October 8, 2025 • 17 mins
John Stepek, senior reporter and author of the Money Distilled newsletter, is joined by pensions expert Tom McPhail to talk about pension protection. It's no secret that UK Chancellor Rachel Reeves is looking for ways to raise cash to balance the nation's books in the upcoming November budget. Stepek and McPhail discuss ways to keep your pension protected and keep more of your money.
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Episode Transcript
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Speaker 1 (00:16):
Welcome to Merton Talk Sure Money, the personal finance edition
of Merton Talk's Money and these bonus podcasts we talk
about the best strategies for making the most of your money.
I'm join Stepic, senior reporter for Bloomberg and author of
the award winning, in fact, multi award winning Money Distilled newsletter.
(00:36):
Now Mern's out this week and instead I'm going to
be joined by pensions expert Tom McPhail, friend of the show.
Tom spent almost twenty years at Hargreaves Lansdown, fifteen of
those is their head of retirement Policy. He's also a
trustee director of a very large final salary dB pension scheme,
which I just said I thought would be absolutely fascinating
and then caught myself and thought, my goodness, I used
(00:59):
to be cool. But anyway, enough of that, and is
a freelance media contributor to discussing all things pensions. Thanks
very much for joining me today, Tom, Thank you John. Obviously,
one of the reasons we've got you on the show
today is because there's a little thing, the November budget
coming up in two months time, and there's going to
(01:21):
be an awful lot of speculation between now and then.
But one particularly interesting thing we've talked a lot about
is the potential impact on pensions, and obviously a lot
of people have been scrambling to try and get ahead
of potential changes. Now, nothing we say on this show
is personal financial advice, just to be very very clear,
(01:42):
and you always have to think about your own circumstances.
But my was caught the other day by an article
you wrote in which you said you are going to
take your twenty five percent tax free lumps some out
of your pension ahead of the budget. And I thought
it was quite an interesting rationale. So should we have
a wee chat about that and you can explain to
the readers or listeners rather what it was that drove
(02:04):
this decision and how you thought about it.
Speaker 2 (02:06):
Sure, absolutely, and through that process hopefully we can emphasize it.
Just because I've done it, it doesn't mean everybody should.
Might say, exit this up quite quite particular. You guys
have talked already about the political context, but I think
it's worth just briefly revisiting that. Yeah, for the last
twenty twenty five years, certainly post two thousand and eight,
(02:29):
pretty much every budget there's been that. Oh, I wonder
what rules are going to change. I wonder what allowances
are going to take away. I wonder what restrictions are
going to impose. And particularly once we got into the
coalition years, there was a series of budgets where they
hipped away at the pension allowances. So you know there
is some form here, and we didn't always know in
advance what it was going to be. But I think
(02:50):
the particular situation we're in now after Rachel Reeves's budget
last year, a very substantial increase in borrowing, only running
a deficity around five percent, there's debt to GDP is
currently at around one hundred percent, so there's a real
squeeze on the government. So I think that context is relevant.
I think it's also relevant to point out that Tossed
(03:13):
and Bell, who I've met a couple of times and
no reasonably well and I've read his book, which, by
the way, I would recommend it's a really interesting and
well read book. With disagreed with almost everything in it,
but it was. It's genuinely a well written and interesting book.
But yet he is clearly not averse to the idea
of taxing wealth. The government has found to a wealth
tax as such, but where is the wealth. It is
(03:36):
in the pension system. And he has talked in his
resolution found eight days about capping the tax freedom summ
at forty thousand pounds, which is a really swinging cut.
The ifs talked about cutting it to one hundred thousand pounds.
It's not even as if the government's the only one's
thinking in these kind of terms. So I think that
context is relevant. If ever there was a moment when
(03:58):
a government was going to come along and strict the
pensions tax free cash. Certainly now more than any time
I've been working in pensions, it feels like the moment
that context really made me feel deeply uncomfortable. And then
there's my particular personal circumstances. John, I'm fifty nine, I'm
only working part time now, so I'm going to tap
(04:19):
into my pensions pretty soon anyway. And I think a
really crucial point here is because I've been pretty lucky
in life, I cannot accrue any more tax free cash.
