Mansion Tax and the Budget: New Chancellor, Same Smorgasbord.

Hello and welcome to Housing Unpacked Night Frank's podcast about the residential property market, which of course is very much in their headlines again. I'm your host Tom Bill. Rising mortgage rates due to the conflict in the Middle East has been a story that seems to have dragged on for several months, but as I mentioned last week, UK inflation readings haven't been too adversely affected so far by higher energy prices, so a lot of uncertainty is being priced in, which hasn't, of course, made encouraging reading for anyone looking to take out a fixed rate mortgage at the moment. The silver lining was that we hadn't seen a sort of pre-budget speculation that took some of the air out of the property market last year, but that changed at the weekend with the front page story in the times, talking about the chancellor who was considering lowering the so-called mansion tax threshold from £2 million to £1 million at the bottom, even before the legislation has come into effect. It supports the assertion repeated often on this podcast that the rates introduced by Rachel Reeves last November were merely introductory. The speculation has also included the possibility of raising capital gains tax or aligning it with income tax. It's not a new idea and shows I think the limited menu of options that the government has left itself. The recent increase in government borrowing costs has reportedly caused a deal of consternation inside the treasury, and stories have been emerging that John Healey and Andy Burnham have been surprised by the state of the country's finances, which some people watching are found to be quite surprising themselves. The question that many will be asking is what exactly is going on inside the treasury on month or so from the budget, and a week before Labour's awesome conference in Liverpool. And what, of course, could all this mean for the property market? How credible are some of the latest trial balloons? Well, who better to walk us through all of that than former special adviser to Richie Sinek at the Treasury? James Nation of Four France Partners. James, a very warm welcome back to Housing Unpacked. Great to be back with you, Tom. Love to see you. Well, I thought, as per my intro, I thought we'd sort of seen the back of the term trial balloon. I mean, we wouldn't be talking about them again, but here we are. Perhaps it hasn't disappeared yet. If you remember last year when we were talking in advance about budget, Tom, it was incredibly messy. There are a couple of reasons for that. One, Rachel Reeves set last year's budget up in such a way that the speculation was how much she would need to fill in a black hole. Right, she had historically low headroom going into that fiscal event last year. And so all the commentary was, is she or isn't she going to breach the manifesto? What are some of the tax raising options to increase headroom? And then we even saw that speculation over, you know, are they actually going to breach and put income tax rates up? And if you remember, I said, no, they wouldn't because no one is going to breach the manifesto. And that's where we are now. You also had a lot of cooks involved in the process last year. Like you might remember, there was a budget board created, which was intended, I think, from the chancellor and her then team to try and get other ministers, other number 10 advisors, properly involved in budget decisions. But what that meant was surprise, surprise. We were reading about all sorts of different tax options every week. And then we also had the final bit of speculation, which is we could all go on the OBR's website and know when internally are they going to be submitting various rounds of the forecast to the chancellor. This year, a lot of that has changed. The OBR have basically come out and said, we're not going to publish any information on our timetable ahead of the budget. So we won't know when John Healey is getting forecast rounds. The other thing that I think has changed is genuinely John Healey and Andy Burnham do like to keep things tight. I mean, you remember the last time we spoke, we were speculating on a potential chancellor, the decision was taken late to go for John Healey. I think that was a bit of a surprise for some people. And it shows us that Andy Burnham is not someone really who likes to litigate things through the press. He does like to keep things tight. That being said, because of the difficult global backdrop and how we think that is going to impact headroom and the public finances and all the various promises or non-promises that Andy Burnham has made and the desire to do some more cost-to-living support. And inevitably, we're drawn back to, well, what does that mean in advance of a budget if we think spending cuts are too difficult and if manifesto tax rises are a no-go. So that's why I think, you know, we're having this conversation of there being just some evidence in the papers of what might be being considered once again. Yeah, I mean, in simple terms then, is it that the Treasury number 10 have just been spooked by how high borrowing costs have certainly climbed since the beginning of September? And that timing is why