Chancellor Rachel Reeves says her budget will raise taxes by £40 billion as she delivered Labour’s first Autumn statement in 14 years.

In her opening speech, she said “change must be felt”, and the only way to drive economic growth is to invest.

“There are no shortcuts and to deliver that investment is to restore stability and turn the page on the last 14 years,” she began.

“In July, I exposed a £22 billion black hole, a series of promises they had made with no ability to deliver. The party opposite hid the reality of their spending. They called an election to avoid making difficult choices. Never again will we allow a government to play fast and loose with the public finances.”

Office for Budget Responsibility (OBR) review

She went on to slam the former Conservative government, announcing that the Office for Budget Responsibility (OBR) had published its own review into the Spring Budget forecast.

The OBR says the Tories did not provide them with “all the information” and if they had known their Spring Budget forecast for spending would have been “materially different”.

Reeves added that any comparison between today’s forecast and the spring forecast would be “false” and confirmed they would be implementing the 10 recommendations from the OBR’s review.

Reeves said: “NHS waiting lists are at record levels, children in portacabins as school rooms crumble and prisons overflowing, crimes which are not investigated and criminals not published – that is the country’s inheritance from the party opposite.

“Their plans relied on a baseline for spending this year which we now know was wrong, because it did not take into account the £22 billion deficit.

“Any chancellor would face the same reality and any responsible chancellor would take action.”

Compensation

She set out by saying Sunak had failed to budget to compensate victims of the Post Office Horizon Scandal and the Infected Blood Scandal.

She said the Labour government will provide £11.8 billion for victims of the infected blood scandal, and £1.8 billion to compensate victims of the Post Office scandal.

Tax avoidance

The chancellor says she will reduce wasteful spending and sets out a 2% productivity savings target for government departments. She said a covid corruption team would be set up.

Modernise HMRC systems and employ more staff, and clamp down on umbrella companies who exploit work and go after the promoters of tax avoidance schemes. This will raise £6.5 billion by the end of the forecast, she says.

National Living Wage

The National Living Wage will increase to £12.21 per hour and the minimum wage for over 21 year olds will rise to £10 per hour, while a change to carer’s allowance will allow a carer to earn up to £10,000 while still receiving the allowance.

National insurance

Reeves says she will not increase National Insurance, VAT and income tax for working people.

But employers’ National insurance contributions will rise from 13.8% to 15%. The threshold at which businesses start paying National Insurance on a workers’ earnings will be lowered from £9,100 to £5,000. She said this would will raise £25 billion per year.

Reeves says she is increasing employment allowance to help smaller businesses. The employment allowance will increase from £5,000 to £10,500, which the chancellor says will mean 865,000 employers won’t pay any National Insurance at all next year.

From 2028-29, personal tax thresholds will be increased in line with inflation.

Inheritance tax

Reeves says she will extend the inheritance tax threshold freeze for a further two years to 2030.

That means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1 million when a tax free allowance is passed to a surviving spouse or civil partner.

The will bring inherited pensions into inheritance tax from April 2027.

Non-dom tax regime

Reeves has announced plans to abolish the non-dom tax regime and eliminate the “outdated concept” of domicile from the tax system starting in April 2025.

This change affects UK residents whose permanent home, or domicile, for tax purposes is outside the UK, allowing them to avoid UK tax on income earned abroad.

More major announcements

• The house was delighted to hear a cut in duty on draft alcohol, which is “a penny off the pints at the pubs.” Alcohol duty rates on non-draught products will increase in line with RPI from February.
• An additional £2.9 billion will be given to the Ministry of Defence.
• There will also be a £2.3bn increase to the core school’s budget to ensure hiring of teachers into key subjects.
• £500 million for road maintenance with special mention of repairing pot holes.
• £22.6 million cash injection for the day-to-day NHS health budget
• VAT will be introduced on private school fees from January and legislation to remove their business rates relief will be made from April.
• Fuel duty will be frozen next year.

Reeves concluded: “I have made my choices, the responsible choices to restore stability to our country and protect working people. More teachers in our school, more appointments in our NHS, more homes being built, fixing the foundations of our economy and investing in our future. Rebuilding in Britain.”