So however much more my pension pot rows, the amount
of tax free cash I get out of it is
always going to stay the same. They've frozen. That's the limit.
All the growth of my pension pot in the future
(04:41):
is going to be taxable when I draw the money out.
And then in addition, they've just announced they're going to
take away the inheritance tax exemption on pension pots from
twenty twenty seven. You know, I'm only fifty nine now.
If I live until I'm oneventy five, then even if
I you know, the money suffers further taxation when it
gets passed on to any beneficiary, so you know, the
(05:01):
tax context has already changed. That then led me to
the realization that, well, look, if it's a trade off
between leaving the money and the pension pot and potentially
suffering tens of thousands of pounds of extra tax if
they reduce the allowance or taking an out of the
pension pot now reinvesting it over the next few years
in ices between myself and my wife where it will
(05:24):
then continue to grow tax free, and from where we
can draw in it tax free. Actually pretty quickly, I'm
going to be ahead of the game. I use an IFA,
by the way, and I would encourage others to do
the same. So, you know, he and I sat down
and talked it through together, and he ran a spreadsheet
for me and the numbers were pretty clear that within
a few years I would be better off for taking
(05:46):
the tax free cash out now and putting it into
my eyes. So, because I'm only working part time now,
I'm no longer generating the kind of surplus income that
would allow me and my wife to keep filling up
our eyes for allowances. For those allowances go begging. But
if I take the money on my pension, I can
then use up those allowances. So there's a whole lot
of factors there that really came together to make this
(06:08):
a pretty simple decision for me.
Speaker 1 (06:11):
I think that point about the reduction, So at the moment,
the tax free allowance is just over two hundred and
sixty eight thousand pounds, So if they were to reduce
that even to the one hundred thousand, let alone the
forty k that Torson had previously suggested, then I mean
that is a massive, massive loss there. So I think
(06:31):
your point about sitting down with someone and going through
a spreadsheet and working out where your break even point,
if you like, or your pain point is makes a
lot of sense, because obviously the flip side of this
is the fact that if you do take it out
and she doesn't change it. Then that means you are
going to have this problem of well, okay, what do
(06:53):
I do with the money just now? Because obviously the
annualizer allowance is twenty thousand pounds, so even between two
people that's they'll it's still only forty thousand, which means
it still takes quite a while to get that money reinvested,
and in the meantime you are going to be liable
for tax or in any kind of growth and that money.
So I think that's that's the key. Don't say to
(07:15):
think of it, isn't it on the other's say to
this calculation.
Speaker 2 (07:19):
John, it could be worse than that, because I mean,
the worst case scenario is I take this money out
of my pension, which I am doing, and then they
wrong foot me by saying, no, we're not going to
reduce pension tax rece just cap off the amount you
can put in your ices, and that would be That
would be disappointing because then I'd have this big bag
(07:41):
of money in my bank account and I'd have no
tax free shelter to put it into. I don't think
they're going to reduce either of the annual allowance or
torst the bell again. Has talked in the past about
I think he suggested one hundred thousand capping off the
maximum amount. So I don't think they're going to do that,
But you know, I'm not ignorant of the risks I'm
(08:01):
taking and making this decision. It could go really badly
for me. And if it does, you can all get
on X and send me tweets telling me.
Speaker 1 (08:11):
Let's hold that, let's hold our listeners. Don't do that.
But yeah, I think it's just really important to understand
that this is very clear that this does suit you,
and you've read weighed up the risks and rewards. But again,
it's suitable for yourself, not necessarily for everyone else needs
to think through their own their own circumstances. But I
(08:31):
think the way you've described that in the thought process
behind it makes a lot of sense in terms of
if you're you know, a mere strip of a lad
like me and actually not at the point where you
could take your lump sum even if you wanted to,
What what should people like me be thinking about before
the budget rolls around, Because I don't know about you
(08:54):
be for to my mind, this is one of the
least I mean, obviously before every boy there's always an
element of uncertainty, but there's tame. Just as with the
last time, it sort of feels as if almost anything
could happen, and that isn't really much. This kind of
off completely off limits. So in terms of is there
(09:18):
anything at all that you can do as a I
couldn't saver or or I couldn't pensionality, I don't know
anentually your your money against what may happen in November
twenty sixth.
