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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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.”
Rachel Reeves confirms Budget will raise taxes by £40bn
The chancellor has confirmed that her first Budget will raise taxes by an eye-watering £40bn.
But she insisted that the blame lay with the Conservatives. 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.
On her tax rises she told MPs: “Any chancellor standing here today would have to face this reality”.
Reeves opens Budget by saying her ‘belief in Britain burns brighter than ever’
Chancellor Rachel Reeves opened her Budget speech by stating that her “belief in Britain burns brighter than ever”.
She told the Commons: “On July the 4th, the country voted for change. This government was given a mandate: to restore stability to our country and to begin a decade of national renewal. To fix the foundations and deliver change through responsible leadership in the national interest. That is our task and I know we can achieve it.
“My belief in Britain burns brighter than ever and the prize on offer is immense. As the prime minister said on Monday, change must be felt: 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.
“And the only way to drive economic growth is to invest, invest, invest.
“There are no shortcuts and to deliver that investment we must restore economic stability and turn the page on the last 14 years.”
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.
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