Retaliation

Rishi Sunak responded: “The OBR has declined to back up her claims of a fictional £22 billion black hole. It is deeply disappointing she has sought to politicise this.

“You only need to look at the facts to see that her inherited claims are nonsense. When we left the office the UK was the fasted growing economy in the world.

“During the election she repeatedly promised her plans were fully funded. She said the budget would balance the books. This budget does not such thing and reveals they haven’t been straight with the British people.

“The chancellor has announced a multi-billion billion spending spree. She said she would not fiddle the figures to get better results. She has done exactly that so she can borrow much more and working people will pay the price.”

Detectives investigating the deaths of two men in Brixton are appealing for witnesses.

Two years ago, on Sunday, October 30, 2022, Guilherme Messias Da Silva (23) and Lemar Urqhart (27) died on Railton Road. 

Detective chief inspector Samantha Townsend, who leads the investigation, said: “It has been two years since this shocking incident and our thoughts continue to remain with the family and friends of Guilherme and Lemar.

“My team is working tirelessly to identify those responsible for their deaths and to get justice for the families. I am extremely grateful to those individuals who have already come forward to share information, but would urge anyone else who has information and has not yet spoken to us to come forward. No piece of information is too small.”

Police were called at about 7.40pm on Sunday, 30 October 2022 to reports of gunshots heard in the Railton Road area. 

Firearms officers immediately attended the scene along London Ambulance Service and London’s Air Ambulance. 

Despite the efforts of emergency services, both Guilherme and Lemar were found injured at the location and pronounced dead at the scene. 

Detectives believe two cars were driving in the Railton Road area when one of the cars was in collision with Guilherme’s moped before further colliding with parked vehicles. 

Lemar then got out of one of the cars involved in the collision and was pursued by a man, armed with a firearm. The man shot Lemar and returned to his car before leaving the scene. 

Lemar Urqhart’s family statement said: “Two years since our son, grandson, brother, nephew, cousin and friend was tragically taken from us. Whoever said time is a healer, lied. The pain is unbearable & life will never be the same. Lemar was an integral part of the family and his death has rocked our family to the core.

“Every day we hope that new information is given to aid the arrest of the person/s who did this. We plead with anyone who has information to please come forward. Any information could be vital. Our family would be forever grateful to anyone who could help.”

Any witnesses or anyone with information should call police via 101 quoting CAD 6166/30Oct.

The first Labour budget in 14 years will be delivered at lunchtime by the chancellor, Rachel Reeves.

She previously blamed the Conservatives for leaving a “£22 billion black hole” in the public finances and warned there had been “difficult decisions” to make.

The biggest expected revenue raiser, set to generate as much as £20 billion for public services, is a hike in employers’ national insurance.

Government officials have indicated that there will be three main hikes – income tax, national insurance and VAT for ‘working people’, while the Labour government tries to find cash to balance the books.

Prime minister Kier Starmer, said in his speech on Monday, that the budget would include a pledge of £240 million in funding for services to get people back in to work which will enable work, skills and health support to be offered to disabled people and long-term sick.

Sir Starmer also said the current £2 bus fare cap – which has been on more than 4,600 routes in England since January 2021, will be replaced by a new £3 cap until the end of 2025 in the budget.

It is also thought that there will be £500 million of funding provided to build up to 5,000 social homes and bring total investment in housing supply to £5 billion as part of the government’s Affordable Homes Programme.

Ms Reeves has already confirmed to the global media that parts of her budget will be funded by adjustments to the UK’s “fiscal rules” — a move that prompted a strong rebuke from speaker of the House of Commons, Lindsey Hoyle.

Currently, the government is committed to reducing national debt as a share of GDP over the term of this parliament, rather than over a rolling five-year period. However, Reeves plans to modify the method of debt measurement, which would permit up to an additional £50 billion in spending on infrastructure projects.

Sir Starmer posted on social media: “This is a huge day for Britain. After 14 years of decline, we will invest in our country – rebuilding our schools, hospitals and roads. We won’t shy away from the tough decisions to grow our economy and protect working people’s payslips. There is a brighter future ahead.”

The budget is set to be announced at 12.30pm today.

Rishi Sunak, current Conservatives party leader, will give a speech in response when Reeves has finished.

Image credit: Fred Duval