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”.
Funding for Infected Blood Scandal and Post Office compensation schemes
Chancellor Rachel Reeves has announced £11.8 billion to compensate those impacted by the infected blood scandal, and £1.8 billion to compensate the victims of the Post Office Horizon scandal.
Ms Reeves said: “The previous government also failed to budget for costs which they knew would materialise. That includes funding for vital compensation schemes for victims of two terrible injustices: the infected blood scandal and the Post Office Horizon scandal.
“The Leader of the Opposition rightly made an unequivocal apology for the injustice of the infected blood scandal on behalf of the British state, but he did not budget for the costs of compensation.
“Today, for the very first time, we will provide specific funding to compensate those infected and those affected, in full with £11.8 billion in this Budget.
“I am also today setting aside £1.8 billion to compensate victims of the Post Office Horizon scandal, redress that is long overdue for the pain and injustice that they have suffered.”
Analysis: Rachel Reeves goes on the attack on the £22bn black hole
The Independent’s polticial editor David Maddox writes:
After weeks of the Tories questioning her claims over a £22 billion black hole in the public finances, Rachel Reeves is promising a line by line analysis today to prove it exists.
She quotes the Office of Budget Responsibility (OBR) to say it was deceived by the alst government and its projections in the spring would have been “materially different” hd it known the full facts.
Ms Reeves wants to pin the blames for her tax rises and Budget misery on Tory mismanagement.
This could well be the debate framed for the next five years.
Rachel Reeves gets a dressing down before the Budget
The Independent’s Kate Devlin reports:
Rachel Reeves has received a dressing down before she started her Budget speech.
She was told off by the deputy speaker of the Commons Nus Ghani, because so many of her measures have already appeared in the press.
“We must all remember … to respect this House”, the chancellor was told.
Earlier this week the Speaker Sir Lindsay Hoyle also complained that Budget announcements should be made first to the House of Commons.
Rachel Reeves begins budget announcement
Rachel Reeves has stood up in the Commons to deliver the first Labour budget in 14 years.
What could a fiscal drag mean for the economy?
The chancellor is reportedly considering extending the freeze on income tax thresholds today, taking it beyond the planned 2028 end date.
Critics have called the measure a ‘stealth tax’ as it has caused more people to pay more income tax since 2021 – despite rates never rising.
This is because the personal allowance and higher income thresholds are frozen.
Reeves could be looking at a new death tax on spouses
The Independent’s Political Editor David Maddox writes:
There are warnings that inheritance tax could for the first time be extended to spouses and civil partners.
Ingrid McCleave, partner at law firm DMH Stallard and tax specialist, comments on possible changes to inheritance tax (IHT).
She said: “The Chancellor may extend the seven-year rule on gifting to 10 years, so that more gifts are brought back into a person’s estate for inheritance tax.
“On the spouse exemption, inheritance tax free transfers on death between spouses and civil partners could be restricted to a ceiling and everything above taxed at 40 per cent.
“The business property relief on AIM listed trading companies (passive investments rather than running a business ) could be restricted to a ceiling or abolished and/or the ownership period extended from two years.
“Pensions pots may also be brought within the IHT net on death.”
Analysis: Rishi Sunak gives the PM an easy ride at his final PMQs
Rishi Sunak has given Sir Keir Starmer an easy ride at his final appearance at PMQs from the despatch box.
The friendly back-and-forth had a distinctly “end of term” feeling to it, as the two leaders paid tribute to one another and shared jokes from either side of the house.
Opening what is typically a combative exchange, the Labour leader commended Mr Sunak for his “hard work, for his commitment and for his decency in everything that he has done”.
Preparing for his return to the backbenches, the former prime minister told the Commons that he will “now be spending more time in the greatest place on earth”. “If anyone needs me I will be in Yorkshire,” he said.
Mr Sunak avoided the heavy topics, questioning Sir Keir on initiatives to get more state schools playing cricket, as well as calling for him to “find his inner tech bro” and make the UK the “home of AI growth and innovation”.
What is expected to be announced in todays budget?
Rachel Reeves is just 10 minutes away from delivering the first Labour budget in 14 years. Here is a look at what could be announced:
- A 6.7% increase in the national living wage will see it rise to £12.21 an hour next year.
- There could be an increase to employer’s national insurance contributions or an extension on the freeze on the thresholds for the personal taxes.
- £3 billion boost to the armed forces - although this will largely be used to cover pay rises.
– More funding for the NHS, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines.
– £240 million in funding for local services will be spent on helping people get back to work.
– The £2 cap on bus fares across most of England will rise to £3.
- Changes to inheritance tax.
- The freeze on fuel duty could be scrapped - which could see prices increase at the pump.
- Capital Gains Tax - which is paid on the profit made when an asset which has increased in value is sold - could be hiked.
Starmer acknowledges Sunak’s last PMQs appearance
Sir Keir Starmer and Rishi Sunak have engaged in a jovial exchange ahead of the conclusion of the Tory leadership competition later this week.
Today marks Sunak’s final week of leading the opposition during prime minister’s questions.
Both the speaker and the prime minister had some kind words to say about Sunak, who confirmed he would be spending more time in his constituency in North Yorkshire as he steps down as the Conservative Party leader.
PMQs begin ahead of Budget
Prime minister’s questions have begun in the House of Commons.
Sir Keir Starmer is taking his usual weekly questions, ahead of Rachel Reeves delivering Labour’s first budget at 12:30pm.
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