Rachel Reeves has delivered Labour’s first budget in 14 years, marking a significant moment with her being the first female Chancellor.
- The budget includes £11.8bn for blood scandal victims and £1.8bn for Post Office victims as part of compensation schemes.
- A crackdown on welfare fraud and increased employer National Insurance contribute to an ambitious financial overhaul.
- Reeves outlines economic forecasts with projected GDP growth and changes in borrowing and inflation rates.
- The budget reflects a focus on investment and reform, maintaining a 2% inflation target and promising significant public service improvements.
Rachel Reeves, making history as the first female Chancellor, has presented Labour’s inaugural budget after a 14-year interlude. The government, endorsed by the electorate to bring stability, aims for a decade-long renewal focused on investment-driven growth.
Compensation allocations are a prominent feature. Reeves has designated £11.8bn to redress the contaminated blood scandal, alongside £1.8bn for Post Office scandal victims, underscoring a commitment to addressing past oversights in public service funding. The public’s awareness of deficient public services, suffering from past neglect, is evident in daily experiences, ranging from record NHS waiting lists to unmet public safety expectations.
Economic stability remains a priority, with the Bank of England’s inflation target of 2% upheld. Reeves shared a forecast indicating inflation rates at 2.5% this year, slightly increasing to 2.6% next year. By adhering to financial rules that prevent borrowing for current spending, the government projects meeting this target ahead of schedule by 2027-28, with a modest surplus anticipated by 2029-30.
Projected GDP growth marks a mixed outlook. While 2024 and 2025 show improved expectations at +1.1% and +2% respectively, the following years exhibit a dip in growth, concluding with a 1.6% rise in 2029.
The appointment of a Covid corruption commissioner is imminent, tasked with retrieving funds from fraudulent contracts during the pandemic. Alongside this, David Goldstone’s role as chair of the newly established Office for Value for Money highlights a strategic push towards financial integrity.
To combat welfare fraud, anticipated to save £4.3bn, Reeves introduces reforms to the benefits system. These include innovative methods and enhanced powers for direct recovery of funds from fraudsters.
In employment-related measures, the national minimum wage increase and a significant uplift in carer’s allowance emphasise support for working individuals. Significant measures are also applied to fiscal policies, with higher National Insurance contributions and capital gains tax adjustments set to raise substantial revenue.
The budget introduces stricter inheritance tax rules projected to generate £2bn by focusing on loophole closures and specific exemptions. The abolition of non-dom status from 2025 further aligns with the reformative tax agenda.
Reeves’ commitment to economic growth is seen in a 1.5% rise in government spending, complemented by a 1.7% increase in capital investments. Education and social care benefit notably from these adjustments, with additional funding for councils and special projects across the United Kingdom.
Changes to fiscal metrics also include a new approach to measuring public sector debt, intended to support strategic investments while maintaining accountability through specified ‘guardrails’.
Transportation receives attention with strategic infrastructure projects aimed at enhancing connectivity, thereby supporting Labour’s broader economic objectives.
Rachel Reeves’ budget seeks to balance immediate social needs with long-term economic reforms, setting a course for equitable growth and stability.