we're reading about CGT, mansion tax. Is that the sequence of events? I don't necessarily want to say that the Treasury are briefing things out. I can actually believe that they're being quite tight-lipped. I'll give you a quick example Tom. Last week, there was a leak to Sky News of a 50-page document that the policy unit in number 10 under Kirstama produced with all sorts of ideas in there. The fact that they're all sorts of ideas in there allows journalists to do articles that say, oh, Labour are considering X. It doesn't necessarily mean that the Treasury is considering doing X or Y right now for the budget. So I think I just want to be a bit cautious this time round about the notion of trial balloons because I do believe that helium burn them are at least aiming to be tighter and more controlled than Reeves' operation was. It doesn't mean we won't see more tax speculation and it might be some speculation that we see and we think all they are, they might actually do that measure. I just want to like leave people with the view that I think it is a tighter process from last year. We may see balloons floating in the air but not necessarily ones that have been released by the Treasury. Indeed. We're thinking about it. In terms of the helium burn them have said that they were surprised at the state of the public finances and again that seems to have been part of perhaps incorrectly as you've laid out. Suddenly we've seen these stories around tax rises because they're surprised at the size of the black hole. Do you think that's genuine? Because from the outside you sort of wonder how could they be surprised? What are they now hearing from Treasury officials that they weren't that's made them surprised? Yeah. I think it is, you can't say that you're surprised around the overall public finances and the implications of various choices and trade-offs to the public finances because I think those are well covered by the likes of resolution foundation Institute for Physical Studies and others. It is true Tom that the reality that you are told in the Treasury about how the OBR think about particular things as well as a forecaster. You might only appreciate that when you're on the inside. It's also true to say that everyone goes in with their own ideas of what might work well or what might raise money and perhaps will come back to this on capital gains tax. But it's only when you're confronting the kind of HMRC analysis or the OBR assumptions as I say that you learn the reality. So on some specific aspects I can believe you only have the truth revealed once you're on the inside. But the notion that our public finances you can't do everything and there are going to be difficult decisions required. Well that is clear from numbers from a range of reputable organisations which you should be able to read. Yeah. You touched on the observation window and it's now we're sort of guessing as to when that is and that of course is the period when the OBR sort of it bases its calculations on what's happening in financial markets very crudely during this observation window. So people inside the Treasury will be hoping that borrowing costs are not particularly high over this seven day period. And what's your best guess James as to the observation window that the OBR is going to be using and how kind of negatively could that colour the process? Well we don't know but my guess actually Tom would be that I think they've already observed would be my view. I just think based on historic precedent they've already been observing and in any case while you know you have seen some rallying off the back of the Bank of England's decision last week particularly on the quantitative tightening side that is not enough or material enough in my view to drastically change you know the fact that headroom is going to be reduced quite substantially because of a higher cost of borrowing and other factors as well. So for me it's not so much relevant this time when the observation window is precisely because I think the difficult global backdrop is just there and doesn't really change week to week. It's more are there other factors in the forecast that either help or hinder the government? So for example you know we've seen this morning quite a challenging public finance print when it comes to government spending but you know we've also seen in the past that a higher outlook for inflation can help the government out a bit in the short term because of the OBR's assumption around tax receipts. So does that help for instance? On the other side you're going to have the OBR needing to factor in issues like lower migration which they think might push up borrowing slightly. So you know I think for me when the observation window was is sort of it's not immaterial but it It doesn't really matter this time because we just. know it's tough, and maybe the difference is a billion here or there in terms of the headroom hit. But I think, you know, it's going to come down to broader OBR economic judgments on the likely pass-through of what's happening in around the impact on the economy, and then some of those other factors I mentioned. So, slightly worse than would you say, since the time that Burnham came into number ten in