000 or even £100,000, down from the current lifetime maximum of £268,275 (those with protection may still retain higher limits).
Flat-rate tax relief: A move to a single rate of 25–30% for everyone, replacing the current structure where basic-rate taxpayers receive 20% relief and higher/additional-rate taxpayers receive 40–45%.
Lower annual allowance: The £60,000 annual allowance may be halved to £30,000 or even £25,000, severely restricting how much can be contributed each year with tax relief.
Tax on inherited pensions: Income tax could be applied to all inherited pensions, removing the current exemption when the policyholder dies before age 75.
Reinstating the Lifetime Allowance: Despite being abolished only last year, there are whispers it could make a swift and unwelcome return.
National Insurance on employer contributions: Employer pension payments — currently free from both income tax and NI — could be brought into the NI net, weakening one of the most tax-efficient ways for business owners to extract profits.
NI on private pension income: A new 1–2% National Insurance charge could be levied on pension income in retirement.
Taken together, these rumours send a damaging message: that pensions remain a policy lever, not a stable long-term savings contract. And that perception alone risks discouraging an entire generation from saving for the future.
My Proposal
a) Establish Independence
I would immediately transfer responsibility for long-term pension policy to an independent, non-political body — similar to how the Bank of England sets interest rates. The goal: a stable, credible framework for pensions that can’t be rewritten before every election.
b) Abolish the ‘Double Death Tax’
If pensions are to be included in one’s estate for Inheritance Tax (IHT) (as proposed), it is indefensible to also charge income tax on beneficiaries when the policyholder dies after age 75. It should be one or the other (in my view) — not both. I’d make pensions subject to IHT but abolish the post-75 income tax charge, ending the double taxation on death.
c) Increase Auto-Enrolment
I’d gradually raise auto-enrolment contributions from the current 8% (of ‘qualifying earnings’) to a more sustainable 12%, shared equally between employer and employee. The earlier and more consistently people save, the more compounding can do its work — and the less reliant we become on the state system.
2. State Pension: Unpopular but Necessary Reform
This would be the most politically difficult reform of all — the kind that would probably have me packing my bags from Number 11 before I’d even got comfortable.
The uncomfortable truth is that the State Pension is neither affordable nor sustainable in its current form. As of the 2024–25 financial year, the UK government spends around 5% of GDP on the State Pension — roughly £146 billion, according to Department for Work and Pensions. With total public expenditure at about £1.2 trillion, the State Pension alone absorbs around 12% of all government spending, surpassed only by the NHS [sources: gov.uk, ifs.org.uk].
Left untouched, this trajectory will see the State Pension consume an ever-larger share of the budget, crowding out vital investment in healthcare, education, and infrastructure.
And if we simply ignore the problem, we’ll end up paying for it anyway. Markets will start to (increasingly) question the government’s ability to service its debt, borrowing costs will rise, credibility will erode, and working-age households will pay the price through higher taxes and mortgage rates.
At some point, someone needs to make the tough decision.
My Proposal
a) Raise the State Pension Age (SPA) to 70
The current SPA of 66 (set to reach 67 by 2028 and 68 by 2046) no longer reflects today’s life expectancy. People are living longer and healthier lives, and that needs to be mirrored in policy. I would gradually raise the SPA to 70 — phased in over several years to protect those close to retirement. A higher SPA would strengthen the labour force, boost productivity, and reduce fiscal pressure — with estimated savings of £10–15 billion per year once fully implemented. These estimates are broadly consistent with the savings achieved when the SPA rose from 65 to 66 [source: IFS: How did increasing the State Pension Age from 65 to 66 Affect Household Income]).
b) Replace the Triple Lock with a Fair, Sustainable Guarantee
The so-called triple lock — guaranteeing increases by the highest of inflation, wage growth, or 2.5% — has become politically untouchable, but it is also fiscally corrosive. It ratchets the pension upwards in good times and bad, regardless of economic conditions. I would replace it with a more sustainable promise: an annual increase in line with CPI inflation, with a floor of 0% (so pensions never fall, even in deflation). This would protect pensioners’ purchasing power without overburdening taxpayers. The estimated saving is around £10 billion a year [source: Can the UK afford the triple lock].
The Outcome
Together, these changes could deliver around £25 billion of credible, long-term structural savings — helping to stabilise public finances and preserve the integrity of the pension system for future generations.
