Rachel Reeves presents Labour’s first budget in 14 years, making history as the first female Chancellor to do so.
- The budget focuses on large-scale public investment, aiming for national growth through significant reforms and compensations.
- Labour intends to stabilise the economy with targeted investments, addressing long-standing financial gaps left by previous administrations.
- Reeves confirms inflation targets and fiscal rules while outlining substantial plans for public welfare and infrastructure development.
- A crackdown on fraud and measures to boost employment and social support highlight Labour’s integrated approach to governance.
Rachel Reeves has unveiled the first Labour budget in over a decade, marking a historical moment as the first female Chancellor to do so. Her focus is set on rebuilding the nation through investment, which she emphasises as the sole path to growth. Reeves earmarked £11.8bn for the infected blood victim compensation scheme and £1.8bn for the Post Office scandal victims, rectifying past oversights in public service funding.
Reeves outlines the myriad of issues plaguing the public sector, citing NHS waiting lists at all-time highs and deteriorating educational facilities. Her budget aims to rectify years of neglect by funding vital services and compensations, a move seen as a direct response to public dissatisfaction with service standards.
The budget maintains the Bank of England’s 2% inflation target, with forecasts predicting a slight rise to 2.5% this year. Fiscal stability is reinforced by her commitment to avoid borrowing for current spending, aiming to meet this goal by 2029-30, potentially achieving it two years earlier according to IFS director Paul Johnson. Borrowing is expected to decrease from 4.5% to 2.1% of GDP by the end of the forecast.
Reeves introduces a Covid corruption commissioner to address fraudulent Covid contract payments, highlighting a new era of accountability. Additionally, a £4.3bn saving is anticipated from a crackdown on welfare fraud. Reforms in health and disability benefits along with expanding employment opportunities show a commitment to social welfare.
Significant adjustments in taxation include an increase in employers’ national insurance to 15%, changes in capital gains tax rates, and stricter inheritance tax rules. These measures aim to generate £40bn in tax revenue, marking it the largest tax-raising budget since 1993, according to expert Simon Gleeson.
Reeves promises an increase in state pensions by up to £470 and a substantial boost to carers’ allowance, indicating a focus on long-term financial support for vulnerable populations. The decision to freeze fuel duty aims to relieve financial pressure on workers and communities, projected to save motorists nearly £60 annually.
Investment in public infrastructure is evident with Reeves’ announcement of over £5bn for affordable housing and developments in rail services, including securing HS2’s extension to Euston. The emphasis on strategic national projects supports the overarching theme of renewal and growth.
Reeves’ decision not to extend the freeze on income tax and national insurance thresholds reinforces her commitment to keeping manifesto promises. Day-to-day government spending will increase alongside capital spending, signalling an end to austerity.
Aiding the high street with a 40% relief on business rates and reducing duty on draft alcoholic drinks are among the measures to invigorate local economies. Her approach is geared towards holistic economic development while ensuring fiscal responsibility.
Rachel Reeves’ budget represents a transformative agenda aimed at repairing past neglect and laying foundations for a sustainable future.
