UK budget 2024 live: Rachel Reeves’ expected tax hike will hit workers, says ex-Bank of England governor
Education secretary Bridget Phillipson has vowed no tax rises in payslips for ‘working people’
Your support helps us to tell the story
This election is still a dead heat, according to most polls. In a fight with such wafer-thin margins, we need reporters on the ground talking to the people Trump and Harris are courting. Your support allows us to keep sending journalists to the story.
The Independent is trusted by 27 million Americans from across the entire political spectrum every month. Unlike many other quality news outlets, we choose not to lock you out of our reporting and analysis with paywalls. But quality journalism must still be paid for.
Help us keep bring these critical stories to light. Your support makes all the difference.
Rachel Reeves’ tax-hiking Budget will hit workers however Labour frame it, the former governor of the Bank of England has said.
Lord Mervyn King, who was head of the Bank of England for a decade until 2013, said that the debate around who Labour are classifying as a “working person” is “a terrible illusion”.
Speaking on Sky’s Sunday Morning with Trevor Phillips, Lord King said: “Taxes are paid by people, they’re not paid by companies or institutions, ultimately, they fall on the amount that people can spend, and you only can raise significant amounts of money by raising taxes on most people, however you care to define that, but it’s most people will have to pay higher taxes.”
He added: “Ultimately, the impact of these higher taxes has to be on the consumption of most people, however you care to define that group.”
It comes after education secretary Bridget Phillipson pledged that working people would not see higher taxes on their payslips.
We’ll be bringing you all the latest updates ahead of the big event here, on The Independent’s liveblog.
Reform MP admits migrant plan would lead to ‘friendly stand-off’ between UK and France
Richard Tice, the deputy leader of Reform UK, has admitted his party’s policy of picking up and taking migrants back to France could result in a “friendly stand-off” between the countries.
Speaking to Sky News’s Sunday Morning With Trevor Phillips programme, he said: “It’s very simple. The government’s policy of smashing the gangs is clearly not working, and sadly people are literally dying... The only way to stop the boats is a variant of what Australia did.
“We’ve talked about it before. I will repeat it again: You’ve got to safely pick up and take back to France, which we are legally entitled to do under the 1982 UN Convention of the Law of Sea.
“And by the way France has a legal obligation to do the same, which they are in breach of. So we are legally entitled to do this.
“If the French coastguards say ‘you’re not coming in’ they’re in breach of international law.”
When pressed on what would happen if French authorities refused, Mr Tice said: “Well then we’ve got a stand-off... I’m not saying go to war but you can have a friendly stand-off with friends. It’s the only way you’re going to stop the deaths. Ours is the kind and compassionate policy.”
Reform MP: Labour’s Budget will be ‘most socialist in living memory'
Deputy leader of Reform UK Richard Tice has said he expects Labour’s Budget to be “the most socialist budget in living memory”.
Speaking to Sky News’s Sunday Morning With Trevor Phillips programme, he said: “What we’re going to get on Wednesday, I fear, is the most socialist budget in living memory.
“I think it’ll be an assault on jobs, I think it’ll be an assault on small businesses, on entrepreneurship, on hard work and that will end up being an assault on growth.
“We’re in a crisis. You can’t tax your way out of a crisis. You’ve got to grow your way out of a crisis, and that means reducing the size of the state and motivating people with hard work, taking risks, setting up businesses, being an entrepreneur. And that’s how you get growth in the economy.
“Instead we’re going to get a bigger state, more bloated, more inefficient and with outcomes frankly that are not commensurate with the money that’s being poured into the public services.”
Scientist and TV presenter Brian Cox criticises reported cuts to research: ‘Nothing short of idiotic'
Scientist and TV presenter Brian Cox has criticised reported cuts to research and development spending in the upcoming budget.
Former minister for science George Freeman MP has written a letter to Rachel Reeves expressing his concern at a reported below inflation spending settlement for UK science, research and innovation.
In his letter, Mr Freeman warned this would mean “deep cuts across other parts of R&D investment, with significant negative consequences for the UK’s world-leading R&D sector, putting the brakes on growth and undermining fragile investor confidence”.
Brian Cox shared the letter on the social media platform X, saying: “I wholeheartedly agree. Cutting UK R&D funding in today’s highly competitive and indeed dangerous world would be nothing short of idiotic.”
Working person is someone whose main income comes from them ‘going out to work everyday’ - education secretary says
Education Secretary Bridget Phillipson is on the media rounds this morning.
