First Lady: Chancellor Of the Exchequer Rachel Reeves holds the famous red Dispatch Box outside No.11 Downing Street before presenting The Budget to MPs in Parliament on Wednesday © A.A. Gill /Alamy Stock Photo
Rachel Reeves delivered her first Budget this week, having spent months preparing the public for a bleak and challenging outlook. To address the infamous £22bn blackhole, Reeves’ Budget revealed £40bn in tax increases aimed at improving public services. Here’s a quick rundown of its key announcements:
National Insurance contributions for employers will increase by 1.2 percentage points to 15% from April 2025 (with Employment Allowance increased from £5,000 to £10,500 and the £100,000 threshold removed to assist SMEs)
• National Insurance contributions for employers will increase by 1.2 percentage points to 15% from April 2025 (with Employment Allowance increased from £5,000 to £10,500 and the £100,000 threshold removed to assist SMEs)
• The National Living wage will increase by 6.7% to £12.21 for over-21s, and by 16.3% to £10 for 18-to-20-year-olds
• Capital Gains Tax will increase from 10% to 18% for the lower rate, while the higher rate will go up from 18% to 24%
• The freeze on Inheritance Tax will continue to 2030, and from 2027 inherited pension pots will be subject to the tax.
• The Defence Budget will grow by £2.9bn with £3bn a year re-pledged for Ukraine for ‘as long as it takes’
• Fuel Duty will be frozen and the existing 5p cut will remain for a further year
• The Stamp Duty surcharge for second homes will increase from 3% to 5%
• Air passenger duty on private jets will rise by 50%
• VAT will be added to private school fees from January 2025, while the budget for free school breakfast clubs rose to £30m for 2025 and 2026
• The NHS will receive an additional £22.6 billion of resource spending in 2025-26
• Most importantly, draught alcohol duty will decrease by 1.7%, making drinks on draught cheaper by 1p
Speaking after the event, the Chancellor doubled down on the choices made, stating that whilst it is not a Budget that the Government would like to repeat it was necessary to regain economic stability. Mixed reaction followed from political parties, with the Conservatives focusing on broken promises and unfunded borrowing sprees. The Lib Dems however welcomed the increase in NHS spending and increases to minimum wage but criticised that the Budget for being too similar to its predecessors, and for not addressing social care or the broken local council system. Keeping to the aims of economic security, the Budget has seemingly managed to keep the markets comparatively stable, despite the yield on 10-year gilts hitting its highest point since August 2023 on Thursday afternoon, at 4.56%, though this is still comparatively low compared to the infamous mini budget two years ago.
2% – OBR’s forecast of how much Britain’s economy is expected to grow in 2025
£100bn – Amount the Government will invest over the next five years in capital spending
9 – Number of times the Chancellor said “finally” during her 77-minute Budget Statement
£500m – New funding for the Government’s Affordable Homes Programme
37,000 – Predicted reduction in the number of private school pupils as a result of Labour’s VAT policy
£25k – Amount Scotland’s former First Minister Nicola Sturgeon was paid to appear on ITV’s general election results programme
591,072 – Births recorded in England and Wales in 2023, the lowest number since 1977
$20 decillion – Amount a Russian court has fined Google for restricting Russian state media channels on YouTube (a figure higher than all the money in the world combined)
Safe access zones around abortion clinics came into force this week. Anyone caught handing out anti-abortion leaflets or undertaking silent prayer or vigil within a 150-metre radius of clinics and hospitals offering abortion services could face an unlimited fine.
The UK needs to reduce greenhouse gas emissions by 81% from 1990 to 2035 declared the Climate Change Committee in its advice to the Energy Security and Net Zero Secretary. The Committee insisted that ‘the technologies needed to achieve it are available’ but that business needs ‘confidence in what the Government’s long term policy plans are’.
A review on the challenges of developing national infrastructure was published which sought to understand how to reduce delays to judicial reviews to Nationally Significant Infrastructure Projects. The Government will consider the findings as it seeks to strike a balance between ‘the critical need for projects and maintaining the public’s right to challenge government decisions’.
The news that the Southport attacker who murdered three young will face terror charges caused a political spat, with Conservative leadership contender Robert Jenrick alleging the Government ‘concealed’ this information from the public having initially declared it was not a terror-related incident. The murders sparked this summer’s riots after misinformation spread online said the attacker was a Muslim. Meanwhile, far-right leader Tommy Robinson (one of those spreading the rumours) was jailed for 18 months for repeating false allegations against a Syrian refugee in breach of an injunction.
