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The chancellor will announce Labour’s first Budget in 14 years tomorrow, leading one of the most anticipated fiscal events in over two decades.
Ahead of her announcement, the chancellor has announced more details of NHS spending, pledging funding for two million extra appointments.
But health secretary Wes Streeting has warned that the NHS still faces “real problems this winter,” adding that “one Budget can’t undo 14 years of damage.”
The chancellor has also been warned that rumoured plans to increase employers’ national insurance contributions (NICs) could hit 700,000 workers with a £400 tax rise.
This is the number of individuals estimated to be working for ‘umbrella companies’ as contractors or freelancers. Due to a loophole in these workers’ tax status, they will often find themselves covering their employers’ NICs.
Andy Chamberlain, of self-employment body IPSE, said: “It’s difficult to see how this wouldn’t breach Labour’s pledge not to raise taxes for ‘working people’.”
We’ll be bringing you all the latest updates ahead of the big event here, on The Independent’s liveblog.
Starmer chairs pre-Budget meeting
Ahead of the Budget, Sir Keir Starmer chaired a political Cabinet meeting, without civil service officials.
A Labour spokesman said: “This Budget is about investment with Labour versus decline under the Conservatives. The Prime Minister opened the political Cabinet meeting by saying that ‘politics is about choices’ and that the Budget tomorrow will show that ‘we are choosing to fix the NHS, rebuild Britain and protect the payslips of working people’, to deliver on our mandate for change.
The Chancellor told ministers “there would have to be difficult decisions on spending, welfare and tax” to deal with the legacy she inherited.
“She said the Labour Party promised there would be no return to austerity and the Budget tomorrow would deliver on that promise. She said the choices the Government is taking will restore economic stability.
“She said the Budget would fix the foundations of the economy and deliver on the promise of change.”
‘No-one is going to be happy’: Unions brace for Reeves’ Budget
Union leaders are braced for increased taxes and spending cuts in Rachel Reeves’ Budget.
The chancellor has already warned she has had to make “difficult” choices in her first Budget, and the first one ever to be delivered by a female chancellor.
Labour is expected to increase employers’ national insurance contributions, extend the freeze on income tax thresholds, increase in capital gains tax on shares, and close inheritance tax loopholes.
One union leader told the Independent: “The impression we are getting is that no-one is going to be happy”.
Reeves’ first budget is about ‘protecting the payslips of working people’
Rachel Reeves’ first budget is about “protecting the payslips of working people”, the prime minister told a political Cabinet meeting.
It comes amid a growing row over the definition of “working people”, with the party having promised not to raise national insurance, income tax or VAT on those individuals.
Addressing the meeting on Tuesday, Sir Keir said “politics is about choices”, adding that Wednesday’s Budget will show the party is “choosing to fix the NHS, rebuild Britain and protect the payslips of working people”.
The prime minister also said that the “question for the Budget is not whether we must act, it is how we act and what choices we make in the national interest”, a Labour Party spokesperson said.
We will back the OBR says prime minister
The Government will back the Office for Budget Responsibility (OBR), not trash it, the Prime Minister’s spokesman has said after Jeremy Hunt complained about the body publishing a review of the last administration’s spending plans on the same day as the Budget.
The former chancellor complained that the body publishing a review into the “black hole” Labour says it inherited on the same day as the Budget is not impartial.
Asked if the Government was using the OBR as a political tool, Sir Keir Starmer’s spokesman said: “No, the Prime Minister is clear that this Government is going to back the independent OBR, not trash it.
“The answer is not to blame the referee, face up to the challenges we faced and be honest about the trade-offs and choices the Government face, not pretend they don’t exist.
“That’s why the Government is strengthening the OBR through the Budget Responsibility Act to ensure that it’s never sidelined again, like we saw during the mini budget.
“The Government has been up front about the black hole of the nation’s finances and it fully backs the OBR and the independent scrutiny it provides.”
