Rachel Reeves will announce Labour’s first Budget in 15 years later this month, leading one of the most highly-anticipated fiscal events in over a decade.
As the chancellor looks to fill the £22bn “black hole” in public spending she announced in late July, speculation has mounted about what measures will be included on 30 October.
During Labour’s first few months in power, ministers have warned that “tough decisions” will be required to balance the books. Prime minister Sir Keir Starmer has said the event is going to be “painful” but that there is “no other choice given the situation that we’re in”.
This likely means tax rises and spending cuts can be expected. The government has already come under fire for its decision to cut back winter fuel payments for millions of pensions, sparking a row which has hung over its first 100 days in power.
In the run-up to the Budget, inflation fell below the 2 per cent target for the first time in three years, sparking hopes of an interest rate cut to come in November.
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Key points
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Inflation falls below 2% target for first time in three years
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Budget 2024: Proposed national insurance hike sparks row
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Preview: What will be in Labour’s Budget?
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Ex-Bank of England chief urges Reeves to raise national insurance
Pinned: Inflation falls below 2% target for first time in three years
Wednesday 16 October 2024 08:02 , Albert Toth
UK inflation has decreased to below the 2 per cent target for the first time in over three years.
The consumer price index (CPI) has dropped to 1.7 per cent, down from 2.2. per cent in August, according to the Office for National Statistics.
The figure has beaten expert predictions, which largely estimated a more modest drop to 1.9 per cent.
Inflation falls below 2% target for first time in three years
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Wednesday 16 October 2024 15:33 , Albert Toth
Inflation has dropped below 2 per cent for the first time in over three years, raising hopes that the Bank will cut interest rates in November. The decrease exceeded many economist predictions, with the Consumer Price Index (CPI) falling to 1.7 per cent
But some experts have warned that the rate drop is “badly timed” for many people, as it will be a key factor in how much benefits are uprated by the DWP next April.
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
ICYMI: Ex-Bank of England chief urges Rachel Reeves to raise national insurance
Wednesday 16 October 2024 13:14 , Albert Toth
In an open letter published in The Independent, Mervyn King warns the chancellor against higher borrowing
“Be courageous, be bold, and ensure that the economic inheritance we leave to our grandchildren is one of which both they and we can be proud.
“One day, you will look back on your time as chancellor and you will want to remember the far-reaching changes you made – not the political compromises that others will urge on you.”
Controversial weight-loss jab policy revealed ahead of Budget
Wednesday 16 October 2024 11:53 , Albert Toth
Ahead of the Budget on 30 October, it has been revealed that a trial is underway where unemployed people will be given weight-loss jabs to assist them back into work.
The UK’s life sciences sector will receive £279 million from drugs giant Eli Lilly, to invest in developing new medicines and ways to deliver treatment.
“The long-term benefits of these drugs could be monumental in our approach to tackling obesity. For many people, these jabs will be life-changing, help them get back to work and ease the demands on our NHS,” health secretary Wes Streeting wrote in The Telegraph.
Unemployed to be given weight-loss jab to help them back into work, government says
Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
Wednesday 16 October 2024 10:03 , Albert Toth
Rachel Reeves has been boosted by a sharp drop in inflation as she seeks to find £40bn of tax hikes and spending cuts in this month’s Budget.
The chancellor will welcome the dip, which saw inflation fall under the Bank of England’s 2 per cent target for the first time in more than three years, as she prepares for what promises to be a brutal Budget.
Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
Would raising employer national insurance be a ‘tax on working people’?
Wednesday 16 October 2024 10:00 , Albert Toth
Labour came under criticism in recent days after several ministers refused to rule out that an increase in employer national insurance contributions (NICs) will be announced in the upcoming budget.
Ministers and Treasury officials have indicated the government’s position is that the measure would not break their manifesto pledge. Meanwhile, Institute for Fiscal Studies director Paul Johnson has argued it would be a “straightforward breach.”
Here are the facts about the debate and how the measure could affect you:
Fact check: Would a employer national insurance hike be a ‘tax on working people’?
ICYMI: Reeves warned national insurance hike would be ‘straightforward breach’ of manifesto
Wednesday 16 October 2024 08:00 , Albert Toth
Rachel Reeves has been warned that hiking employer national insurance contributions would be “a straightforward breach” of the Labour manifesto.
The chancellor has been told by Paul Johnson, director of the influential Institute for Fiscal Studies (IFS), that the party said “very clearly” it would not make the change.
Reeves warned over ‘straightforward breach’ of manifesto if national insurance hiked
Budget rumours: Inheritance Tax reform
Wednesday 16 October 2024 06:00 , Albert Toth
Inheritance tax is a levy on the estate of someone who has died. This is their property, money and possessions. Crucially, it is not paid if the value of these things is below £325,000.
The tax rate is 40 per cent, but it’s only charged on the part of the estate that’s above the threshold. In 2023/24, only 5 per cent of deaths generated an inheritance tax bill, raising around £7 billion.
However, the IFS writes that the tax measure “is littered with special exemptions”. These include a business relief, the ability to pass on agricultural land tax-free, and the tax-free passing on of pension pots.
