John Rentoul answers your questions on how Labour’s Budget will affect you – from taxes to disability benefits

Chancellor Rachel Reeves has unveiled Labour’s first Autumn Statement in 14 years, prompting a flurry of questions from readers about the potential impacts on their finances and the future direction of the party

Chancellor Rachel Reeves has unveiled Labour’s first Autumn Statement in 14 years (Getty Images)

In a significant move to reshape the UK’s economic landscape, Chancellor Rachel Reeves unveiled Labour’s first Autumn Statement in 14 years, proposing a £40 billion tax hike aimed primarily at the wealthy and businesses.

The Budget marked a pivotal shift in fiscal policy – and naturally Independent readers had questions about how new measures could affect their bank balance, and what the autumn statement revealed about the direction of the Labour Party.

To bolster support for workers, Reeves confirmed a minimum wage increase to £12.21 for those over 21, alongside a cut in duty on draft alcohol and a new tax on vaping products.

Other key measures included a 1.2 per cent increase in employer National Insurance contributions, scrapping tax perks for non-domiciled individuals, increasing Capital Gains Tax, and introducing a £450 tax on private jet flights.

While Carer’s Allowance will see an increase and fuel duty remains frozen next year, the freeze on income tax and National Insurance thresholds is set to end in 2028.

Here are seven Budget questions from Independent readers – and my answers from the “Ask Me Anything” event.

Q: What will the level of national debt be after this spending round? How much debt repayments will we be paying per year?

Kieran

A: Under the old definition, the national debt continues at just below 100 per cent of national income; under the new definition, PSNFL, it remains flat at just above 80 per cent of national income.

Reeves plans to borrow more, so repayments will rise, but her rule restricts her to investing in assets that will produce a return, so there shouldn’t be a net increase. Growth is forecast to be lower, which is embarrassing for a government that claims that growth is its No. 1 objective – but I think taxes would have had to rise anyway, and so growth would have been lower even if the Tories had won the election.

Q: How does the Budget affect people on disability benefits?

Jo-Anne Burrow

A: I doubt if it will have much effect in the short term. Reeves said she would continue to make the “savings” pencilled in by the Tory government by “reform” of the Work Capability Assessment. I am not sure what the implications of this would be.

Beyond that, Reeves promised a crackdown on fraud and a review of the “root causes of inactivity,” which sounds to me like muddling through as before.

Q: Where is the growth? Other than in the size of the state, the tax take and borrowing? How many farms will we lose? How much will unemployment increase as a result of the NICs changes?

Robert Corbishley

A: The OBR predicts that growth will be slightly lower and that unemployment will be lower initially before returning to the current level. As for farms, I think they continue to be treated extremely generously for inheritance tax purposes.

My view is that even if the Conservatives had won the election, they would have had to put up taxes too. They may not have increased them as much, but then there would have been more difficult decisions to cut public services further, and growth would have been suppressed a bit.

Q: How come there’s always money made available for war and weapons but we are being repeatedly hit over the head with the gloom hammer and told “things are going to get worse” when we desperately need things to get better?

stonia

A: I am not sure I understand the question. Most people would expect the government to spend money on defence and to support the Ukrainian people in their struggle against Putin’s aggression. Even if we didn’t have a defence budget, the government would face difficult choices between competing priorities.

Q: Why is the Labour Party yet again targeting disabled people and disability benefits?

BrummieGuy

A: I do worry about the rather unspecific intention to take money from the welfare budget, and I am not sure that the “crackdown on fraud” that Reeves promised is the answer.

I suspect that dealing with the rise in the numbers of long-term sick and disabled will cost more in the short term.

Q: Why isn’t Reeves targeting either the 40 per cent rate of tax relief on pensions or applying NI to employers’ pension contributions? Both are eminently justifiable.

Dan Dennis

A: Restricting pension contribution relief to the basic rate is something that has been suggested and ignored at every Budget I can remember. I think ministers, once they look at it, always prefer to limit total tax relief instead.

As for NI on employers’ pension contributions, that would discourage pension provision. What was surprising to me, when I discovered it, is that pension funds are free of inheritance tax on death; it makes sense to end that, which Rachel Reeves has done. That won’t have much if any effect on incentives to save in a pension.

Q: I’m worried that Rachel Reeves will cut funding for international aid and development work. How would she reach a decision about this?

SierraLeoneMatters

A: She didn’t mention international development in her speech, so I assume that the aid budget remains at 0.5 per cent of national income, which is lower than the 0.7 per cent target under the last Labour government, which was finally reached by the coalition government – although I gather that there are complications about how asylum seekers‘ accommodation is paid for.

These questions and answers were part of an ‘Ask Me Anything’ hosted by John Rentoul at 4pm GMT on Wednesday 30 September. Some of the questions and answers have been edited for this article. You can read the full discussion in the comments section of the original article.

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