Speaker 2 (09:32):
Really good question, John, And there are limited options available
to us. And my worry is that I've talked about
the pension tax free lumps on the pension commencement lumps.
Some there are other tax breaks available to pension savers
which could come under pressure government. Actually for the government
grants on pensions every year is an order of seventy
(09:54):
billion pounds. So the most obvious thing is the pension
contribution tax relief that you get for putting money into
a pension. And there's the National Insurance contribution relief. You know,
employers put money into pensions, no national assurance liability on that.
The money's growing tax free in the pension pots. So
if you've got certain cash that you are thinking of
(10:14):
putting aside for retirement. It's a no brainer to do
it ahead of the budget rather than after and.
Speaker 1 (10:21):
Just moving on he can other options. Is what else
do you think we should be watching out for. I mean,
obviously they've they've changed the inheritance tax situation on pension
zone or in stocks.
Speaker 2 (10:32):
And the farms.
Speaker 1 (10:34):
That's another idea that people get very concerned about. Do
you think they'll make any further moves on front?
Speaker 2 (10:41):
Oh? John, So, I was talking to some farmers yesterday
down at a sheep auction, as you do in my
part of the world, I too, am living the dream
and they are incandescent with rage about the ID changes.
I don't think. I don't think down in Westminster they
quite realize just maybe they do when they don't care.
(11:01):
But the entire farming community is absolutely up in arms
about what they've done on the inheritance tax. I don't
see any sign of the government softening their position on that.
I think I think that one is a done deal. Also,
you know, you look at the private school VAT change
which was which was introduced mid year. So I think
(11:22):
where the government feels it is ideologically appropriate to do so,
they're they're not shy of imposing taxes. They're bending over
backwards to try and preserve their manifesto promise of not
raising income tax VAT and national insurance. So we can
argue about whether they honored that promise on the employers NI,
(11:45):
but it's about protecting workers and where does that leave them.
It's about taxing wealth.
Speaker 1 (11:50):
I think everyone would agree there are sensible things that
could be done with particularly council tax reform or the
we that we tax generally. And I think the only
thing that the thing I'm more concerned about is that
a lot of the measures are just slapping extra complexities
(12:10):
on rather than trying to step back and do our
full scale reform, which I suspect which just require more
time than the government viels it has for some reason,
and so much.
Speaker 2 (12:22):
Of tax and regulatory reform in this country it's just additive,
you know. It's not reforming another layer of regulation or
another layer of tax onto an existing and already fiendishly
complicated system. And again I would speak up in Torst
and Bells Defect. He argued in his book for Fundamental
(12:44):
Reform with the UK's tax code that it has become
hugely byzantine and bureaucratic and inefficient and incoherent.
Speaker 1 (12:53):
This is a slightly not off topic question, but slightly
bigger cubation and micro question. Do you think that the
government is a little bit who worried about the reaction
to the bond market in that context, because I sometimes
think that if, if you, if you could stand up
there and tell a decent story about how they were
(13:14):
going to take six months a year to do a
big review of this particular area of tax or this
area of spending more importantly, for example, on the you know,
the disability but an if it's side of things, I say,
we're not cutting in just now, but what we are
going to do is we're going to go through this
with a fine tooth comb. We're going to figure out
where it's going wrong, and at the end of that process,
(13:36):
at next year's budget, we're going to present a plan
for cutting back to a reasonable level or something like that,
something that doesn't necessarily get ticked off by the OBR,
but that expresses a kind of direction of travel that
the bond market would have sympathy with. You know, we
are going to get this in hand kind of thing.
Speaker 2 (13:58):
That's a really interesting question because bond investors. What they
care about is the stability of the government, economic growth, inflation.
You know, if the government presents a credible plan for
how it can push all those numbers in the right direction,
I think, you know, investors buying government debts would be
(14:19):
open to that, and they would listen to that, but
it's got to be credible. And one of the government
bummed up against already was where they tried to introduce
some spending cards and they couldn't get it part of
their own party. The two huge areas aside from debt,
the two huge areas of government spending are welfare and
(14:40):
health the NHS. You know, unless they can show some
credible plans on how they can bring those government expenditure
under control, I think they're always going to be fighting
an uphill battle.
