Rachel Reeves delivers the first Labour budget in 14 years, making history as the first female Chancellor.
- The budget focuses on stabilizing the British economy and prioritizes public service investments.
- Significant funds allocated to compensate victims of past financial scandals.
- Key fiscal changes include increased taxes and measures to tackle fraud.
- A commitment to infrastructure development and educational funding is underscored.
Rachel Reeves has unveiled the Labour Party’s first budget in over a decade, a significant moment in British political history. She emphasizes the need for transformation, stating, “The only way to deliver growth is to invest, invest, invest.” Her plans include considerable investments in public services, highlighted by a strong focus on remedying the past administration’s oversights, such as the lack of funding for blood scandal victims.
To address the pressing issues within public services, Reeves has earmarked £11.8 billion for victims of the infected blood scandal and £1.8 billion for those affected by the Post Office scandal. She stressed the urgency of these measures, reflecting the broader public sentiment about broken public services and finances.
In terms of economic predictions, Reeves supports a stable approach by maintaining the Bank of England’s 2% inflation target, although forecasts suggest slight increases. She reiterates the government’s commitment to not borrowing for daily expenses, aiming to meet budget balance goals earlier than projected. The approach is endorsed by Paul Johnson of the IFS, who sees the forecast of a budget surplus by 2027-28 as sensible.
Acknowledging the challenges posed by fraud within welfare systems, Reeves outlines plans to save £4.3 billion through enhanced fraud prevention methods. Further, she confirms adjustments in national insurance and capital gains tax which are expected to generate significant revenue by the end of the forecast period. The increase in employers’ national insurance to 15% and changes in inheritance tax rules are part of a broader strategy to stabilize public finances.
The budget also sets the stage for long-term improvements in infrastructure and public welfare. Reeves announces increased spending on education, social care, and military defense, alongside the creation of a new Office for Value for Money. She promises no return to austerity, with day-to-day government spending set to rise by 1.5% and capital spending by 1.7% in real terms.
Highlighting the Labour government’s fiscal responsibility, Reeves introduces innovative public investment rules designed to foster economic growth. These include a focus on financial liabilities as a debt measure and an emphasis on infrastructure projects like the trans-Pennine upgrade and HS2 to Euston Station.
This budget has prompted varied responses. Business figure James Dyson criticized inheritance tax changes as potentially harmful to family businesses. However, proponents argue these adjustments are essential to achieving fiscal sustainability.
Rachel Reeves’ inaugural Labour budget bridges economic stability with necessary growth initiatives, aiming to redefine Britain’s fiscal landscape.
