Budget 2024 – latest: Inflation falls to lowest rate in three years, Reeves ‘eyes £40bn’ in cuts and spending
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Rachel Reeves will announce Labour’s first Budget in 15 years later this month, leading one of the most highly-anticipated fiscal events in over a decade.
As the chancellor looks to fill the £22bn “black hole” in public spending she announced in late July, speculation has mounted about what measures will be included on 30 October.
During Labour’s first few months in power, ministers have warned that “tough decisions” will be required to balance the books. Prime minister Sir Keir Starmer has said the event is going to be “painful” but that there is “no other choice given the situation that we’re in”.
This likely means tax rises and spending cuts can be expected. The government has already come under fire for its decision to cut back winter fuel payments for millions of pensions, sparking a row which has hung over its first 100 days in power.
In the run-up to the Budget, inflation fell below the 2 per cent target for the first time in three years, sparking hopes of an interest rate cut to come in November.
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Ex-Bank of England chief Mervyn King urges Rachel Reeves to raise national insurance in Budget
Exclusive: Former Bank of England governor Mervyn King has made a dramatic intervention warning Rachel Reeves that she must raise national insurance in her Budget on 30 October.
The Independent’s political editor David Maddox reports:
Ex-Bank of England chief urges Rachel Reeves to raise national insurance in Budget
Exclusive: In a dramatic intervention, the former governor of the Bank of England tells the chancellor she must be ruthlessly honest with the public
Preview: What will be in Labour’s Budget?
Changes to capital gains, inheritance tax, pension savings and more – here’s your guide to what the Labour Budget on 30 October could have in store:
Budget 2024 preview: What Reeves could do in Labour statement amid tax rise talk
Many experts expect tax rises to be on the cards
Analysis: Reeves will need lawyer's language to break national insurance pledge
During the election Labour made a clear promise “not to raise taxes on working people”. This specifically included income tax, VAT and national insurance contributions.
The problem Rachel Reeves has as her first Budget approaches on 30 October is that somehow she has to pay for an estimated £25bn in spending commitments and encourage economic growth with little room for manoeuvre.
Her former Bank of England mentor Lord Mervyn King has warned her against extra borrowing even by rewriting the fiscals and suggested she raises national insurance instead to invest.
It is clear from the prime minister’s words this morning that national insurance rises on employer contributions is now a strong possibility. But does this mean a breach in the manifesto promises from just over 100 days ago?
The Tories say yes - they would - but so does the independent Institute for Fiscal Studies director Paul Johnson.
It appears that Labour are planning on using a lawyer’s way out - appropriate for the prime minister - to emphasise that their pledge was “for working people” not employers.
Budget 2024: Latest news as proposed national insurance hike sparks row
Hello and welcome to The Independent’s Budget 2024 live coverage where we’ll be bringing you the latest updates ahead of Labour’s fiscal event on 30 October.
Labour has been criticised in recent days for refusing to rule out an increase to employer national insurance contributions (NICs). Some experts say the measure would break their pledge to not raise taxes on working people – but officials have indicated that the government does not agree.
Institute for Fiscal Studies director Paul Johnson said the measure would be a “straightforward breach” of the Labour manifesto, but added that Ms Reeves will “almost certainly” need to break a manifesto commitment to meet her spending targets.
He says that a 1p hike in employer NICs would “probably not” be very damaging to jobs.
Shadow chief secretary to the Treasury Laura Trott said: “In 2021, the chancellor said increasing employer national insurance was a tax on ‘workers’. That’s why even in her own words it breaks Labour’s manifesto promise not to increase tax on working people.”
However, it has been pointed out that Ms Trott and her party had criticised Labour for not ruling out the measure in the run-up to the general election, implying they did not believe the manifesto had done so.
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