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
