Rachel Reeves is delivering a massive £40billion ‘tax bomb’ Budget that could define the Labour government today.The Chancellor said the country had ‘voted for change’ and vowed to ‘invest, invest, invest’ as she mounts what looks set to be the biggest raid in history in the Commons. The scale of the package – despite Keir Starmer claiming there was no need for taxes beyond what the £8billion in the Labour manifesto – is even greater than thought. It could outdo 1993’s eyewatering revenue-raiser in the wake of Black Wednesday. Businesses have warned of a ‘perfect storm’ with Ms Reeves hiking employers’ national insurance to raise an incredible £25billion for the Treasury. Capital gains tax is being bolstered and alongside curbing on reliefs will bring in £2.5billion.  Inheritance is also in the crosshairs, drumming up another £2billion through reducing benefits for estates and people handing down farms and shares. However, in a bright spot for motorists fuel duty is being frozen for another year.But despite intense speculation the seven-year freeze on thresholds is not being extended. Ms Reeves argued that the Tories left public services in tatters and more funding is essential – even though critics say much of the gap is down to bumper public sector pay deals she signed off. Admitting that no Chancellor would want to be imposing such enormous tax rises, she claimed the OBR watchdog has concluded there were ‘undisclosed pressures’ on the ‘broken’ finances so the previous forecasts were wrong. Ms Reeves is also tearing up fiscal rules to borrow up to £50billion more for big-ticket investment in infrastructure and equipment. Jittery markets have pushed up interest rates on the government’s debt mountain as they price in more risk of a crisis.Ms Reeves said she is ‘deeply proud’ to be the first woman to be Chancellor in the 900 year history of the role, and the first woman to deliver a Budget.She said Labour had rebuilt the country after the Second World War and would ‘rebuild Britain once again’.  As she briefed the Cabinet on the contents earlier, Keir Starmer said it was ‘a huge day for Britain’.In other measures in the package revealed today:Ms Reeves said she would set aside £11.8billion for compensation for the infected blood scandal, and £1.8billion for victims of the Post Office scandal;The Chancellor insisted that she will toughen the day-to-day spending rules so the books must be balanced in 2029-30. From then on it will have to be balanced in the third year of the forecast;Employers’ national insurance contributions will rise by 1.2 percentage points to 15 per cent in April 2025, and the threshold for paying them will fall from £9,100 per year to £5,000; Carer’s Allowance will be available for people who work 16 hours a week at the minimum wage;The Government is setting a ‘two percent productivity, efficiency and savings target for all departments to meet next year’; Ms Reeves said research and development funding will be protected in the settlement.  Chancellor Rachel Reeves said the country had ‘voted for change’ and vowed to ‘invest’ as she mounts one of the biggest raids in history in the Commons Ms Reeves said she is ‘deeply proud’ to be the first woman to be Chancellor in the 900 year history of the role, and the first woman to deliver a Budget Ms Reeves carried out the traditional photo op outside the famous No11 black door today  Keir Starmer said it was ‘a huge day for Britain’ as Ms Reeves prepares to unveil the plans Ms Reeves insisted she is ‘choosing investment over decline’ The Budget has been titled ‘fixing the foundations to deliver change’  Jittery markets have pushed up interest rates on the government’s debt mountain to the highest since June as they price in elevated risk of a crisis – although yields have since dipped again. Pictured, 10-year gilts yields this morning
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Budget 2024: Key points Rachel Reeves became the first female chancellor to present a Budget today as she presented Labour’s first government economic plan for 14 years.In her Budget the Chancellor: Confirmed she was raising taxes by £40billion Froze fuel duty, when it was expected she would increase it, because of the impact on consumers.Increased employer National Insurance Contributions by 1.2 points to 15 per cent from April, while reducing threshold from £9,100 to £5,000, to raise £25bn.Made inherited pensions subject to inheritance tax.Increased lower rate of capital gains tax from 10 to 18 per cent, and the higher rate from 20 to 24 per