If you want an insight into this government’s priorities, take a look at its asymmetry on adjusting tax thresholds and welfare payments for inflation. Let’s call it Labour’s penchant for fiscal drag and fiscal drift.

Fiscal drag is a familiar enough concept now: ministers freeze tax thresholds so that inflation and pay growth shunt more people into paying tax or higher marginal rate bands, raising revenues by “stealth”. Fiscal drift is the opposite: when welfare payments match or exceed the growth of prices to push up spending. Our chancellor likes both.

In last week’s budget, Rachel Reeves doubled down on previous Tory policy, breaking her manifesto pledge as she froze income tax and national insurance thresholds until 2031. Threshold freezes since 2022 will, as a result, raise £67 billion more in tax each year by 2030–31 than if thresholds had been inflation-protected throughout. Reeves’s new freeze accounts for £13 billion of that total.

The effects are stark. In 1990, roughly one in fifteen income-taxpayers paid the then top 40p rate. Today, roughly one in five pay that, or the higher 45 per cent marginal rate. This will now jump to almost a quarter of taxpayers under Reeves. An estimated 780,000 more people will start paying income tax and 920,000 more will become ensnared in the 40 per cent band after last week’s budget.

Then there’s student loan thresholds. The budget froze the plan 2 repayment and interest thresholds for three years from 2027–28, adding £0.4 billion a year to repayments. More graduates, in other words, will see their pay rises siphoned off to the Student Loans Company, equivalent to stealthily raising their taxes again.

If all this were a principled decision to let inflation and pay growth work to raise revenue and cut spending, that would be one thing. But on spending, Labour takes a different approach, insulating welfare benefits from inflation, if not making them more generous still.

The triple-lock remains untouched, for example, despite costing about £24 billion more per year by 2030 than if the state pension had been inflation-protected since its introduction. Prices are expected to grow by just under 15 per cent through 2030–31. The value of the state pension is forecast to grow by more than 20 per cent.

Add to this the decisions to scrap the two-child benefit cap and reverse earlier cuts to disability and winter fuel payments (measures costing more than £9 billion a year by 2030–31), all beyond indexing other welfare benefit payments, and you see that Reeves is growing the welfare state.

Where indexation of thresholds would limit revenue, Labour freezes them. Where indexation boosts benefits spending, Labour protects it and adds further generosity. The fiscal effects are obvious. If you over-index benefits and let inflation erode the real value of tax thresholds, the government’s share of national income rises on both ends: significantly more tax revenue from drag, more spending from drift.

By the end of the decade, in fact, new revenue from these threshold freezes will be more than accounted for by both the growth in triple-lock spending and welfare policy changes that go beyond protecting benefits from inflation. We’re getting “high-tax, high-spend” through indexing decisions. The fiscal drag is funding fiscal drift.

Labour no doubt thinks this is good politics. Polling historically implies that fiscal drag is a more palatable way to raise taxes than jacking up headline rates. George Osborne even said he thought people liked becoming higher-rate taxpayers because it made them feel successful.

Given the scale and salience of this tax squeeze, I’m not sure about this political judgment. But it’s more important to understand what these choices are really doing. They are not “fixing a black hole”. Labour is using stealthy tax rises on earners to protect and enlarge its true priority: the blessed welfare state.