July, obviously the Middle East War was still going on at that stage, but the backdrop is slightly, it's worse, is that fair to say, for the treasury in terms of what they were thinking might be in the budget or what the things that they might have to do in the budget? Of course, I think it's worse, given where, you know, Brent Crude is, and then also, you know, given where ten-year yields are. So, I think, yes, it is. And I think what that has done is, it is, it probably emboldens John Healey in the view that he just needs to do no harm in this budget from a market's perspective. There are certain things which he will need to deliver. I think devolution is going to feature, I think, some form of flexibility is for, you know, the British Business Bank, the National Wealth Fund and others to borrow within the fiscal rules, and I think upfront support on the cost of living. So, I think that is going to need to be there in the budget, but probably the worsening backdrop maybe runs contrary to what would be the usual political dynamic when you get a new leader, which is, you know, you absolutely go for it in your first budget. Yeah, no, absolutely. Makes sense. It's all about his buffer, isn't it, which was, I think, last recorded at around 24 billion. That's the headroom figure. Where do you think that might have got to now, James, and where do you think Healey actually wants it to be on the other side of the budget? So I think he's around the 10 billion mark. Would just be my gut feel where they are. I think one thing that apparently has changed this time, although we don't know, is that the OBR is giving him what's known as the pre-measures forecast before they factor in any government policy slightly later. But I think internally within the Treasury, they have a pretty good idea of where OBR assumptions are. And my view is just looking at it. I think you're down at 10 billion or so. Now, the Treasury will not like that. They will say to the Chancellor, they will advise him to top up headroom. I cannot see him going back to the 23.4 billion that was there under Reeves Tom. I just think that's too difficult. So I think he is ultimately going to settle for lower headroom. If he can get it to 15, that cushion to 15 billion great from his perspective. But I think the broad argument he is going to have to make is, you know, the buffer is lower, yes, but it's lower for a reason, which is that is our shock absorber. In the face of external events, we can't control. And obviously, you see that with the Middle East. And then the challenge for him is going to be right. Can you do enough on tax to marginally top up your headroom and fund what you need to fund on the cost of living side? And I think that's the real challenge for him as I see it as this budget approaches. And what do you think the answer to that question is, Jane? At a stretch, yes, but you have to go back and you have to look at some pretty painful options that were on Rachel Reeves' smorgasbord last year that she didn't go for, which is why even if to your lovely phrase earlier, Tom, it's not the treasury launching balloons if that's the right phrase. That is why we are seeing talk again in the papers and beyond around, you know, some of these tax options coming back. What could be done on property tax? What could be done on next base broadening? Are we going to see an increase in the bank tax or the corporate surcharge for the banks? That's why, because it's sort of, you know, can he get that figure that is enough to marginally top up headroom and do what he needs to do on the cost of living? Just on the side note, actually, I noted a smaller GDP uplift, I think is part of the calculations from planning reform as part of the OBR's overall kind of, you know, number crunching that might make things a bit sticky for him. Is that sort of that's in the background as well? So I'd be worried about this if I was in the treasury because you're right on planning reform. The OBR actually gave Rachel Reeves a lot of help on this in I think spring statement 2025 where I think it was a 0.2% boost to real GDP that fell in 2029 30. And the reason why that's important, Tom, I think that was like a 6 billion or so boost, is that is, as people will remember, 2930 is the key target year for the fiscal rules. So if the OBR were to say, actually, we don't think it's going to be that bigger boost anymore or we're going to push the boost back, it does cause John Healy a very real headache because then all of a sudden he has got a, you know, a problem for that key year in the fiscal rules where he needs to show that buffer, which we've been discussing. Now I think two things for me flow from this. One, I think there will be some serious debate within the government over whether there is a need for a housing intervention of some form at the budget. I think that is why some whispers are out there around the return of help to buy, for example, maybe we can come back to that. Against that, I think there is some around Andy Burnham who would prefer to do something on maybe the supply side or the affordable housing side and, you know, to do something which they would perceive would be better used in the regions rather than heavily concentrated in