Budget 2024 live: Rachel Reeves reveals £40bn in tax hikes and boost to NHS spending in historic speech

A sombre stage had been set for months before the new Labour government’s first Budget. The gloomy messaging began when Rachel Reeves unveiled told the Commons the public purse was facing a £22bn “black hole” at the end of July. It continued when the prime minister warned that the coming event would be “painful.”

With these bleak warnings in place, many predicted the worst from the fiscal event. Some expectations were met: the chancellor confirmed £40bn in tax rises, announcing expected tweaks to capital gains, national insurance and more.

However, there were also some surprises, alongside several measures that had been “leaked” being completely omitted from the statement.

Here’s what was missing from the Labour Budget:

Did Labour mislead the public during their summer election campaign by claiming they wouldn’t tax working people?

Rachel Reeves has now confirmed that employer national insurance contributions (NICs) will rise in Labour’s upcoming budget, raising eyebrows about whether this goes against their manifesto pledge.

Many are wondering if this move breaks the promise to not increase taxes on working people.

The Independent spoke to Daniele Girardi, an economist at King’s College London, to get his take on whether Labour is staying true to their word or stepping back from their commitments.

The short-term politics of Rachel Reeves’ Budget are clear. Taxes that affect most voters’ pay are not increased. Even the duty on petrol remains unchanged, while the much anticipated extension of the freeze of income tax thresholds was notable by its absence.

Yet, at the same time, spending on public services is increased this year and next – including (above all) on the health service. And there was even a one penny cut in the price of draught beer sold in pubs.

Read the rest of election guru and polling expert Sir John Curtice’s Voices piece:

The Local Government Association (LGA), which represents hundreds of local authorities in the UK, says the budget is a “step in the right direction” but councils still face a “precarious short and long-term future”.

Chair of the LGA, Cllr Louise Gittins, said: “It is encouraging that the Chancellor has responded today by providing £1.3 billion extra funding for the next financial year, which will help meet some – but not all - of the significant pressures in adult and children’s social care and homelessness support.”

Cllr Gittins commended funding for children with special educational needs and disabilities, children’s social care reforms, Right to Buy reform, funding for potholes, affordable housing and childcare, among other measures.

She added: “This is a step in the right direction, but councils and the services they provide to their residents still face a precarious short and long-term future. The government needs to give explicit clarity on whether councils will be protected from extra cost pressures from the increases to employer national insurance contributions.

“Only with greater funding certainty through multi-year settlements and more clarity on financial reform, can councils protect services, meet the needs of residents and work in partnership on the government’s priorities, from social care to housing, inclusive economic growth and tackling climate change. We look forward to continuing to work in partnership with the government to address these issues for councils and communities.”

Brexit is on course to cut UK trade by 15 per cent, the government’s independent financial watchdog has warned.

Vote Leave campaigners argued that British trade would receive a boost from exiting the European Union in the run up to 2016’s referendum.

But in documents published alongside Rachel Reeves’ Budget the Office for Budget Responsibility (OBR) said that “weak growth in imports and exports over the medium term partly reflect the continuing impact of Brexit, which we expect to reduce the overall trade intensity of the UK economy by 15 per cent in the long term.”

The figures led to claims that Brexit was the “elephant in the chancellor’s study”.

The prime minister has said that he wants to reset the UK’s relationship with the EU, fixing it for the benefit of “generations to come”.

Read the full report from our Whitehall Editor, Kate Devlin:

Rachel Reeves has unveiled huge tax hikes of £40bn in her Budget as Labour bids to fix the nation’s finances.

Key policies include a hike in employers’ national insurance contributions, a rise in stamp duty for second homes and a freeze on fuel duty.

Capital gains tax will also rise – to 18 per cent for the lower rate and 24 for the higher – while the chancellor also unveiled a reform of inheritance tax.

Use our tax calculator to see how Rachel Reeves’ Budget will impact you:

Rachel Reeves should have combined a fuel duty increase with “major investment” into public transport, Greenpeace UK says.

Greenpeace UK’s senior transport campaigner, Paul Morozzo, said: “The cost of oil is falling, which presented the Chancellor with a perfect opportunity to finally get rid of the freeze on fuel duty.

“A sensible government approach would be to combine an increase in fuel duty with major investment to improve, expand and reduce the cost of public transport. Unfortunately the Chancellor has used this Budget to maintain the freeze and put up bus fares, which will only hurt those on the lowest incomes.”

Ami McCarthy, Greenpeace UK’s head of politics, said: “Changing the fiscal rules is a common sense step that will allow us to make the long-overdue investment the country drastically needs. The Chancellor must use the additional funds to go further and faster on green measures that will boost the economy, and tackle the climate and cost of living crises at the same time, like home insulation, public transport, and jobs in industries of the future.

“Progressive tax measures are welcome, but the Chancellor should go much further to tax the super-rich and corporate polluters. Making them pay their fair share would raise hundreds of billions for communities suffering from climate impacts at home and abroad.”

Former Labour Party leader Jeremy Corbyn has branded Rachel Reeves’ budget a “missed opportunity to bring about the transformative change this country needs”.

A joint statement from the Independent Alliance - Mr Corbyn’s new alliance of five independent MPs - said the Budget chooses to “bake in decades of inequality by feigning regret over ‘tough choices’ it does not have to make”.

It referenced the decisions to keep the 2-child benefit cap, cut winter fuel allowance and increase the bus fare cap, and the additional £3 billion for military expenditure.

The Independent Alliance welcomed increases to the minimum wage and Carers’ Allowance, but said it is “beyond disappointing” that this has come with “cuts to social security and disability benefits”.

It also welcomed “long overdue investment in hospitals”, adding that the government must ensure this money goes straight to the NHS rather than “private healthcare shareholders”.

The Rachel Reeves Budget has “kicked the can down the road” on Britain’s poverty challenge until earliest next Spring, says the Resolution Foundation think tank.

Mike Brewer, the organisation’s interim chief executive, said: “The first Labour Budget in 15 years was an historic moment, and huge in both tax and spend terms. Rachel Reeves announced £326 billion of extra funding for public services and investment across the parliament, funded by the biggest tax rising Budget on record along with extra borrowing.

“The Chancellor has done a reasonable job of ensuring a balanced package of tax reforms. Essentially, she has more than reversed the last Government’s pre-election National Insurance cuts with post-election National Insurance rises. But there are winners and losers in this convoluted policy reversal, with self-employed workers and small businesses being the big winners and firms employing lots of low or very high earners worse affected.

“The Chancellor has delivered a Budget that engages with the seriousness of Britain’s economic challenges. But it is only the first step of what will be needed to secure strong public services, end stagnation, and lift living standards for all.

“And while the Chancellor has confronted Britain’s austerity challenge, she has kicked the can down the road on Britain’s equally pressing poverty challenge until next Spring at the earliest. A failure to reverse damaging welfare cuts could see over 200,000 more children affected by the two-child limit.”