Public wants ‘positive, proactive’ vision from Budget, poll shows
The public wants to hear a “positive, proactive vision” for growing the economy and restoring public services when the Chancellor delivers her Budget on Wednesday, a poll has found.
Polling by Ipsos on the eve of the Budget found 84 per cent of people thought it was important to hear about Labour’s plans for improving public services during Rachel Reeves’s speech while 80 per cent wanted to hear about plans to grow the economy.
Only 69 per cent said they wanted to hear about the financial “black hole” in current spending plans while less than half the public said it was important for Ms Reeves to talk about the role of the previous government in bringing about the current situation.
So far, more people said they had heard negative stories about the problems facing public services and the economy than about Labour’s plans for the future.
Trinh Tu, managing director of Ipsos UK public affairs, said the public was “sending a clear message” to the Government – “we know the problems, now give us solutions”.
She said: “Awareness of the challenges is high, but people are much less clear on Labour’s plans to address them.
Starmer says ‘working people’ shouldn’t fear the Budget – but who are they?
As Chancellor Rachel Reeves prepares to deliver Labour’s first Budget in 14 years, we want to hear your views. How should “working people” be defined? Should high earners or those with investments be included? And how should this affect decisions in the upcoming Budget?
Share your thoughts here — we’ll highlight the most insightful comments as they come in.
Tories urge rethink on winter fuel payment changes ahead of Budget
Conservative MPs have gathered in Westminster to call on the Government to “think again” about means-testing the winter fuel payment.
Later on Tuesday, they will hand in a petition to the Treasury ahead of Rachel Reeves’ first Budget on Wednesday.
Shadow work and pensions secretary Mel Stride told the PA news agency that the petition has collected “over a quarter of a million signatures”.
Mr Stride said that they are “calling upon the Government to think again about means-testing the winter fuel payment”.
He said “many” pensioners are going to “really, really struggle”, adding: “This Government chose to give well above inflationary pay rises to trade union paymasters when it came to wage settlements and chose to take this money away from some of the most vulnerable people in the country. We don’t believe that’s right.”
“I am a working person,” says Wes Streeting
Wes Streeting has said he is a working person but that it is “people on low and middle incomes” who the Chancellor has in her mind’s eye when it comes to the Budget.
“I am a working person. Last time I checked I was working very hard,” the Health Secretary told Sky News.
“What I will say is that in our manifesto we were very clear about the steps we were going to take to protect working people, which was ruling out increases in income tax, national insurance and VAT, and despite all the pressures that we are under and the scale of the black hole in the public finances, we will honour every single one of those commitments.
“Just on this ‘working person point’, I think what we mean is when we’re making decisions, especially in the context of a Budget, who do we have in our mind’s eye?”
He told Kay Burley: “With the greatest respect to you and I, and the jobs that we do and the salaries we’re on, and I know you work hard doing your job, I don’t think the Chancellor’s worried about whether you or I are going to get by. She is worried about people on low and middle incomes.”
Private school VAT plans won’t affect special educational needs, Streeting claims
Private schools have the means to mitigate against the risk of children with special educational needs being priced out by tax rises, the Health Secretary has said.
In response to concerns about how raising tax on private schools will affect their provision to pupils with special educational needs, Wes Streeting told LBC: “Children with statements of special educational needs and disabilities will be exempt.”
Pushed on how this will work for children who do not have that statement, Mr Streeting said independent schools have the means to deal with those situations.
“Firstly, I’d say the statement is available to children and young people and their parents in that situation.
“I’d also say to independent schools, they have the means. They have hiked up their fees with inflation-busting increases for well over a decade and I’m sure they can take steps to mitigate against children being forced to drop out.”
What won’t be in the Budget? Labour’s less likely options weighed up
The country is just days away from hearing Labour’s first Budget since coming into power, as speculation mounts around what measures could be making the cut.
Tax rises have been confirmed by Labour, with Keir Starmer telling reporters he would defend them “all day long.” Both the PM and chancellor Rachel Reeves have reiterated the party’s message that “tough decisions” are needed for economic growth.