London and South and the southeast. But certainly I think because of that worry over what the OBR have said previously and then changing their mind, I think there probably are live conversations on housing. In my experience, and remember the OBR as a new chair, they are quite cautious. They don't like delivering sort of massive knee jerk surprises to a chancellor or a government. So I just wonder whether, you know, this is one where they say we're going to keep the impact under review. We're going to work very closely with developers to understand the outlook for the market. But I do just wonder, you know, are they really going to in this budget? Jonathan Haskell's first budget make a fundamental change to their boost from playing reform assumption and I'm not sure. Okay, interesting. And help to buy, as you said, was mentioned in this in this leak, this 50 page document leak to Sky News, I believe. Do you sense then that that's a particularly live discussion at the moment? Could we see some movement or announcement on that? Would that surprise you? So my honest view is I think I can believe probably when we've had these discussions before, I mean, I pulled cold water quite quickly. I'm not inclined to do that this time because I do think, and we've talked before about the 1.5 million homes ambition as predicted. Angela Rainer has been moving away from that, you know, it was always a stretch target as you and I have discussed before. So I can absolutely believe that within the government, there are some who are saying on the MHCLG side, the departmental side. Look, we've had a really strong evaluation of help to buy. It would actually provide a good sort of demand side leading kick, which would help ultimately developers as well to get building and help activity in the property market. And I think they will also try and say to the Treasury, look under your fiscal rules because it's a loan scheme that might score more favorably as a financial transaction under your debt target, right? So I can believe that MHCLG is making all those arguments and we saw from the leak to your point that the team around Starmer at the time in number 10 were keen on it as well. I just have a bit of doubt in my mind, though, still Tom, that there are people around Andy Burnham who will perceive help to buy as being very Tory, very regionally concentrated and not in line with what they want to do, which is I think explore new flexibilities and ways to allow, you know, the National Housing Bank under Homes England to work with mayors to build more affordable housing supply. So if the marginal pound had to go somewhere on housing, my instinct is still probably not helped to buy, but I think the arguments for it within the government are probably stronger than they were because of the wider backdrop. Yeah, interesting. Yeah, very interesting. It makes complete sense. And actually talking of kind of very regionally targeted policy, there's been, of course, as I alluded to, speculation around dropping the lower rates of the high value council tax, commonly known as the mention tax. That story's actually been around for a few weeks, landing on the front page of the time team to have a bigger impact. What, what did you think when you saw that story, I suppose is the first question. So I think my reaction to it was not necessarily convinced it's a treasury trial balloon, but can believe there's enough chatter about it in Whitehall because I think this is precisely the kind of area they will need to look at. And I think for me, if I'm right, your back to Rachel Reeves is smorgasbord, then your back to consideration of all of the possible options we talked about last year right around doubling to certain bands, maybe a Scottish style system on the council tax side, for example, on this specific one, I think the calculation they've got to make is it worth all that pain with Labour MPs in London for just what £800 million. And it might be that they need to go there and that they take a decision that, sorry, we know you're going to be annoyed, but actually we need to make this add up in some shape or forms, so therefore we need to go there. But I think it will just be that point around political risk tolerance that they'll be weighing up. There's one thing that we'll get until the capital gains tax side that I could be confident in ruling out. but it's very hard for me to rule other things out because I just think, you know, if they're not touching the manifesto, then the arithmetic remains tough, which is why it's no surprise that all sorts of these difficult options, I think will be under consideration. - Yes, so they're considering it, I think, well, because a land value tag has initially speculated upon is part of complex, as I think we talked about last time, complex and lengthy to introduce. This is almost an easier version of doing a land value tax and redistributing some of the, or being redistributed in terms of the housing equity around the country. But again, it's not gonna bring in money particularly quickly and you've said about the sums of money that it's gonna raise aren't particularly high in the grand scheme of things and the risks around the headlines of, you know, homeowners potentially