It wouldn’t be popular, but it would result in a more sustainable system for the future.
3. National Insurance: Reversing an Unaffordable Giveaway
The Institute for Fiscal Studies (IFS) notes that increasing any of the “big three” taxes — Income Tax, National Insurance, and VAT — is the most direct and reliable way to raise substantial revenue. While the current government has pledged not to touch them, this pledge looks increasingly unsustainable given the UK’s deteriorating public finances.
There are no easy wins left.
My Proposal
Reverse Half of the National Insurance Cut
You could make a reasonable argument that the previous government’s 4-percentage-point cut to the main rate of employee National Insurance (from 12% to 8%) was a politically timed giveaway, not an economically sound one.
I would reverse half of that cut, restoring the main rate to 10%. This strikes a balance — raising significant funds without fully undoing the benefit for lower and middle earners. According to the IFS, this move would generate roughly £21 billion per year — enough to make a real difference to the deficit.
Crucially, this single measure would raise far more revenue than a patchwork of smaller, politically appealing alternatives — such as wealth taxes, further capital gains tax increases, freezing allowances, or trimming inheritance tax (IHT) thresholds and reliefs. Each of those would raise only modest sums while adding complexity and uncertainty to an already byzantine tax system.
By contrast, reversing part of the NI cut is simple, transparent, and broad-based — a policy that raises serious money without distorting investment behaviour or layering on more administrative friction.
It’s not a popular step, but it could at least be explained with honesty:
“We are reversing half of the previous government’s unaffordable, last-ditch giveaway. This is the fairest and simplest way to restore stability now — and we will reverse it again as soon as the public finances allow.”
4. Property Tax: Stripping Away the Friction
Finally, I would completely overhaul how we tax property. This is shamelessly lifted from the work of Dan Niedle of Tax Policy Associates (Tax Policy Associates: How to Reform Property Tax).
My (His) Proposal
a) Abolish Stamp Duty, Council Tax, and Business Rates
I would scrap these three outdated and distortionary taxes — Stamp Duty (on both property and shares), Council Tax, and Business Rates — all of which discourage economic activity and penalise mobility.
b) Replace them with a Land Value Tax (LVT)
In their place, I’d introduce a single Land Value Tax: an annual charge on the unimproved value of land (both residential and commercial), likely set at a modest rate of 0.5–1.0%. Crucially, the tax would apply to the land itself, not to the buildings or improvements upon it — ensuring that development and investment are rewarded, not penalised.
As Dan Neidle of Tax Policy Associates has persuasively argued, such a reform could be broadly revenue-neutral, yet deliver significant economic benefits. It would:
Remove friction from the housing market by scrapping Stamp Duty, making it easier for people to move for work or downsize.
Boost productivity by encouraging land to be used efficiently, rather than left idle or underdeveloped.
Enhance fairness, as those owning high-value land contribute proportionately more, while ordinary homeowners and small businesses benefit from lower transaction costs.
In short, an LVT would support growth, simplify the system, and align incentives with long-term prosperity.
Summary: Tough Choices, Real Impact
The choices above would hopefully restore some credibility, simplify the system and make growth possible again.
Raising the State Pension Age, reforming private pensions, reversing part of the NI cut, and replacing our tangle of property taxes with a Land Value Tax — none of these are crowd-pleasers. But taken together, they’d translate to a significant improvement in the public finances and set us up for something resembling long-term stability.
So that’s my one-day Budget.
Any comments would be welcome - what would you do?
Happy Thursday!
Kind regards,
George
Referrals Welcome
Our business grows mainly through personal recommendations. If you know someone—whether a friend, family member or colleague—who might benefit from financial planning, we’d be grateful if you could share my details with them. Alternatively, you can pass their details on to me, and I’ll be happy to reach out.
Regulatory Information
Blincoe Financial Planning Limited is an appointed representative of Sense Network Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales (No. 14569306). Registered Office: Star Lodge, Montpellier Drive, Cheltenham, GL50 1TY.
Important Disclaimer
This blog is for general information only and is intended for retail clients. It does not constitute financial or tax advice, nor is it an offer to buy or sell any specific investment. Since I don’t know your personal financial situation, you should not rely on this content as tailored advice. While we aim to provide accurate and up-to-date information, we cannot guarantee that all details remain correct over time. We are not responsible for any losses resulting from actions taken based on this blog’s content.