centReveals economic growth is forecast to be just 1.6 per cent by the end of Labour’s first term in office.Announced a crackdown on fraud in the UK’s welfare system, as part of reforms to ensure welfare spending is ‘more sustainable’. Pledged to maintain the Bank of England’s 2 per cent inflation target. Confirms National Living Wage will rise to £12.21 next year. Said she was ‘deeply proud to be Britain’s first ever female Chancellor of the Exchequer’.Sparked uproar from the Tories by claiming it was ‘not the first time that it has fallen to Labour to rebuild Britain’.Accused the Tories of calling an early election ‘to avoid making difficult choices’ in the Budget themselves.Announced she is setting aside £11.8bn and £1.8bn to pay victims of the infected blood and Post Office scandals respectively.  Extraordinarily, despite the looming pain Ms Reeves pointed to a 6.7 per cent increase in the minimum wage to claim she is ‘putting pounds in people’s pockets’.   Ms Reeves said: ‘The only way to drive economic growth is to invest, invest, invest.’There are no shortcuts. To deliver that investment we must restore economic stability.’On tax Ms Reeves said: ‘The scale and seriousness of the situation that we have inherited cannot be underestimated.’Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund, and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40billion.’Any chancellor standing here today would face this reality, and any responsible chancellor would take action. That is why today, I am restoring stability to our public finances and rebuilding our public services.’She is confirming a loosening of the government’s fiscal rules which will enable her to borrow up to £50billion to spend on infrastructure projects and growth sectors like green energy.However, ministers will be watching nervously for reaction in the City, where the government’s borrowing rate yesterday rose to the highest level since the election, leading to fears of mortgage rate rises.Business are already up in arms over her decision to focus tax hikes on employers, including a £20billion hit to NICs.Ministers have been arguing that does not breach the Labour manifesto vow not to raise the main rates of NICs, income tax or VAT because it will not appear on ‘payslips’. But the respected IFS think-tank has branded it a ‘straightforward breach’ while economists say the effect will simply be passed to Brits in lower wages and fewer jobs.The CBI warned that the tax hike, coupled with a bumper increase in the minimum wage, would ‘make it increasingly difficult for firms to find the headroom to invest in the tech and innovation needed to boost productivity and deliver sustainable increases in wages’.Alexandra Hall-Chen, of the Institute of Directors, said the minimum wage had risen nearly a third in two years.’This latest increase comes at the same time as proposed changes to employment rights and expected increase in employers’ national insurance,’ she said. ‘Taken together this is something of a perfect storm for business.’ Investors are also set to be hit by an increase in capital gains tax. Despite Labour’s pledge to protect ‘working people’, most ordinary workers will also be hit by a decision to extend the six-year freeze in tax thresholds, potentially for two more years.Rishi Sunak, whose response to the Budget will be his last big moment as Tory leader, said the expected rise in NI would be a clear breach of Labour’s manifesto. Ms Reeves and her ministers smiled as they headed for the Commons this morning Angela Rayner and Wes Streeting were at Cabinet this morning to hear the Chancellor’s words about the Budget
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David Lammy and Bridget Phillipson were among the ministers who gathered in No10 this morning Ms Reeves will say that spending plans left behind by the last government amounted to a ‘fiscal fiction’ which would have led to a return to austerity.Instead, she is expected to pour more cash into the NHS and other public services.Ms Reeves said the Budget could put Britain on the path to the ‘immense’ prize of higher growth and better public services.She said the measures would ‘turn the page on low growth and will be the start of a new chapter towards making Britain better off. It will mean more pounds in people’s pockets, an NHS that is there when they need it, and businesses creating wealth and opportunity for all’.But briefing the Cabinet on the outline of her Budget plans yesterday, she acknowledged she had had to make ‘tough choices’ on taxes, spending and welfare.