She has declined to say whether Labour’s pledge not to raise income tax, VAT or national insurance will remain in place for the next five years. However a government source has now been forced to clarify that the pledge covers the whole of this Parliament.
She also said that a working person in someone “whose main income arises from the fact that they go out to work every day”. There has been a lot of speculation about what Labour meant in their manifesto when they promised to not tax working people.
“What we’re talking about here is people whose main income arises from the fact that they go out to work every day,” the Education Secretary told Sky News’s Sunday Morning With Trevor Phillips programme.
‘We can do great things as a country again'
Rachel Reeves has compared her mission in this week’s Budget to Labour’s historic reform programmes under Clement Attlee, Harold Wilson and Tony Blair.
In an interview with The Observer, she said: “This is only the fourth time that Labour has gone from opposition into government. In 1945, we rebuilt after the war; in 1964, we rebuilt with the white heat of technology; and in 1997, we rebuilt our public services. We need to do all of that now.
“This is a new settlement on Wednesday to rebuild our country and seize the massive opportunites in technology and energy that are out there.
“There is a global race on for those jobs and we need to seize them for Britain. If we can unlock that investment, public and private, then we can do great things as a country again.”
New era of investment in hospitals, schools and transport to be announced in Budget
Rachel Reeves has said that she will launch a new era of public and private investment in hospitals, schools, transport and energy in her Budget.
In an interview with The Observer, Ms Reeves has said that Labour will change the fiscal rules to allow for £50bn of extra borrowing for capital projects.
£1.4bn has already been pledged to rebuild crumbling schools, but further measures for hospitals are expected to be announced.
She told the paper: “We inherited a plan from the previous government in which public sector net investment, capital investment, would be falling sharply over the course of this parliament, and that would mean scores of hospitals not built. It would mean massive opportunities to grow our economy in the digital and energy sector would be missed and those jobs would go elsewhere.”
UK's 'best days are ahead of us' minister says
Bridget Phillipson said the UK’s “best days are ahead of us” as she promised the Budget would seek to “invest in the long-term prosperity of our country”.
The Education secretary told Sky News’s Sunday Morning With Trevor Phillips programme: “We face some tough choices but we need to restore stability back to the economy.”
She added: “But the choice of this Budget is, ‘do we invest in the long-term prosperity of our country, or do we accept we’re on a path to decline?’
“I think our best days as a country are ahead of us, and this Budget will fix those foundations so that we can get our country back on track.”
Education secretary ‘can't speculate’ how long ‘working people’ pledge will last
Education secretary Bridget Phillipson says she “can’t speculate” on whether Labour’s pledge to not raise income tax, NI or VAT on “working people” will apply for the whole five years of this government. The pledge on working people is included in Labour’s manifesto – but without a timeframe.
Follow along this morning as we bring you everything from the Sunday morning political shows ahead of this week’s Labour Budget.
What is reportedly in this week’s Budget?
On top of what has been confirmed, here are a number of measures that are reportedly going to be in Labour’s first Budget this week:
National insurance hike for employers
The amount employers will pay in national insurance is reportedly set to rise in the Budget.
Reports have suggested it could be increased to up to two percentage points. It has been reported that the raise would be used in part to fund the NHS.
Ms Reeves will also make a cut to the earnings threshold at which employers start making national insurance contributions, The Times has reported. Both measures are expected to raise £20bn.
Continued freeze on income tax thresholds
A continued freeze on income tax thresholds beyond 2028 has been floated ahead of the Budget. Government sources have insisted it would not be a breach of Labour’s election promise to not tax working people.
A threshold freeze would allow Ms Reeves to raise an estimated £7bn by bringing more people into the tax system.
Capital gains tax on shares
Rachel Reeves will reportedly use her Budget to increase capital gains tax on the sale of shares.
However the rates will not change for selling second homes, The Times reported.
Capital gains on profits from the sale of shares, which is currently levied at a higher rate of 20 per cent, is reportedly going to rise by several percentage points.
What is expected in this week’s Budget?
What has been trailed so far from Wednesday’s Budget:
Slash Right to Buy discount
Rachel Reeves is to slash Right to Buy discount given to those purchasing their council house. The move is designed to protect existing stock so thousands more homes remain for rent.
£500m boost for social homes
An extra £500m for the current Affordable Homes Programme will see thousands more houses built. There will also me hundreds of millions of pounds invested in housing projects in Liverpool.
£1.4bn for schools and more childcare
£1.4bn will be set aside in the Budget to rebuild crumbling schools.
£1.8bn will also be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
Ms Reeves has also said she would triple investment in free breakfast clubs to £30m in 2025-26.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments