UK Politics

Britain is locked in a “growth emergency”, a senior cabinet minister has admitted, just hours after Rachel Reeves was dealt a fresh blow over the UK’s economic outlook. Two days before the chancellor stands up to deliver her second Budget, the government has been hit by revelations that the Office for Budget Responsibility (OBR), the leading economic watchdog, will downgrade the country’s prospects and reduce its estimates for economic growth for every year until 2029.The projections are expected to be the most pessimistic since the OBR was set up 15 years ago in the wake of the financial crisis.The news could not come at a worse time for the chancellor whose own job is believed to be on the line in a make or break Budget – just 18 months after she arrived in the Treasury with a “no 1 mission” of growing the economy.Experts have also piled on the pressure, warning that measures expected in Ms Reeves’ Budget on Wednesday – including a form of mansion tax on high-value properties as well as a bank levy – will harm economic growth.Follow our live updates on the Budget hereSpeaking to business leaders at the CBI conference in Westminster, business secretary Peter Kyle admitted that the UK was in a “growth emergency”.“We inherited a situation when we came into office where we [were] stuck in this buy-slight grip of high taxes and low growth, and we are not going to break out of this cycle unless we do some pretty profoundly different things”, he said in a bid to blame the Labour government’s inheritance. “I really think we have inherited [a] growth emergency, and we are still in it, and we will be in it for as long as we are unable to get our way out of this situation without increased economic productivity.”Experts are warning that the chancellor’s imminent Budget will harm economic growth More

Three decades ago, Christopher Broadbent bought an old farm worker’s two-bedroom cottage in the East Sussex countryside.The founder of a consultancy firm carried out a “Damascene conversion” of the house, doubling its size, and bought 50 acres of farming land around it for a nature reserve and a glamping business. But now, with his farmhouse and land thought to be worth around £2m, the 75-year-old fears he and his wife could be placed in a “profoundly uncomfortable” position by a so-called mansion tax, expected to be announced at Wednesday’s Budget.“I’m not saying we couldn’t afford it,” said the Labour voter, “but there would be a deep sense of unease and unfairness.”Mr Broadbent, who plans to retire next year, already pays £3,600 a year in council tax on the four-bedroom home, which sits within the top three council tax bands (F, G and H). Being within the high-end bands, under Rachel Reeves’ expected plan, it could be revalued to check if the property meets a £2m threshold for the mansion tax.The tax, as reported by TheTimes, would see the average “mansion” paying around £4,500 a year, raising up to £500m for the Treasury.For updates ahead of the Budget – click here to read our live blogChristopher Broadbent fears says a so-called mansion tax was ‘politics of the envy’, as he said income tax would be a fairer way for Rachel Reeves toraise money More

A government minister has admitted that Labour’s tax rises have led to wealthy Britons leaving the country, just days before this week’s make-or-break Budget. The business secretary accepted that “some of the decisions” the party has made since Labour entered government mean “some people feel the need to leave”.It comes just days after Sir Keir Starmer was urged to tackle a “dangerous brain drain” that is harming the UK economy after official figures showed that the number of Britons leaving the UK is far higher than was previously thought.Asked if he thought wealthy individuals were choosing to leave the UK because of Labour’s tax choices, Peter Kyle told Sky News: “I do, yes”. Peter Kyle said he would not ‘duck the fact that we have put up taxes’ More

Labour minister apologises for speculation around budgetRachel Reeves is set to hit thousands of Britain’s most expensive properties with a new levy as she prepares to lay out her highly anticipated Budget this week.The chancellor is said to be targeting the wealthy with new taxes as she hopes to balance the books with a series of measures to be announced on Wednesday.A new levy could be applied to some of the most valuable homes, known as a “mansion tax”. The move would reportedly revalue some of the most valuable properties across council tax bands F, G and H and hit 100,000 of them with a new surcharge.The mansion tax was being suggested as a 1 per cent levy on properties worth £2m or more, but there is an expectation that it may be set much lower at a maximum of £5,000 because of concerns about the London housing market.It is one of a series of wealth taxes Reeves is set to unveil to fill the spending black hole in her budget with other measures expected to include a profits tax on gambling companies demanded by former PM Gordon Brown, and a levy on bank profits.What are salary sacrifice schemes?A tax raid on salary sacrifice schemes could be announced in Wednesday’s Budget, reports suggest, raising fears that some people’s retirements could be put at risk.Salary sacrifice schemes allow people to “give up” a chunk of their salary for a different benefit from their employer.Employers may offer salary sacrifice as part of their pension scheme as a tax efficient way to help workers boost their pots.When someone pays into a pension using salary sacrifice, the employer will pay the whole amount into the employee’s pension, including the employer’s contribution.( More

