Budget 2024 latest: ‘Big and difficult choices’ warns health secretary as tax threshold freeze not ruled out

Rachel Reeves is considering raising the tax on vaping products in the upcoming Budget as figures lay bare how many children access them in the UK, The Guardian reports.

The tax on vaping products was originally announced by the Conservatives in March, to come in to force in 2026. It is now understood that Ms Reeves could look to increase this.

Under current plans, the new rates from April 2026 will range from £1-3 per 10ml of liquid, depending on nicotine level.

Chancellor Rachel Reeves will deliver Labour’s first Budget on Wednesday 30 October.

Each year, the chancellor of the exchequer - who is in charge of the government’s finances - makes a Budget statement to MPs. .

The speech outlines the government’s plans for spending and taxes.

The Budget speech usually starts around 12:30pm and lasts about an hour. The Independent will be bringing you all the latest updates on the big day.

Ms Reeves may be considering pushing the freeze beyond its current expiry date of 2028 in a move that could raise £7 billion, according to the Financial Times.

Other measures reported to be under consideration include increasing employers’ national insurance contributions, raising fuel duty for the first time since 2010, changes to rules on inheritance tax and stamp duty, and a levy on e-cigarettes, according to reports across the media.

The Treasury has so far declined to comment on Budget speculation.

Prime Minister Sir Keir Starmer has said that the government will keep to manifesto pledges ahead of the Budget.

Asked about whether reported tax changes under consideration would keep to their promise of not increasing taxes for working people, Sir Keir told a press conference in Berlin: “We are going to keep our manifesto pledges.”

He added: “I’m not going to pre-empt the individual measures that will be outlined by the Chancellor in due course.

“This is going to be a Budget that will fix the foundations and rebuild our country.”

When asked further about potential tax rises, the Prime Minister said that “you’ll just have to wait until the Chancellor lays that out in full, but the structure if you like, the framework, is going to be to fix the foundations and to rebuild our country.”

Scotland’s First Minister will use a speech on Monday to urge the Chancellor to increase spending, as he said the Budget presents a “mark or break moment” for the UK.

On Monday, First Minister John Swinney is expected to make his most outspoken intervention on the budget and push the Chancellor to invest in public services.

Speaking at an event in Edinburgh on Monday in front of academics, think tanks and representatives of the private, public and voluntary sector, the First Minister is expected to describe the past seven years – which has seen Brexit, the pandemic, the war in Ukraine and the subsequent energy price and inflation hikes – as a “long, dark economic winter”.

He will add: “What is needed now is a collective commitment to public investment for economic renewal, investment that will allow us to move into an economic spring, with new growth, new opportunities and new hope.

“In this century, defined by global crises, we must invest boldly to improve living standards, increase equality, and protect the planet.

“We cannot simply sit back and wait for economic conditions to improve after nearly two decades of volatility.”

The wider benefits of scrapping the two-child limit such as the future earnings potential of young people who avoid poverty as a result are being ignored, a think tank has said.

Prime minister Sir Keir Starmer has faced pressure, including from some of his own Labour MPs, since being elected in July to scrap the controversial Conservative policy but has insisted he cannot do so in the current economic climate.

The New Economics Foundation (NEF) said its UK-wide analysis suggests that retaining both the two-child limit and the benefit cap – which a number of campaigners have said should also be axed – could see almost half (49.4%) of families with three or more children living in relative poverty after housing costs by the end of this Parliament five years from now.

Scrapping both from April 2025 could cost the Government £2.5 billion a year, rising to £3.5 billion by 2029/30, the organisation said.

Much of these costs are taken up by the two-child limit at £1.9 billion and £2.6 billion respectively, the NEF said, but it argued this would be “significantly offset by short, medium and longer-term economic gains”.

There have been rumours Labour could tweak the fiscal rules the Government uses to constrain its own spending and tax decisions.

Chief among those under consideration for change is the period over which the Government aims to see national debt falling as a percentage of the UK’s overall economic output.

Relaxing this rule to a longer period than the current five-year target, or removing spending by certain public organisations from the total, could allow the Chancellor to borrow more cash to invest in major infrastructure projects such as railways, roads, hospitals and new prisons.

Labour has vowed there will be no return to austerity while it is in government.

The party also made a manifesto promise not to raise the major taxes on “working people”: national insurance, income tax and VAT.

Instead, it has committed to specific tax rises, such as the decision to start charging VAT on private schools, in order to fund their agenda.

However, there are hints further tax rises could come, and also that the Chancellor may make changes to the way the Government calculates its debt reduction targets.

Public services including the NHS and local councils are struggling across the UK, as they grapple with an ageing population, backlogs caused by the pandemic, and the aftermath of the coalition-era austerity programme.

Labour has brokered a pay deal for a swathe of public servants after several years of industrial action, a spending commitment worth £9 billion by some estimates.

Ms Reeves has also claimed the previous Conservative government did not account for the costs of some of its promises, which now need to be met or scaled back.

These commitments, alongside keeping the Government’s ongoing costs “standing still”, made up the so-called £22 billion “black hole” in the public finances which Labour said it needs to fill.

However, Ms Reeves is said to have since identified a far larger £40 billion funding gap which she will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.

An education minister has said it is “right” to end tax breaks for private schools as soon as possible in order to raise funding for the state sector.

Baroness Smith of Malvern defended the speed at which the policy was being introduced, arguing it had been Labour’s plan in opposition and was included in the party’s election manifesto.

From January, the Government plans to remove the VAT exemption and business rates relief for private schools to enable funding for 6,500 new teachers in state schools.

Currently, independent schools do not have to charge 20% VAT on their fees because there is an exemption for the supply of education.

One of the criticisms levelled by opponents is the short timescale involved.

Tory peer Lord Lexden, who is president of the Independent Schools Association, criticised the “great haste” at which the Government was introducing the measure during a debate in Parliament.