Speaker 1 (14:51):
Yes, I mean, it's just it's this. This is the
point where I have sympathy for the people who are
who want to get ready the or br A law.
I realize an awful lot of people who weren't that,
But actually, you know, they're doing it for reasons that
are different to me. The sense that if they didn't,
if someone thinking that will what they would get away
with everything, but we're going to need it up up shortly.
(15:13):
But one thing I did want to not let you
leave without Hans and Tom was, let's say we me
dree chancellor for the day. If you had one thing
on your wish list that you could just im pause
or you know, push through, what would it be?
Speaker 2 (15:33):
Yeah, off the cuff, right, So I think spending reform
is I would actually look to reduce the size of
the state as much as I could. I touched there
on the welfare bill. It's ludicrously out of the role, right,
So we count with this country's finances back on a
sound footing without bringing spending under control. So I would
(15:55):
definitely put that very high on my shopping list.
Speaker 1 (15:58):
Tell us to tell them that's on your wish life,
where as you should actually just kind of be the
sort of thing you think a chancellor would immediately be
thinking about as soon as they stand up.
Speaker 2 (16:07):
But we are, we are, we are well.
Speaker 1 (16:11):
Look, thanks very much, Tom, all right, thanks John, thanks
for listening to this week's Merton Talks to Your Money.
If you like a show, rate review and subscribe wherever
you listen to podcasts, and be sure to follow me
and Merrin on x slash Twitter as Merton's at Merrin
(16:31):
sw and I'm at Join Underscore Stepeck and then what
are you Tom? People can follow you.
Speaker 2 (16:37):
I'm at Pensions Monkey.
Speaker 1 (16:40):
There we go, and this episode was produced by some
of Saddie and Moses. And questions and comments on the
show and all the shows are always welcome. Our show
email is Merrion Money at Bloomberg dot net. And if
you're not already a subscriber to Bloomberg, then I highly
recommend that you do. So go out to help Bloomberg
dot com slash uk and you'll find subscription packed conch
(17:00):
just to suit you. Thanks h
Welcome to Merton Talk Sure Money, the personal finance edition
of Merton Talk's Money and these bonus podcasts we talk
about the best strategies for making the most of your money.
I'm join Stepic, senior reporter for Bloomberg and author of
the award winning, in fact, multi award winning Money Distilled newsletter.
(00:36):
Now Mern's out this week and instead I'm going to
be joined by pensions expert Tom McPhail, friend of the show.
Tom spent almost twenty years at Hargreaves Lansdown, fifteen of
those is their head of retirement Policy. He's also a
trustee director of a very large final salary dB pension scheme,
which I just said I thought would be absolutely fascinating
and then caught myself and thought, my goodness, I used
(00:59):
to be cool. But anyway, enough of that, and is
a freelance media contributor to discussing all things pensions. Thanks
very much for joining me today, Tom, Thank you John. Obviously,
one of the reasons we've got you on the show
today is because there's a little thing, the November budget
coming up in two months time, and there's going to
(01:21):
be an awful lot of speculation between now and then.
But one particularly interesting thing we've talked a lot about
is the potential impact on pensions, and obviously a lot
of people have been scrambling to try and get ahead
of potential changes. Now, nothing we say on this show
is personal financial advice, just to be very very clear,
(01:42):
and you always have to think about your own circumstances.
But my was caught the other day by an article
you wrote in which you said you are going to
take your twenty five percent tax free lumps some out
of your pension ahead of the budget. And I thought
it was quite an interesting rationale. So should we have
a wee chat about that and you can explain to
the readers or listeners rather what it was that drove
(02:04):
this decision and how you thought about it.
Speaker 2 (02:06):
Sure, absolutely, and through that process hopefully we can emphasize it.
Just because I've done it, it doesn't mean everybody should.