Former Shadow Housing Minister Mike Amesbury lost the Labour whip after he was filmed repeatedly punching a constituent after a night out. It is unclear what caused the brawl, although in the footage after the fight Amesbury can be heard telling the man he “won't threaten the MP ever again”.
The result of the Conservative leadership contest will be revealed tomorrow after polls closed yesterday. Kemi Badenoch remains the favourite to win, although Robert Jenrick insisted the contest was "close". Turnout so far was reported to have been low, resulting in Badenoch blitzing the airwaves over the past week.
In a slightly more consequential election, Americans will go to the polls on Tuesday to elect a new president. Polling puts Kamala Harris and Donald Trump neck-and-neck, with the result expected to hinge on the tightest of the already competitive swing states, specifically Pennsylvania. It is hoped the result will be announced sooner than it was in 2020, although many fear that Trump will again deny the legitimacy of the result should he lose.
With all eyes on the Budget announcement, both in and outside Parliament – much to the Speaker’s irritation (plus ça change) – there wasn’t a great deal else taking place on the green benches this week. Ed Miliband’s Great British Energy Bill swept through its report stage and third reading without amendment and has now moved to the Lords; whilst a Government debate on remembrance and veterans, two weeks ahead of Remembrance Sunday, took precedence on Monday in a rare moment of unity across the House to pay tribute to the UK’s Veterans and Armed Service personnel.
The Lords is forging ahead with the Water (Special Measures) Bill aimed at increasing transparency in the water industry, and has almost completed debate on the Passenger Railway Services (Public Ownership) Bill – to start bringing the rail franchises back into the public sector. With just its Lords third reading to go, the Bill is likely to be the new Government’s first major piece of legislation (apart from some Treasury business already rushed through) to pass into law.
And finally… six months after they last sat, the full rostra of House of Commons select committees returns from next week bringing vital scrutiny back to Parliament, after the Government’s landslide majority and the Opposition’s leadership vacancy tipped the scales towards the non-existent setting overnight in July. With the biggest refresh of committee chairs and membership in 14 years and a whole new generation of MPs after their first clipped-up-social-media-ready Gotcha! moment… expect some dicey exchanges over the next few months.
Savanta released a snap poll following the Budget, which garnered reaction to some of the policies announced. The most popular announcement was increased funding for the NHS, earning the support of 71.1% of survey respondents. Coming in just behind was the rise in the National Living Wage, with 69.3% of respondents in support, compared to just 13.5% who opposed; the decision to extend the fuel duty freeze also proved popular with 62.9% in support. Surprisingly, more people than not supported increasing employer National Insurance Contributions, with 36.7% in support and 33% against. And by far the least popular policy (out of those put to people in the survey) was increasing the single bus fare cap from £2 to £3,with only 23% of respondents in support.
Think tanks were also quick to respond to the Budget, so here’s a rapid-fire sum-up of some of their reactions: the IFS said the Budget was as expected and expressed disappointment that “there was little in the way of serious tax reform”; the IPPR welcomed that the Budget marked a “decisive shift” for the UK economy, but stated more ambition will still be needed; the Centre for Social Justice said it “provided a glimmer of hope that this Government has a plan to fix Britain’s economic inactivity”; the TaxPayers’ Alliance argued the employer NIC increase will “decimate” businesses; the Joseph Rowntree Foundation called for more certainty for those living in hardship; the IEA stated the Budget is “likely to hurt working people and do little for economic growth”; the Adam Smith Institute suggested many of the measures will fail to attract growth and termed the employer NIC hike a “tax on jobs”; and the Centre for Policy Studies argued it will reduce business investment, trade and private sector activity.
It might have been his last week as leader of the Conservative Party, but that didn’t stop the Chancellor from taking a dig at Rishi Sunak during the Budget. When announcing that the rate of Air Passenger Duty on private jets was being increased, Reeves, looking straight at Sunak, revealed that a private jet to California (where Sunak has a property) would cost £450 more per passenger. It doesn’t appear as the former PM was paying much attention though, as when the camera panned to him he was deep in discussion with Shadow Chief Secretary to the Treasury Laura Trott.
