For those who like this kind of gesturing,  the 2023 report by Torsten Bell’s Resolution Foundation (reporting on how to get Britain out of stagnation) has been marked the Economy 2030 Inquiry

2030 is also a staging date for the Workplace Pensions Roadmap. It is the buzz phrase of Pensions UK for its conference.

It is hardly surprising that the Pension Policy Wonks are taking the date seriously! Was our 2025 budget written in 2023 by a thought leader?

I am now getting correspondence using 2030 as a shortcut to “radical change” and in case we think that tax changes aren’t part of the pension agenda, there’s the news that Torsten Bell has a new job as adviser to the Treasury at the next tax-changing budget some time in November.

Unsurprising, the FT look back to its 2030 report, setting out a blueprint for Britain’s economic strategy.

Bell led this “inquiry” that argued for a set of tax reforms paying higher public investment, while levelling up the treatment of different forms of income ; tilting the tax burden from workers to wealth, and offering  pensions as a side order to fill in gaps.

Income

The overarching idea was to ensure people on higher incomes were taxed equally, whether their income came from employment, self-employment, capital gains or rent. One specific proposal was to extend national insurance to rental income, so that landlords would pay the same tax on rental income as tenants pay on their earnings.

A Times report suggests that  Reeves was currently considering the idea, in the hope of raising £2bn. Bell also suggested raising the rate of NI contributions on self-employed earnings, from 2 to 8 per cent, and increasing the basic rate of tax on dividends, from 8.75 per cent to 20 per cent.

He also wanted to lower the threshold at which the top rate of income tax kicks in, from £125,000 to £100,000 — while scrapping the current thresholds at which child benefit and the tax-free personal allowance are suddenly clawed back, resulting in punitive marginal tax rates.

Wealth

Bell proposed in 2023that pension pots should be subject to inheritance tax —  this has already been adopted. Bell has also argued for broad reforms to property-related taxes that would be likely to win approval from many economists, but trigger fierce political controversy.

He has advocated a complete overhaul of the council tax regime, with regular revaluations of all properties used as a basis to introduce a proportional property tax, in place of the current banded system.

He has also argued for a move to halve stamp duty — seen as exacerbating the UK’s problems with housing affordability — and fund this by lowering the VAT registration threshold. Other economists and think-tanks, including the Institute for Fiscal Studies, have long advocated reforms in these areas. Economists argue that stamp duty is “especially harmful” to the economy because it stops people moving to areas with better jobs, or downsizing from larger properties.

However, the political obstacles to reform are formidable because of the potential for big upfront losses both for individuals and to the exchequer. Reeves has asked officials to explore the options for reform of property taxation but the process is at an early stage, apparently.

Pensions

A pensions Minister dong pensions? 2030 can be made a lot more easy if these proposals are taken up

Rumours are swirling that the government could reduce the size of the tax-free lump sum that retirees can withdraw from their pension after the age of 55. The allowance is currently set at 25 per cent up to a cap of £268,275.

In a 2019 Resolution Foundation report, Bell described the lump-sum allowance as “very generous, very regressive, and a strange incentive not to stagger your retirement income”. He suggested a cap of £40,000, arguing that this could raise £2bn a year while leaving three quarters of future pensioners unaffected. Assuming they are taking benefits as pensions. If people choose to leave pension pots to the estate it could be pretty well the “lot of the pot”.  I expect to see plenty of cash stripping by wealthy savers at a 40 or even 45% saving.

Last year, the IFS estimated that revenue foregone from tax-free lump sums, based on current saving behaviour, was about £5.5bn a year.

Bell has also supported moving to a flatter rate of tax relief, which is currently set at savers’ marginal income tax rate, as a way to make the tax advantage less skewed towards wealthy savers. In 2016 the Resolution Foundation found that a rate of 25 per cent would raise around £4bn a year, as well as boosting the pension savings of basic rate taxpayers.

Reeves has also previously supported a flat rate of tax relief but the government has so far avoided introducing such a policy owing to the impact it would have on higher-earning public sector workers. Will these ideas survive political reality?

National insurance from the users of the NHS

Perhaps the most drastic would be to introduce national insurance on pension payments. The argument is the burden this demographic puts on the NHS. It may not have been in the 2023 inquiry but if you’re going to “go big”, this is where he could do it.