Speculation about Rachel Reeves’ upcoming Budget continues to mount as she prepares to outline measures to address the deficit in public funds on Wednesday.The chancellor has told the public she has no “easy choices” on Wednesday, after the Institute for Fiscal Studies (IFS) estimated she needs to find at least £22bn to fill the gap in the public finances. The lead up to the fiscal event has been rife with rumours about what could be to come, including the expectation – and then apparent U-turn on – an increase to income tax.It looked as if Ms Reeves would break Labour’s election-winning manifesto and increase income tax. She later abandoned that plan, following more optimistic forecasts received by the Treasury from the budget watchdog.We already know some measures which will feature in Wednesday’s announcement. Rail fares will be frozen in the Budget, saving commuters on pricier routes more than £300 a year, and the cost of an NHS prescription in England will also be frozen at £9.90.Ms Reeves is expected to reaffirm Labour’s commitment to the triple lock on state pensions, and confirm that 13m pensioners are set to benefit from an above inflation rise next April.Here, we look at how other measures in the Budget could affect pensioners.Freezing income tax thresholdsSir Keir Starmer refused to rule out freezing income tax thresholds at the Budget, which could result in people paying more tax by “stealth”.At Prime Minister’s Questions last Wednesday, Sir Keir declined to answer a number of questions from opposition leader Kemi Badenoch on the issue of threshold freezes.The tax-free personal allowance was frozen at £12,570 until 2028 by the previous Conservative government. Frozen tax thresholds can be used to raise more money for the Treasury, in effect rising taxes by stealth.Even if income tax rates are not increased, people could end up paying more tax as a result of the freezes. Freezing tax thresholds can create what economists call “fiscal drag” – more people are pulled into higher tax brackets as average earnings increase, but the thresholds stay the same.As mentioned earlier, Ms Reeves is expected to reaffirm the government’s commitment to the triple lock on state pensions in the Budget. But frozen tax thresholds could affect a rising state pension.The state pension has been £11,973 per year since April 2025 and, as a result of the triple lock, it is expected to rise to at least £12,578 per year in April 2027.The triple lock means the state pension increases annually, by whatever is highest of inflation, average growth in earnings or 2.5%.On Wednesday, the Chancellor will reveal the Government’s latest set of tax and spending policies More

Months of political speculation will come to an end on Wednesday as Rachel Reeves delivers her long-awaited autumn Budget. Myriad tax rises and spending cuts have been floated, some on firmer authority than others, leaving millions of Britons waiting to find out how they will be affected.Many economists predict that substantial tax rises can be expected in the Budget, as Ms Reeves looks to counteract the country’s ailing economic performance.Researchers from the Institute for Fiscal Studies (IFS) have found that the chancellor will need to find at least £22bn to make up a shortfall in the government’s finances, as rising borrowing costs and weak growth forecasts drastically reduce her room for manoeuvre.Speaking from Downing Street earlier in November, Ms Reeves said: “Politicians of recent years have become addicted to shelling out for short-term sticking-plaster solutions rather than making long-term economic plans.”Adding further fuel to speculation is the seeming reluctance from No 10 to recommit to Labour’s manifesto pledges not to raise the headline rates of VAT or national insurance contributions.Chancellor Rachel Reeves will oversee Labour’s second Budget on 26 November More

Rachel Reeves is poised to deliver her Budget this week, following intense speculation regarding potential tax increases aimed at stabilising the nation’s finances. The Chancellor is expected to unveil measures designed to address a significant deficit in public funds and establish a more robust financial reserve, thereby reducing the need for future demands on taxpayers. Here we look at some of the measures the Chancellor might announce at around 12.30pm on Wednesday, 26 November. Income taxChancellor Rachel Reeves has reportedly abandoned plans for a significant income tax hike, a move that would have broken manifesto pledges. This U-turn follows less pessimistic forecasts received by the Treasury from the budget watchdog, leading to the measure being dropped from what Speaker Sir Lindsay Hoyle described as the “hokey cokey budget”.Instead, Ms Reeves is now said to be favouring an extension of the existing freeze on income tax thresholds. Should this be implemented alongside a freeze on National Insurance thresholds, it could generate an estimated £8.3 billion annually for the Exchequer by 2029/30.By not increasing the thresholds, she will benefit from a process called “fiscal drag”, where as wages go up people are dragged into paying tax for the first time or shifted into a higher rate.Rail fares Commuters on the more expensive routes will save more than £300 a year More

Labour is set to announce an end to the two-child benefit cap at Wednesday’s Budget, following months of intense pressure from backbenchers, campaign groups and political opponents.Ahead of the fiscal event on 26 November, government insiders have told The Independent that the chancellor will scrap the controversial policy in a bid to appease discontented MPs and boost ailing poll results.Rachel Reeves hinted earlier this month that Labour could abolish the controversial policy, saying she does not think it is right that children are “penalised” for being part of large families.Speaking on BBC Radio 5Live, the chancellor said it was important not to let the “costs to our economy in allowing child poverty to go unchecked”. She added: “In the end, a child should not be penalised because their parents don’t have very much money.”Rachel Reeves said it was important not to let the ‘costs to our economy in allowing child poverty to go unchecked’ More