By The Editors British budgets have come to resemble an overstuffed toolshed: Each finance minister adds a new shelf, and nothing is ever thrown out. New Chancellor of the Exchequer John Healey could start by clearing the clutter.

Healey will release his first budget on Wednesday. He can’t afford yet another proposal that costs credibility and raises little revenue. Government borrowing from April to September was £97.8 billion ($116.8 billion), £6 billion above the Office for Budget Responsibility forecast. Debt interest over those six months was £60.8 billion. Higher borrowing costs alone could eat nearly half of the “headroom” left by Healey’s predecessor.

Markets have noticed. Earlier this month, the 30-year gilt yield exceeded 6%, its highest level since 1998; borrowing costs remain the highest in the Group of Seven. Given Britain’s pressing needs — not least a huge funding gap for the military — the chancellor can’t realistically promise to reduce borrowing, increase spending and avoid painful choices. But he can make public finances less fragile.

On the spending side, a good start would be to deflate ballooning health and disability benefits for those of working age. Spending for this cohort has risen by more than half since the Covid-19 pandemic and is forecast to keep climbing. That doesn’t mean crude cuts to everyone with a diagnosis, but it does suggest tighter tests of incapacity benefits, more reassessments of conditions that may improve and real incentives to return to work. Two reviews are due this autumn, limiting what Healey can do now. But he can make clear that spending can’t keep rising at its post-Covid rate.

Tax reform should be the second imperative. Britain’s system is riddled with complexity, perverse incentives and dead-weight administrative costs that have accrued as successive governments piled new carve-outs and relief measures into the toolshed. Chocolate-covered biscuits carry a 20% value-added tax; most others are VAT-free. Hot takeout meals are generally taxed at 20%, and cold ones zero. Poorly designed policy means a parent earning an extra £1 on £100,000 can lose thousands of pounds in child-care benefits. And so on.

The Conservatives are pledging to address some of these distortions. But Healey should have his own response. As one example, a stamp duty on property transactions discourages people from moving for work. Scrapping that levy — a Tory pledge — could be tied to reforming England’s council taxes, which are still based on 1991 valuations. That would allow the government to gradually shift taxation away from transactions and toward recurrent property taxes.

On the other side of the ledger, Healey also needs to raise revenue. But piling more taxes on the wealthy, or entrepreneurs, will raise little and accelerate a worsening wealth exodus. A 1 percentage-point increase on every rate of income tax would raise about £11 billion a year by 2029-30 — enough to cover the gap in defense spending and help rebuild fiscal room. Yes, that would break Labour’s pledge not to raise the main taxes. But much has changed since the party’s manifesto was written. A more dangerous world costs money, and Healey should say so.

Budgets are usually judged by what they add; Healey’s should be judged mainly by what he’s willing to throw out. Tidying the shed won’t win him much applause from the backbenches, but it will leave Britain less fragile, better placed to grow and more prepared for the next crisis.