Rachel Reeves unveils Labour’s first budget in 14 years, marking a historic moment as the first female Chancellor delivers the financial plan.
- Reeves emphasizes investment as key to growth, allocating significant funds to address past scandals and restore public services.
- The budget includes measures to tackle welfare fraud, increase national insurance for employers, and adjust capital gains and inheritance taxes.
- Reeves commits to maintaining key inflation targets and introduces initiatives to support working individuals and retirees.
- A focus on infrastructure and public investment is highlighted, with commitments to improving transport and securing funding for housing and social services.
Rachel Reeves, in a notable step for Labour, introduced the first budget in 14 years, emphasizing that the path to growth lies in significant investment. She highlighted Labour’s commitment to investing in Britain’s renewal, dedicating £11.8 billion to compensate victims of the infected blood scandal and £1.8 billion for the Post Office scandal victims. This reflects an acknowledgment of not only financial issues but also the decay visible in public services, such as the NHS and education system.
Emphasizing economic stability, Reeves confirmed the Bank of England’s inflation target at 2% and forecasted the borrowing figures to decrease from 4.5% to 2.1% of GDP by the end of the forecast period. Alongside, she projected fluctuating GDP growth rates throughout the upcoming years, indicating an initial rise followed by slower growth rates.
Reeves announced the establishment of a Covid corruption commissioner to reclaim funds spent on dubious contracts and introduced David Goldstone to helm the new Office for Value for Money. These steps are part of a crackdown on welfare fraud projected to save £4.3 billion. The minimum wage increase and adjustment of the carer’s allowance, reflecting the largest increase since 1976, reveal efforts to improve life for the working class.
In taxation, the budget insists on raising employers’ national insurance contributions to 15% and reducing the threshold, which aims to raise £25 billion annually. Capital gains tax rates are set to rise, while stricter inheritance tax rules are expected to generate over £2 billion. Moreover, Reeves delights in progressing Labour’s goal of abolishing non-dom status, reflecting a push for tax equity in the UK.
Reeves assured no extension on the freeze of income tax or national insurance thresholds, marking a shift towards adjusting these in line with inflation from 2028-29 onwards. The budget promises no return to austerity, delivering increased spending in areas such as special education, Ministry of Defense allocations, and local council funding.
Public sector net financial liabilities will now measure debt to facilitate increased public investment. By securing advancements in transport and housing, and ensuring the continuation of projects like the trans-Pennine upgrade and HS2 funding, the government aims to address critical infrastructure needs.
Rachel Reeves’ budget lays a robust foundation for growth, emphasizing investment and fiscal responsibility while addressing past financial shortcomings.