Might say, exit this up quite quite particular. You guys
have talked already about the political context, but I think
it's worth just briefly revisiting that. Yeah, for the last
twenty twenty five years, certainly post two thousand and eight,
(02:29):
pretty much every budget there's been that. Oh, I wonder
what rules are going to change. I wonder what allowances
are going to take away. I wonder what restrictions are
going to impose. And particularly once we got into the
coalition years, there was a series of budgets where they
hipped away at the pension allowances. So you know there
is some form here, and we didn't always know in
advance what it was going to be. But I think
(02:50):
the particular situation we're in now after Rachel Reeves's budget
last year, a very substantial increase in borrowing, only running
a deficity around five percent, there's debt to GDP is
currently at around one hundred percent, so there's a real
squeeze on the government. So I think that context is relevant.
I think it's also relevant to point out that Tossed
(03:13):
and Bell, who I've met a couple of times and
no reasonably well and I've read his book, which, by
the way, I would recommend it's a really interesting and
well read book. With disagreed with almost everything in it,
but it was. It's genuinely a well written and interesting book.
But yet he is clearly not averse to the idea
of taxing wealth. The government has found to a wealth
tax as such, but where is the wealth. It is
(03:36):
in the pension system. And he has talked in his
resolution found eight days about capping the tax freedom summ
at forty thousand pounds, which is a really swinging cut.
The ifs talked about cutting it to one hundred thousand pounds.
It's not even as if the government's the only one's
thinking in these kind of terms. So I think that
context is relevant. If ever there was a moment when
(03:58):
a government was going to come along and strict the
pensions tax free cash. Certainly now more than any time
I've been working in pensions, it feels like the moment
that context really made me feel deeply uncomfortable. And then
there's my particular personal circumstances. John, I'm fifty nine, I'm
only working part time now, so I'm going to tap
(04:19):
into my pensions pretty soon anyway. And I think a
really crucial point here is because I've been pretty lucky
in life, I cannot accrue any more tax free cash.
So however much more my pension pot rows, the amount
of tax free cash I get out of it is
always going to stay the same. They've frozen. That's the limit.
All the growth of my pension pot in the future
(04:41):
is going to be taxable when I draw the money out.
And then in addition, they've just announced they're going to
take away the inheritance tax exemption on pension pots from
twenty twenty seven. You know, I'm only fifty nine now.
If I live until I'm oneventy five, then even if
I you know, the money suffers further taxation when it
gets passed on to any beneficiary, so you know, the
(05:01):
tax context has already changed. That then led me to
the realization that, well, look, if it's a trade off
between leaving the money and the pension pot and potentially
suffering tens of thousands of pounds of extra tax if
they reduce the allowance or taking an out of the
pension pot now reinvesting it over the next few years
in ices between myself and my wife where it will
(05:24):
then continue to grow tax free, and from where we
can draw in it tax free. Actually pretty quickly, I'm
going to be ahead of the game. I use an IFA,
by the way, and I would encourage others to do
the same. So, you know, he and I sat down
and talked it through together, and he ran a spreadsheet
for me and the numbers were pretty clear that within
a few years I would be better off for taking
(05:46):
the tax free cash out now and putting it into
my eyes. So, because I'm only working part time now,
I'm no longer generating the kind of surplus income that
would allow me and my wife to keep filling up
our eyes for allowances. For those allowances go begging. But
if I take the money on my pension, I can
then use up those allowances. So there's a whole lot
of factors there that really came together to make this
(06:08):
a pretty simple decision for me.
Speaker 1 (06:11):
I think that point about the reduction, So at the moment,
the tax free allowance is just over two hundred and
sixty eight thousand pounds, So if they were to reduce
that even to the one hundred thousand, let alone the
forty k that Torson had previously suggested, then I mean
that is a massive, massive loss there. So I think
(06:31):
your point about sitting down with someone and going through
a spreadsheet and working out where your break even point,
if you like, or your pain point is makes a
lot of sense, because obviously the flip side of this
is the fact that if you do take it out
and she doesn't change it. Then that means you are
going to have this problem of well, okay, what do
(06:53):
I do with the money just now? Because obviously the
annualizer allowance is twenty thousand pounds, so even between two
people that's they'll it's still only forty thousand, which means
it still takes quite a while to get that money reinvested,
and in the meantime you are going to be liable
for tax or in any kind of growth and that money.
