Budget 2024 live: Rachel Reeves reveals £40bn in tax hikes and more borrowing in historic speech
Chancellor promises to ‘invest, invest, invest’ after months of bleak warnings over economy
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Rachel Reeves has announced tax hikes that will raise an eye-watering £40bn in her historic first Budget.
The chancellor blamed previous Conservative governments for the measures. She accused them of blowing a hole in the public finances and failing to fund compensations schemes, such as the one for those affected by the infected blood scandal.
After months of warning the public of the “tough choices” ahead, Ms Reeves promised to “invest, invest, invest” in order to “fix public services”.
Delivering the first Labour budget since Alistair Darling in 2010, she said: “My belief in Britain burns brighter than ever. And the prize on offer today is immense.
“More pounds in people’s pockets. An NHS that is there when you need it. An economy that is growing, creating wealth and opportunity for all. Because that is the only way to improve living standards.
“There are no short cuts. To deliver that investment we must restore economic stability.”
Ms Reeves added she was “deeply proud” to be the first female chancellor and it showed young girls there should be “no ceiling on your ambitions”.
Increase to employers’ national insurance contributions
A 1.2 per cent increase to employers’ national insurance contributions (NICs) has just been confirmed. This is different to NICs paid by workers – it is paid by their employers on top of their wages.
The rate will now rise from 13.8 per cent to 15 per cent. The threshold for paying them will fall from £9,100 per year to £5,000 in April 2025, the Chancellor has announced.
Reeves announces rise to carers allowance
The weekly earnings limit for carers allowance will rise to the equivalent of 16 hours a week at the national living wage, the largest increase since the allowance was introduced, the chancellor has announced.
She said they would also review overpayments.
Reeves attacks Tory legacy: ‘We will never again play fast and loose with public finances’
Rachel Reeves said the Government would publish a “line-by-line breakdown of the £22 billion black hole that we inherited”, saying this showed “hundreds of unfunded pressures on the public finances”.
The Chancellor told MPs: “The Office for Budget Responsibility has published their own review of the circumstances around the spring budget forecast.
“They say that the previous government, and I quote, ‘did not provide the OBR with all the available information to them’ and that had they known about these ‘undisclosed spending pressures that have since come to light’ then their spring budget forecast for spending would have been, and, I quote again, ‘materially different’.”
Ms Reeves added: “Let me make this promise to the British people: never again will we allow a government to play fast and loose with the public finances and never again will we allow a government to hide the true state of our public finances from our independent forecaster.
“That’s why today, I can confirm that we will implement in full the 10 recommendations from the independent Office for Budget Responsibility’s review.”
Fuel duty freeze remains
The chancellor has just said that the government will keep the freeze on fuel duty.
This is good news for drivers, who would have had the 7p rise passed on to them at the pump.
Fuel duties, or taxes, apply to purchases of petrol, diesel and a variety of other fuels used both for vehicles and domestic heating.
Analysis: Important win for the Lib Dem leader on the carer allowance
Sir Ed Davey, who cares for his disabled son and previously cared for his mother, has been a staunch campaigner for carers and their financial needs.
The increase of extra income to keep the carers’ allowance to £10,000 will help thousands of people across the country.
More important will be the efforts to end the cliff edge where they lose the allowance and the issue of overpayments.
The Lib Dem leader will see this as an early personal victory as he leads his newly enlarged 72-MP bloc.
Reeves confirms the government will stick to Bank of England’s 2 per cent inflation target
Chancellor Rachel Reeves told the Commons that the government would stick to the Bank of England’s two per cent inflation target.
The UK inflation rate was 1.7 percent in September 2024, down from 2.2 percent in the previous month.
She said: “Today, I can confirm that we will maintain the MPC’s (Bank of England’s Monetary Policy Committee) target of 2 per cent inflation, as measured by the 12-month increase in the Consumer Prices Index.”
Reeves announces increase to minimum wage
Rachel Reeves has announced the increase of minimum wage by 6.7 percent.
The chancellor told the house that the national living wage will see it rise £12.21 an hour next year as she delivers Labour’s first budget in 14 years.
It will also be raised for 18-20-year-olds by 16.3 per cent - bringing it up to £10 an hour for this group.
Ahead of the budget, John Foster, chief policy and campaigns officer at the Confederation of British Industry (CBI), said the national living wage was a “valuable tool” for protecting the incomes of the poorest in society “but with productivity stagnant, businesses will have to accommodate this increase against a challenging economic backdrop and growing pressure on their bottom line”.
Crackdown on welfare fraud
Reeves has announced a fresh crackdown on welfare fruad.
She told the house that the new strategy will raise £3.4bn a year by the end of the fiscal forecast and will including direct access to bank accounts to recover debt.
Budget to raise taxes by £40 billion
Chancellor Rachel Reeves told the Commons “this Budget raises taxes by £40 billion”.
She said: “The leadership campaign for the party opposite has now been going on for over three months, but in all that time not one, single apology for what they did to our country – because the Conservative Party has not changed.
“But this is a changed Labour Party and we will restore stability to our country again.
“The scale and seriousness of the situation that we have inherited cannot be underestimated.
“Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund, and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40 billion.
“Any chancellor standing here today would face this reality, and any responsible chancellor would take action. That is why today, I am restoring stability to our public finances and rebuilding our public services.”
Seven key pillars of Labour growth strategy
Rachel Reeves has spoken about what she calls the seven key pillars as Labour’s growth strategy:
- Restore economic stability.
- Increasing investment and building infrastructure - transforming planning rules.
- Working with devolved governments.
- Creation of Skills England, to tackle economic inactivity.
- Expanding opportunities for small and medium sized businesses.
- Protecting record funding for research and development.
- Maximise growth benefits of clean energy mission.
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