Budget 2024 live: Rachel Reeves reveals £40bn in tax hikes and boost to NHS spending 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 but revealed a boost to NHS spending.
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” and announced a £22.6 billion increase in the day-to-day NHS health budget.
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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Stamp duty hike for second homes
Stamp duty land tax surcharge for second homes will increase by two percentage points to five per cent, and will come into effect from Thursday, Reeves announced.
“This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years,” she pledged during the Budget.
‘Deeply disturbing’: Charity condemns Labour’s continuation of Tory benefits plans
Rachel Reeves has announced that Labour will continue with Tory reforms to the work capability assessment, which is used to decide eligibility for working-age incapacity benefits.
In a bid to keep the benefits bill down, Labour will reduce access to these benefits, but the plans have been met with fury by disability campaigners who said the announcement was “deeply disturbing”.
Richard Kramer, chief executive of Sense, has said the government has “played into the dangerous narrative that disabled people should be forced to work and tightened the Work Capability Assessement. They did this knowing that not all disabled people can work - and that, withint three years, it will leave more than 424,000 disabled people, who are unable to work, worse off by more than £4,000 a month.”
“We are demanding that this dismal decision is urgently reversed”, he said.
Reeves announces passenger duty rise of 50% for private jets and aims jab at Sunak
Chancellor Rachel Reeves has announced a passenger duty rise of 50 per cent for private jets.
She mocked Tory leader Rishi Sunak as she joked his “ears have pricked up” when she mentioned air passenger duty.
She told the Commons: “Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.
“But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50%. That is equivalent to £450 per passenger for a private jet to, say, California?”
Analysis: Reeves risks backlash with inheritance tax hike
Critics have denounced it as a “death tax” and Ms Reeves has been warned her she risks punishing middle-class homeowners, but the chancellor did announce plan to squeeze millions of pounds more from inheritance tax.
The levy is routinely found to be one of voters’ least favourite measures, despite just a tiny number of estates paying it.
Official figures released last week also show Britons are already paying more inheritance tax.
The Treasury took in £4.3bn in the six months since April, £400m more than in the same period in the previous financial year and a rise of 10 per cent, HM Revenue and Customs date showed.
Measures to crackdown on shoplifting
Reeves has announced further action to crackdown on shoplifting on UK highstreets.
The chancellor said the government is set to scrap “effective immunity for low value shoplifting,” and provide additional funding to crackdown on organised gangs that target retailers.
Chancellor undoes Tory tax threshold freezes in final Budget rabbit
Rachel Reeves has pulled a final Budget rabbit out of the hat, promising to end the tax threshold freezes introduced by Rishi Sunak.
The so-called stealth tax, which saw workers quietly dragged into higher tax brackets, were a way of raising billions of extra revenue without explicitly raising income tax or national insurance.
But while Ms Reeves said extending the freeze could raise “billions of pounds to deal with the black hole in our public finances and repair our public services”, she said it “would hurt working people and take more money out of their payslips”.
It would have been embarrassing for the chancellor to keep the freezes in place, having accused the Tories of “picking the pockets of working people” over the move in the past.
Analysis: Relief for the poorest households in debt
Rachel Reeves has said that she will reduce the level of debt repayments that can be taken from people’s Universal Credit payments.
After discussion with think tanks such as the Joseph Rowntree Foundation, Ms Reeves announced that the level of debt repayments that can be taken out of people’s Universal Credit will be lowered from 25 per cent to 15 per cent each month.
This is good news for 1.2 million of the poorest households who will be able to keep more of their Universal Credit payments. And hopefully put them in a better financial position to manage their debt in the long run. Those who benefit will gain an average of £420 a year, according to Ms Reeves’ calculations.
The Joseph Rowntree Foundation has been calling on the government to take this step so that people aren’t forced to choose between going without essentials or getting into debt.
Allowing families to keep more money each month will help them feed their children and pay other households bills - hopefully keeping them from going deeper into debt and relying on crisis charity help.
Big win for boozers as Reeves cuts draft duty
Despite unveiling £40bn worth of tax hikes, Rachel Reeves showed a soft spot for Britain’s boozers in her Budget.
The chancellor promised to cut draft duty by 1.7 per cent, taking a penny off the price of a pint in the pub.
It came as Ms Reeves confirmed she will let duty on non-draft products rise in line with inflation.
The move shows Ms Reeves is backing Britain’s beleaguered hospitality industry, with pub and restaurant bosses having consistently called for the balance of taxes to be tilted away from hospitality venues and towards supermarkets.
Reeves announces fresh tax on vaping and one-off tobacco duty rise
Chancellor Rachel Reeves said the government will renew the tobacco duty escalator and introduce a flat-rate duty on all vaping liquid from October 2026.
She added: “Alongside an additional one-off increase in tobacco duty to maintain the incentive to give up smoking.
“And we will increase the soft drinks industry levy to account for inflation since it was introduced, as well as increasing the duty in line with CPI (Consumer Prices Index) each year going forward. These measures will raise nearly £1 billion per year by the end of the forecast period.”
Analysis: Reeves goes ahead on ‘ideological’ private schools tax
There are serious doubts now that imposing VAT on private school fees will be anything more than ideological rather than raise £1.6 billion needed to fund 6,000 new teachers.
Ms Reeves though has ignored the warnings and gone where no other chancellor has gone before in taxing education.
Already this is a clear dividing line with the Tories who have vowed to reverse the tax on schools and it leaves Labour in danger of looking as though they are attacking the middle class and aspiration.
It is certainly a move which Tony Blair - an old boy of Fettes in Edinburgh (the Scottish Eton) - would not have considered.
Thousands of children are now set to be moved into state schools at the cost of the taxpayer.
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