George Osborne, balancing the budget on the backs of the rich

George Osborne has a dilemma to answer in his autumn statement (which must be finalised by 28 November, when it will be submitted to the Office of Budget Responsibility). He has promised to offset politically welfare cuts worth £10bn with tax increases on the wealthy. There is an added complication in that Osborne cannot afford (literally) to choke recovery by imposing levies on sources of wealth creation. This leads him, logically, to pensions and property. The FT reports that the chancellor is considering reducing the maximum level of tax relief on annual pension contributions from £50,000 to either £40,000 or £30,000. It is estimated that these changes would net the Treasury an extra £600 million or £1.8bn a year respectively.

It is fashionable to see this as a political trade-off with the Lib Dems. There is doubtless a fair portion of truth in that analysis; yet Osborne knows that the Tories have a perception problem.