So I think that's that's the key. Don't say to
(07:15):
think of it, isn't it on the other's say to
this calculation.
Speaker 2 (07:19):
John, it could be worse than that, because I mean,
the worst case scenario is I take this money out
of my pension, which I am doing, and then they
wrong foot me by saying, no, we're not going to
reduce pension tax rece just cap off the amount you
can put in your ices, and that would be That
would be disappointing because then I'd have this big bag
(07:41):
of money in my bank account and I'd have no
tax free shelter to put it into. I don't think
they're going to reduce either of the annual allowance or
torst the bell again. Has talked in the past about
I think he suggested one hundred thousand capping off the
maximum amount. So I don't think they're going to do that,
But you know, I'm not ignorant of the risks I'm
(08:01):
taking and making this decision. It could go really badly
for me. And if it does, you can all get
on X and send me tweets telling me.
Speaker 1 (08:11):
Let's hold that, let's hold our listeners. Don't do that.
But yeah, I think it's just really important to understand
that this is very clear that this does suit you,
and you've read weighed up the risks and rewards. But again,
it's suitable for yourself, not necessarily for everyone else needs
to think through their own their own circumstances. But I
(08:31):
think the way you've described that in the thought process
behind it makes a lot of sense in terms of
if you're you know, a mere strip of a lad
like me and actually not at the point where you
could take your lump sum even if you wanted to,
What what should people like me be thinking about before
the budget rolls around, Because I don't know about you
(08:54):
be for to my mind, this is one of the
least I mean, obviously before every boy there's always an
element of uncertainty, but there's tame. Just as with the
last time, it sort of feels as if almost anything
could happen, and that isn't really much. This kind of
off completely off limits. So in terms of is there
(09:18):
anything at all that you can do as a I
couldn't saver or or I couldn't pensionality, I don't know
anentually your your money against what may happen in November
twenty sixth.
Speaker 2 (09:32):
Really good question, John, And there are limited options available
to us. And my worry is that I've talked about
the pension tax free lumps on the pension commencement lumps.
Some there are other tax breaks available to pension savers
which could come under pressure government. Actually for the government
grants on pensions every year is an order of seventy
(09:54):
billion pounds. So the most obvious thing is the pension
contribution tax relief that you get for putting money into
a pension. And there's the National Insurance contribution relief. You know,
employers put money into pensions, no national assurance liability on that.
The money's growing tax free in the pension pots. So
if you've got certain cash that you are thinking of
(10:14):
putting aside for retirement. It's a no brainer to do
it ahead of the budget rather than after and.
Speaker 1 (10:21):
Just moving on he can other options. Is what else
do you think we should be watching out for. I mean,
obviously they've they've changed the inheritance tax situation on pension
zone or in stocks.
Speaker 2 (10:32):
And the farms.
Speaker 1 (10:34):
That's another idea that people get very concerned about. Do
you think they'll make any further moves on front?
Speaker 2 (10:41):
Oh? John, So, I was talking to some farmers yesterday
down at a sheep auction, as you do in my
part of the world, I too, am living the dream
and they are incandescent with rage about the ID changes.
I don't think. I don't think down in Westminster they
quite realize just maybe they do when they don't care.
(11:01):
But the entire farming community is absolutely up in arms
about what they've done on the inheritance tax. I don't
see any sign of the government softening their position on that.
I think I think that one is a done deal. Also,
you know, you look at the private school VAT change
which was which was introduced mid year. So I think
(11:22):
where the government feels it is ideologically appropriate to do so,
they're they're not shy of imposing taxes. They're bending over
backwards to try and preserve their manifesto promise of not
raising income tax VAT and national insurance. So we can
argue about whether they honored that promise on the employers NI,
(11:45):
but it's about protecting workers and where does that leave them.
It's about taxing wealth.
Speaker 1 (11:50):
I think everyone would agree there are sensible things that
could be done with particularly council tax reform or the
we that we tax generally. And I think the only
thing that the thing I'm more concerned about is that
a lot of the measures are just slapping extra complexities
(12:10):
on rather than trying to step back and do our
full scale reform, which I suspect which just require more
time than the government viels it has for some reason,
and so much.