having to move away from neighborhoods they've been in forever because they're asset rich and cash poor. I mean, they're gonna be worried about a certain amount of backlash aren't they? It's part of the calculations. - Yes, but I think at the margins, a burning administration would be more relaxed about the politics of this than a stammer one. There are downsides to all of these tax options we're going to discuss, which listeners will know, but I can believe that internally in the Treasury, the chances team will probably have asked a question, hey, we're introducing this high value property tax surcharge in just a few years' time. Can we see some options for a broader catchment and who that impacts how much it raises? Because ultimately, every little is gonna help in terms of if I'm right, funding what they need to fund or want to fund on the cost of living side in the near term and then ultimately, you know, making sure that headroom is in an okay place. - Yeah, so you wouldn't be necessarily that surprised if it was a measure that was introduced? - No, I wouldn't. - I wouldn't be surprised. I can see how they might not go for it. I can definitely believe strong representations for many Labour MPs not to do it. But I just think, be aware that you mentioned something very interesting there around a land value tax. The thing to keep in mind is if the reporting that they are not going to do a more radical revamp of council tax or a 1991 style revaluation, if those reports are true, then they are also upsetting another cohort of Labour MPs elsewhere in the country who think that, you know, the current property tax system is fundamentally unfair, right? So there is another cohort of Labour MPs who you've got to satisfy because you've got to be able to say politically in that circumstance, look, I know you're annoyed at us because we're not doing fundamental property tax reform at this juncture, 'cause it's too complicated, you're gonna take too long. But we agree it is a labor thing to do to, you know, get higher taxes from higher property wealth. Therefore, that's why we're doing X, Y, Z to change the high value surcharge. So you're hearing a lot about the Labour MPs in London who would be annoyed, just keep in mind the kind of broad of views elsewhere in the party. - Yeah, okay, now a very interesting point. I mean, I think the Tories and Reform have suggested that they would scrap it if they took power. I'm not sure how straightforward that would be or how that would work, is that sort of something that's easy to say, but not actually easy to do in practice. What you learn is that the government always sets the baseline and the danger when they set the baseline, you know, and what I mean by that is like with their spending plans and their tax plans as well. If you're then the opposition who wants to cancel something or deviate from a particular policy or change it, you've got to set out how you would pay for that. And I think as it stands, what both Reform and the Tories are able to do in the absence of, you know, big welfare consolidation proposals from the government is that they are able to say, well, you know, welfare would be what we reform fundamentally to free up savings for canceling this particular tax measure or, you know, doing this particular spending measure instead when you look at the fence. The problem is, you know, that is gonna start to get incredibly challenging for them to make the sums add up as well. - Yeah, okay, you mentioned capital gains tax. The Tories also emerging about a hike in that or a lying with income tax, which of course in terms of the property market will affect landlords and some of the decision making that goes on there are further disincentive, potentially pushing down supply and sending rents in the opposite direction. You seem a bit more categorical about this one or a bit more clear-eyed about what they may or may not do. - Silicon CGT, I think my view would be, I don't see full equalization within contacts because I think they will understand that that loses money and also, you know, even if you were to do a kind of reform there where you have an indexation allowance on the inflationary side, you know, I still think that would be too problematic a signal to send and also will cost you money. I do think though, and you always see this from the treasury that there is scope to do some tinkering around certain CGT or even inheritance tax allowances to try and raise a few billion here or there. I think, you know, one that is, I think particularly important or I can believe that they might have in their sites is ending forgiveness at death on the capital gains side. So that's kind of my view there. I don't see room for full equalization. I do see a classic kind of treasury trying to scrimp a few billion here or there by tightening reliefs and allowances. - So it could potentially make life more difficult for landlords in this case in terms of disposing property with that, would that be right? - Hard to say, if I'm right that rates are gonna stay where they are, not necessarily, but, you know, clearly there's gonna be implications for the portfolio if certain changes are made to the base around, you know, particular reliefs. So we'll