The economic think tank says that ending these measures alone would raise £4.8bn a year by 2029.
Tell us what you’d like to see announced in Labour’s first budget
Wednesday 16 October 2024 03:00 , The Independent
We would like to hear your thoughts on what you would like to see introduced in Reeves’ Budget. Should she focus on measures to support homeowners, such as the Freedom to Buy scheme? Or would you prefer a focus on closing tax loopholes, such as abolishing non-dom status, to ensure a fairer tax system?
Share your views:
Tell us what you’d like to see announced in Labour’s first budget
Budget rumours: Taxing pension savings
Wednesday 16 October 2024 00:01 , Albert Toth
Pension tax relief is a reduction of the amount of tax paid on private pensions. It helps workers save for retirement by boosting their pension pots.
The amount of tax relief a person is granted is based on their income tax. It will effectively cancel out tax on pension contributions up to a maximum of £60,000.
After this, contributions will be taxed at either 20, 40, or 45 per cent, depending on which income tax rate the worker falls into.
However, the chancellor is thought to be considering a flat 30 per cent pension tax relief rate. This would mean that higher earners would effectively pay 10 per cent in tax, while those on the additional rate would pay 15.
The measure would raise around £3 billion a year, with 7 million earners paying more tax. But it would be better news for basic rate earners, who would actually begin to receive a 10 per cent boost to their pension contributions.
Evaluating the idea last year, the IFS said it would “redistribute the burden of taxation from the bottom 80 per cent to the top 20 per cent of earners.”
Budget rumours: Capital Gains reform
Tuesday 15 October 2024 22:00 , Albert Toth
It has been reported that Rachel Reeves is considering tweaking Capital Gains Tax at the 2024 Budget.
Capital Gains Tax (CGT) is paid on the profit made when an asset which has increased in value is sold. It is applied to things like the sale of personal possessions worth more than £6,000 (apart from a car), property that’s not the seller’s main home, shares and business assets.
It is charged at 10 or 18 percent for basic rate taxpayers, and 20 or 24 for higher or additional rate earners. There is a tax-free allowance of £3,000.
There are several ways CGT could be changed. In the run-up to the election, the Lib Dems and Greens both said they would rethink the tax bands to be more similar to income tax, raising an estimated £5.2bn a year.
Ex-Bank of England chief Mervyn King urges Rachel Reeves to raise national insurance in Budget
Tuesday 15 October 2024 20:00 , David Maddox
Exclusive: Former Bank of England governor Mervyn King has made a dramatic intervention warning Rachel Reeves that she must raise national insurance in her Budget on 30 October.
The Independent’s political editor David Maddox reports:
Ex-Bank of England chief urges Rachel Reeves to raise national insurance in Budget
Preview: What will be in Labour’s Budget?
Tuesday 15 October 2024 18:00 , Albert Toth
Changes to capital gains, inheritance tax, pension savings and more – here’s your guide to what the Labour Budget on 30 October could have in store:
Budget 2024 preview: What Reeves could do in Labour statement amid tax rise talk
Analysis: Reeves will need lawyer’s language to break national insurance pledge
Tuesday 15 October 2024 16:00 , David Maddox
During the election Labour made a clear promise “not to raise taxes on working people”. This specifically included income tax, VAT and national insurance contributions.
The problem Rachel Reeves has as her first Budget approaches on 30 October is that somehow she has to pay for an estimated £25bn in spending commitments and encourage economic growth with little room for manoeuvre.
Her former Bank of England mentor Lord Mervyn King has warned her against extra borrowing even by rewriting the fiscals and suggested she raises national insurance instead to invest.
It is clear from the prime minister’s words this morning that national insurance rises on employer contributions is now a strong possibility. But does this mean a breach in the manifesto promises from just over 100 days ago?
The Tories say yes – they would – but so does the independent Institute for Fiscal Studies director Paul Johnson.
It appears that Labour are planning on using a lawyer’s way out – appropriate for the prime minister – to emphasise that their pledge was “for working people” not employers.
Budget 2024: Latest news as proposed national insurance hike sparks row
Tuesday 15 October 2024 14:00 , Albert Toth
Hello and welcome to The Independent’s Budget 2024 live coverage where we’ll be bringing you the latest updates ahead of Labour’s fiscal event on 30 October.
Labour has been criticised in recent days for refusing to rule out an increase to employer national insurance contributions (NICs). Some experts say the measure would break their pledge to not raise taxes on working people – but officials have indicated that the government does not agree.
Institute for Fiscal Studies director Paul Johnson said the measure would be a “straightforward breach” of the Labour manifesto, but added that Ms Reeves will “almost certainly” need to break a manifesto commitment to meet her spending targets.
He says that a 1p hike in employer NICs would “probably not” be very damaging to jobs.
Shadow chief secretary to the Treasury Laura Trott said: “In 2021, the chancellor said increasing employer national insurance was a tax on ‘workers’. That’s why even in her own words it breaks Labour’s manifesto promise not to increase tax on working people.”
However, it has been pointed out that Ms Trott and her party had criticised Labour for not ruling out the measure in the run-up to the general election, implying they did not believe the manifesto had done so.
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