Speaker 2 (12:22):
Of tax and regulatory reform in this country it's just additive,
you know. It's not reforming another layer of regulation or
another layer of tax onto an existing and already fiendishly
complicated system. And again I would speak up in Torst
and Bells Defect. He argued in his book for Fundamental
(12:44):
Reform with the UK's tax code that it has become
hugely byzantine and bureaucratic and inefficient and incoherent.
Speaker 1 (12:53):
This is a slightly not off topic question, but slightly
bigger cubation and micro question. Do you think that the
government is a little bit who worried about the reaction
to the bond market in that context, because I sometimes
think that if, if you, if you could stand up
there and tell a decent story about how they were
(13:14):
going to take six months a year to do a
big review of this particular area of tax or this
area of spending more importantly, for example, on the you know,
the disability but an if it's side of things, I say,
we're not cutting in just now, but what we are
going to do is we're going to go through this
with a fine tooth comb. We're going to figure out
where it's going wrong, and at the end of that process,
(13:36):
at next year's budget, we're going to present a plan
for cutting back to a reasonable level or something like that,
something that doesn't necessarily get ticked off by the OBR,
but that expresses a kind of direction of travel that
the bond market would have sympathy with. You know, we
are going to get this in hand kind of thing.
Speaker 2 (13:58):
That's a really interesting question because bond investors. What they
care about is the stability of the government, economic growth, inflation.
You know, if the government presents a credible plan for
how it can push all those numbers in the right direction,
I think, you know, investors buying government debts would be
(14:19):
open to that, and they would listen to that, but
it's got to be credible. And one of the government
bummed up against already was where they tried to introduce
some spending cards and they couldn't get it part of
their own party. The two huge areas aside from debt,
the two huge areas of government spending are welfare and
(14:40):
health the NHS. You know, unless they can show some
credible plans on how they can bring those government expenditure
under control, I think they're always going to be fighting
an uphill battle.
Speaker 1 (14:51):
Yes, I mean, it's just it's this. This is the
point where I have sympathy for the people who are
who want to get ready the or br A law.
I realize an awful lot of people who weren't that,
But actually, you know, they're doing it for reasons that
are different to me. The sense that if they didn't,
if someone thinking that will what they would get away
with everything, but we're going to need it up up shortly.
(15:13):
But one thing I did want to not let you
leave without Hans and Tom was, let's say we me
dree chancellor for the day. If you had one thing
on your wish list that you could just im pause
or you know, push through, what would it be?
Speaker 2 (15:33):
Yeah, off the cuff, right, So I think spending reform
is I would actually look to reduce the size of
the state as much as I could. I touched there
on the welfare bill. It's ludicrously out of the role, right,
So we count with this country's finances back on a
sound footing without bringing spending under control. So I would
(15:55):
definitely put that very high on my shopping list.
Speaker 1 (15:58):
Tell us to tell them that's on your wish life,
where as you should actually just kind of be the
sort of thing you think a chancellor would immediately be
thinking about as soon as they stand up.
Speaker 2 (16:07):
But we are, we are, we are well.
Speaker 1 (16:11):
Look, thanks very much, Tom, all right, thanks John, thanks
for listening to this week's Merton Talks to Your Money.
If you like a show, rate review and subscribe wherever
you listen to podcasts, and be sure to follow me
and Merrin on x slash Twitter as Merton's at Merrin
(16:31):
sw and I'm at Join Underscore Stepeck and then what
are you Tom? People can follow you.
Speaker 2 (16:37):
I'm at Pensions Monkey.
Speaker 1 (16:40):
There we go, and this episode was produced by some
of Saddie and Moses. And questions and comments on the
show and all the shows are always welcome. Our show
email is Merrion Money at Bloomberg dot net. And if
you're not already a subscriber to Bloomberg, then I highly
recommend that you do. So go out to help Bloomberg
dot com slash uk and you'll find subscription packed conch
(17:00):
just to suit you. Thanks h
Host
Merryn Somerset Webb
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