have to wait and see what they do specifically, but that would be my hunch. - Yeah, are you spoken in the past about treasury advice around capital gains tax and the fact, you know, that you can only set it up to a certain level before it start and revenue start falling? Is that still the conversation that's being had between ministers and advisors? - Yeah, I think so. - Is why I don't set much store by the reporting in the telegraph, you know, recently, for instance, around the idea put forward by Del Vinson others that he goes for scale equalization? - Yeah, okay. So it sounds like you'd be less surprised if that lower value threshold for managing tax, I value countertax was dropped than by a CGT hike or equalization or meaningful increase. Source scale equalization would surprise me. A package of changes that means that you're able to get a billion here, a billion there, from some changes to CGT and other quote unquote, well taxes wouldn't surprise me. I think that's core to what they're gonna have to do in order to make this stack up. - And finally, national insurance contributions. That's to be another story, but it's widening that to cover land laws. Again, it seems to be a perennial idea. This smorgasbaw doesn't seem particularly kind of vast array of ideas. It seems to be the same idea as being recycled around over and over again. - Yeah, I'm afraid it is. And let me just take a step back and just say, look, the one thing that would mean I'm wrong here would be if internally within the treasury we think they are going to come out with a serious package of measures on controlling spending or cutting public spending. And the reason why I don't think that Tom is one, I think some of the big decisions on welfare are gonna have to wait until next year. You've got a difficult review into health and disability benefits, for instance, following on from the U-turn on the 5 billion last year. The means I just think it's gonna be difficult to get savings there. Then on the younger people side, I think that's gonna require a lot of upfront investment actually in job support schemes to help out younger people, the unemployed 18 to 25 year olds. And then on the triple lock just really quickly, you sort of seeing many economists say, if they were to only cut the triple lock, that would be seen as a really credible measure. Look, maybe, but all I'm saying is at the moment, people will remember the triple lock, inflation 2.5% or earnings, which have this higher, earnings is gonna be at 3.9%. I struggle to see how you could politically get away with taking the triple lock below the 3.9. So that's not gonna get you meaningful savings anytime soon even if you went for it. And then on the departmental spending side, there are already some quite challenging cuts politically in the numbers for some frontline, public sector departments. So you take all of that together, welfare and departmental spending, and that's why I find it quite hard to see John Healey coming up with a meaningful spending reduction package, which is why we are then back to having the same conversation on the same options that you and I had last year on this tax smorgasbord. Because there's gonna need to be some additional borrowing in the short term, the tax rises, we're describing if they happen, we'll take a while to raise the revenue you need. But that is not a release valve for you, given the wider situation. - No, are there other possible release valve of looking at the three big tax revenue raises that they promised not to touch as part of their manifesto? You can't see them doing anything. - No. - New bands of income tax, or fiddling around with most of those. - They've been very explicit. They've been very explicit. And I think that is the lesson learned from last year that even dancing with the possibility of doing that cost labor dearly. And I don't think Andy Burnham's gonna want to do that. Now, he is going to, and I promise I will come back to Nick's, he is going to, I think, next year confront a very difficult choice, which is how to fund social care, which I ultimately think might lead him to. a binary decision on whether or not he wants to breach the manifesto. But we're not there yet, that is something that is going to have to wait for Dame Louise Casey who's doing a report into social care. So that's not a decision yet. But for this budget, they've been quite explicit, they're not breaching the manifesto. But that means yeah, we then come back to the smorgasbord, and we come back finally to next to those areas where intellectually we know that, you know, there is some sympathy among kind of key advisors and key commentators. I think there was a report out not too long ago about, you know, broadening the next base to landlords and pensioners still in work. And I think that is something that absolutely will need to be considered as a possible option here. Again, your level of surprise end doesn't sound like it would be particularly high, if that would happen. No, I think to take a step back, the things that would surprise me at this budget is if I'm wrong and you actually saw something that went much further on spending restraint, and then if you saw quite fundamental tax reform, so what do I mean