Budget 2024 live: Rachel Reeves reveals capital gains and stamp duty rise as part of £40bn in tax hikes
Chancellor promises to ‘invest, invest, invest’ after months of bleak warnings over economy
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Rachel Reeves has announced increases in stamp duty rise and capital gains tax as part of tax hikes that will raise an eye-watering £40bn in her historic first Budget.
Launching an attack on previous Tory governments, the chancellor said Labour had inherited a £22bn “black hole”, and would never again “allow a government to play fast and loose with public finances.
After months spent warning the public of “tough choices” ahead, Ms Reeves promised to “invest, invest, invest” in order to “fix public services”.
Increases to employers’ national insurance contributions, stamp duty on second homes and a scrapping of VAT exemption on private schools fees were all confirmed by the chancellor, as well as a new duty on vaping liquids.
However, there were surprise announcements that the freeze on income tax thresholds, often described as a “stealth tax”, would not be extended past 2028, while Ms Reeves has also decided against a hike in fuel duty.
Responding to the Budget, Rishi Sunak accused Ms Reeves of “fiddling the figures” and criticised the government for embarking on an “enormous borrowing spree”.
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Got questions about the Budget?
Chancellor Rachel Reeves has delivered her first Budget, which included a few curveballs.
So what will the announcements mean for your finances? And when will changes come into force?
The political ramifications of the budget are also worth exploring. What does Wednesday’s announcement reveal about Reeves’ and Starmer’s long-term plans?
Join a live Q&A with our chief political commentator John Rentoul at 4pm. You can submit a question for John here.
Watch: Rishi Sunak reacts to Budget 'Broken promise after broken promise'
Reeves confirms new Office for Value for Money
Those with keen ears will have noticed the chancellor mention the Office for Value for Money.
In the summer, Ms Reeves said she had told Treasury officials to do a rapid audit of public spending.
She also said she would set up an independent watchdog called the Office for Value for Money in an effort to cut waste and get technology to speed things up in the civil service.
The office will aim to intervene where waste is detected as well as helping government departments sharpen up their buying methods.
As well as spending well, it will ensure the taxpayer gets value from things like the sale in Nat West shares that the government owns.
Today she confirmed that top civil servant David Goldstone will chair the body.
Labour MPs express relief after bracing for ‘massive spending cuts’
Labour MPs have expressed relief over Rachel Reeves’ Budget, in comments to LabourList.
One said they had seen “lots of messages in my [Constituency Labour Party] WhatsApp saying they are looking forward to canvassing this weekend much more now”.
Another new MP told the outlet of their “enormous relief”, saying: “The weeks of stories beforehand suggested massive cuts to public services and spending, instead we have a Budget for long-term economic growth and which gets to work rebuilding our services and infrastructure.”
And Labour council leader described the Budget as “absolutely superb”, praising increased funding for local government and a “transformational investment” in the NHS.
Labour accused of ‘betrayal’ of Scottish whisky industry
British multinational Diageo has reacted angrily to Rachel Reeves’ Budget, accusing the chancellor of breaking Labour’s promise to support the Scottish whisky industry.
Nuno Teles, managing director of the firm’s UK arm, said: “On the campaign trail, Keir Starmer pledged to ‘back the Scotch whisky industry to the hilt’.
“Instead, the government has broken this promise and slammed even more duty on spirits. This betrayal will leave a bitter taste for drinkers and pubs, while jeopardising jobs and investment across Scotland.”
Watch live: Office for Budget Responsibility responds to Rachel Reeves’ £40bn tax hikes
Budget averts 36% fall in net public investment, IPPR analyst says
Rachel Reeves’ Budget will keep investment in the public sector roughly stable over the course of this parliament, according to Carsten Jung, head of macroeconomics at the IPPR think-tank.
The new plans contrast with a 36 per cent fall under the previous Tory government’s plans, Mr Jung said.
What impact will Budget have on rail travel costs?
Regulated train fares in England will increase by up to 4.6 per cent next year and the price of most railcards – excluding the discount mechanism for disabled passengers – will rise by £5, Rachel Reeves announced in her Budget.
The increase in fares is one percentage point above July’s Retail Prices Index (RPI) measure of inflation, which until 2023 was used by Westminster governments to set the cap on annual rises in regulated fares.
But a Budget document published by the Treasury stated that the 4.6 per cent rise will be “the lowest absolute increase in three years”, with fare changes to come into force in March.
Pound strengthens slightly after Budget, but FTSE remains in the red
The pound has strengthened following Rachel Reeves’ Budget – although the FTSE 100 Index remained in the red.
Sterling, which was down 0.4 per cent against both the US dollar and euro prior to the Budget – later stood 0.2 per cent higher at $1.303 dollars and 0.1 per cent lower at €1.201.
However, London’s FTSE 100 Index fell 0.6 per cent.
Budget sets Britain ‘on path towards national renewal’, says TUC
The Trades Union Congress has hailed Rachel Reeves’ first Budget as a “vital first step towards repairing and rebuilding Britain”, but warned that “there is still a lot more work to do to clean up 14 years of Tory mess and economic decline.
TUC chief Paul Nowak said: “The chancellor was dealt a terrible hand by the last Conservative government – a toxic legacy of economic chaos, falling living standards and broken public services. But with today’s budget the Chancellor has acted decisively to deliver an economy that works for working people.
“The government’s investment plans are a vital first step towards repairing and rebuilding Britain – securing the stronger growth, higher wages and decent public services that the country desperately needs.
“Tax rises will ensure much-needed funds for our NHS, schools and the rest of our crumbling public services, with those who have the broadest shoulders paying a fairer share. The chancellor was right to prioritise hospitals and classrooms over private jets.
“There is still a lot more work to do to clean up 14 years of Tory mess and economic decline – including better supporting and strengthening our social security system. But this budget sets us on an urgently needed path towards national renewal.”
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