Few expect Andy Burnham’s extended political honeymoon to last beyond the October 28 budget. The fiscal position is precarious. The bond vigilantes are signalling their nervousness about the UK in the form of 10 year bond yields of 5.4% : the highest of developed economies (despite some nice comments from the IMF). The public will expect to see some evidence of the Prime Minister’s commitment to spend more on defence, employment for young people, affordable housing, meeting the NHS and social care needs of an ageing population, together with some relief from high energy costs, which may spiral further if Trump returns to war with Iran after the mid-term elections on November 5. A promise to defer difficult budget decisions until next year will not convince markets.

The tax options are seriously constrained by the unnecessary pre-election promise not to raise VAT rates or the rates of income tax and employees NICs. Taxes are already approaching 40% of GDP, a post-war high. But more will be needed. The government has, however, already discovered that seemingly easy options targeted at companies and rich people can backfire. Rachel Reeves’ increase in employers’ NICs has angered employers and threatens jobs. A tax raid on inheritance has proved to be less of a tax on rich heirs to family fortunes than a major threat to family farms and firms. Some big taxpayers amongst the ‘non-doms’ have emigrated rather than pay more tax. VAT receipts on private school fees have had to be netted off against the costs of educating children of less affluent families who have migrated to the state sector. Successive attempts to hit the well off by salami-slicing pension tax relief have undermined savings. Gordon Brown’s seemingly innocuous ending of tax relief on company dividends helped to end DB pension schemes. Clever schemes to combat cleverer tax avoidance have added to complexity and economic distortions. The Law of Unintended Consequences is unforgiving.

Taxation is unpopular and so is ‘austerity’ applied to popular public services. Politicians who want to be liked, or win elections, face a dilemma: how to raise revenue painlessly while avoiding damaging unintended consequences. Experience tells us that it is impossible to square this circle. Taxes on companies are hidden from the public but are mainly passed on in -unpopular – higher prices or by reductions in investment. Taxes on rich people may be popular with people who aren’t rich but rich people are potentially mobile and able to afford tax advice on avoidance techniques. Wealth taxes have been largely abandoned except where they are very small (as in Switzerland). Property is not mobile but the taxation of family homes is deeply unpopular with the public outside of ‘mansions’. These problems are unlikely to deter Mr Healey from trying to squeeze a bit more from Capital Gains Tax (which can deter the establishment of new businesses), tax relief on pension contributions (deterring savings) or high-value property (which can’t be isolated from the wider property market). These all tick the box marked ‘fairness’ but they represent the last bit of a much squeezed toothpaste tube.