by that? I mean, you know, for example, full equalization of capital gains and income tax, for example, full-scale replacement of stamp duty and and council tax, or even a full-scale council tax revaluation, that's what I'm not expecting, which is why you're right to say whenever we're mentioning items on the smorgasbord, I'd be less surprised if they were part of the mix. How many items are on this, it's genuinely hard to say, like there are, you know, and then there are more nebulous items where, you know, the size of a tax gap, for instance, is quite vast these days, particularly for smaller businesses. So you can give HMRC some more powers and maybe that allows the OBR to say, okay, we'll buy that you will claw back an additional one billion or so, and that also helps. It's hard to put a number on it, Tom. People will know that there are always these discrete, it talks the complexity of our tax code, that there are always these options for kind of reliefs, allowances, changes that you can make. It's just each one comes with very difficult political and behavioral trade-offs in return often for not that much revenue, which is why you end up having to do a combination of them. No, absolutely. Next week is the Labour Party conference, certainly the time of recording. Any signals or clues we should be looking for from John Healey or Andy Burnham when they speak? So I think just a hunch, I wonder whether Healey is going to want to signal a kind of pro-small business posture in several ways, I think. I think he's going to want ahead of the budget. There's partly a need to reinforce his fiscal credentials and reassure there and not say anything alarming, but I just wonder if he's also going to do a bit of kind of small business signaling as well. One thing I think they are looking at for the budget is, and again, we've heard this before, so people are going to roll their eyes, but what more can we do within the business rate system to tax some larger companies more to fund broader relief for the high street. So I think that is kind of something that Healey might think about. For Burnham, I think this conference is going to be weird in many ways because for him, it's a victory lap. Like, remember this time last year, Andy Burnham, this time last year, a Labour Party conference, came in with an interview where he said, "I don't want to be in hop to the bond markets and was being very bold about his plans for the country." Left with his tail between his legs, the feeling was, Starmer had given a decent speech in Liverpool and a year on, Keir Starmer's out and it's Andy Burnham's moment of triumph. So a lot of it, Tom, is going to be less, I think, policy clues and more him just addressing the Labour Party for the first time and conveying his sense of hope and optimism. But I think there will be things in there. I think there will be clues around devolution, for instance. So we've not really touched on that, but I think the budget is going to have a road map towards much greater local control of business rates and even holding on to a portion of income tax receipts if you're in there. I think maybe a promise of a devolution bill and further legislation there talking about his number 10 north vision and what that means. Those are the things from conference. The one thing I'd say in closing, though, is like, I will be paying attention to any remarks that John Healy or other ministers give in response to questioning on the budget. My sense is that John Healy is going to keep his conversations with journalists quite limited this time round because you'll remember party conference last year, actually Keir Starmer and Rachel Reeves changed their answer a bit when asked about tax and the manifesto, which is partly to where we started the conversation, what led to some speculation. So I think it's what they say in the margins, not just the speeches that is important to watch as well. Trusting. Interesting. And then that broader timetable, as you think Andy Burnham sees it in his head at the moment, he's setting out, I think it's a 10-year vision of the following month and then we get into next year, spring spending review and everyone's talking about an election. That's another subject of loss of speculation. Talk me through. Do you think the next of the 12 months and how you see them, the sort of your central case for how things unfold? Doing the 10-year plan is where he's going to want to or need to articulate what public ownership looks like. He's going to need to, I think, in that plan or want to demonstrate, what does that actually mean? You know, if it's not full-scale re-nationalisation, what does that look like across particular utilities? So I think that'll be core to the 10-year plan. On an election, I think he's keeping his options open, but I think it doesn't look straightforward as it stands, Tom, you've not got a kind of sustained labour lead, really. He's had a bounce, but he's still way below where labour were, with the 34% in the 2024 general election. And you need that bounce to go through 90 days, don't you, I was on a monthly basis. Exactly. Well, a new PM bounce is exactly 10 to fade after 90 days, and then he's got nowhere near the lead that Johnson had in 2019 or even May in 2017. So his biggest and best card is the split on the right, so that's always going to be tempting. But then the third condition for an election, I think, is the story you tell the country. And that is where I kind of struggle, Tom, because, you know, the opposition parties, even though they're going to split, will say, you're going to the country for one reason, and that's because you want to put taxes up. Labour MPs will say, hang on, we've still got our joint second largest majority since the Second World War. What are we doing? So it's a hell of a lot to risk. I think fundamentally, though, this is going to come down to the type of politician Andy Burnham wants to be. You know, he's got all these big decisions to confront next year, that I think if he wants to address them, and not consistent with keeping to the 2024 manifesto, does he just do it? Does he just say, do you know what, I am going to break and breach, and would be honest with the public on why? Or does he feel no, I need some form of legitimacy, and I need to try and engineer a moment to go to the country? I think only he knows that right now, but when you're looking at the external conditions, it's still notwithstanding his bounce, notwithstanding the fact you'd rather be a Labour strategist. It's still a tough political backdrop. Yeah, as you say, easier to sort of maintain a holding pattern at the moment, but in the next year, things are going to start to come to a head in terms of how he sort of shapes his policy, and whether he doesn't need to get a fresh mandate. You mentioned the split on the right. I mean, is that feel, I mean, that feels quite personal, doesn't it? And it's quite embedded. I mean, they all don't like each other very much. Is that something that feels terminal? Is that sort of just insurmountable, do you think, for the political right in the country? Look, predicting in this fragmented environment, you know, what exactly is going to happen, who's going to win out is a difficult thing to do. The one thing that I would say actually, and it's a data point, Tom, is I think we do have evidence that, you know, on the left, Andy Burnham is doing a decent job of reuniting that block of voters. I mean, just to give you a stat, when Starmer left, Labour were holding on to fewer than half of their 2024 vote. Some numbers now have burned and holding on to 68% of Labour's 2024 votes. So he's got some voters back from the Lib Dems, the Greens, right in particular. On the right, you're not seeing that. You're seeing some reform voters go to restore. You're seeing fewer conservative voters either going to reform or saying that they would ever consider voting for reform. So you just have more empirical evidence from the polls that some of those divides on the right are more entrenched at the moment. The big feature this time round, which is why posters of a hell of a job is tactical voting. That is the kind of sort of developing feature at the moment that you are seeing. A lot of people or increasing number of people saying that they will just vote to keep reform out. And we saw evidence of this in the elections in Wales, for instance, earlier this year. Who benefits from that in particular geographies? I think he's going to be fascinating. And that is the only other dimension that I think we've just got to be aware of in looking at how complex his political landscape is at the moment. Yeah, absolutely. And all the decision making that Andy Bernal undertake. Hold on to some pancreas by election. Is that a test? Who's going to win that? Got feel for just from what I've seen, although posters will have better answers, I think I can see Labour holding on. This will be quite a significant victory for them, regardless of the margin, because if they beat that pelansky the leader of the Greens. I don't even we should see it as I all were definitely on for a general election. I do just think it would be a very strong data point of Labour and Andy Bernal being able to say, see, we are the dominant party on the progressive and left block of British politics. And for the Greens to fact their leader will have lost a buy election is a big blow. So, so let's see, it's a very complex constituency, obviously, George Galloway's back, you know, all sorts of cast of characters standing there, but based on what I've seen, my hunch is that it will be a narrow or should be a narrow labour hold and therefore a big win for them. But let's, like, not in terms of numbers, but it's like psychologically given its sap pelansky. But let's see. Yeah, absolutely, James, that was wonderful. Thanks so much again. I look forward to our next chat on the other side of the budget and I'm sure we'll have a much better idea what the smorgasbord looks like later in the year. Thank you, Tom. Listeners, that is it for this episode. A huge thank you to James for talking us through this delicate pre-budget period and what it could mean for the housing market and also the longevity of the government. We will be back soon, but until then, for more analysis, you can subscribe to my research note, which goes out weekly. Please visit the Night Frank website for more details. Until next time, thank you very much for listening.