London, Oct 30 (PTI) The UK’s first female Chancellor of the Exchequer, Rachel Reeves, tabled Labour’s inaugural Budget statement in Parliament on Wednesday since the party’s general election victory with a central “rebuild Britain” theme and a pledge to “invest, invest, invest” through 40-billion pounds (USD 52 billion) in tax rises.
A 25 billion pounds rise in employers’ national insurance contributions and hikes in inheritance and capital gains taxes are among the key announcements of the Budget, which Reeves said is designed to put more money in the pockets of working people.
For overseas nationals, a key change is to the non-domiciled tax regime which will be replaced with a new residence-based system from April 2025 – details of which will be set out in due course.
“The black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by 40 billion pounds,” said Reeves, blaming the previous Conservative government for leaving Labour with a tough economic scenario.
“I know that this is a difficult choice. I do not take this decision lightly,” she said.
The state-funded National Health Service (NHS) is among the biggest beneficiaries, with an additional 22.6 billion pounds for day-to-day spending over two years and 3.1 billion pounds pledged towards capital investment.
The Chancellor also announced the current freeze on income tax thresholds will end in 2028-29 to be updated in line with inflation after that. The previous Tory government froze the thresholds, which meant more people paying higher rates of tax as their salary increases and they move into higher tax bands.
“The party opposite failed our country. Their austerity broke our National Health Service. The British people have inherited their failure. They called an election to avoid making difficult choices,” said Reeves, as part of a central agenda to highlight a move away from Tory “short-termism” by the new Labour government.
The minister reiterated that the government had maintained its general election manifesto commitment to improve economic stability, bring about growth, invest in public services and protect working people.
At the start of her Budget speech, the first by a Labour Chancellor in 14 years, Reeves set out that the country had “voted for change” and “responsible leadership” and continued to attack the “irresponsibility” of the previous Rishi Sunak-led government.
Sunak, in one of his final acts as interim Opposition Leader, hit back by accusing the new Prime Minister Keir Starmer-led government of breaking its election promises.
“The Prime Minister has talked relentlessly about trust, and today’s budget reveals, above all, that the Labour Party did not tell the truth. They said they wouldn’t fiddle the figures – they have. They said they wouldn’t increase borrowing – they have. They said they wouldn’t increase taxes on working people – they have,” he said.
The Treasury Department asserted that there would be no change to working people’s payslips as income tax, employee national insurance and VAT stay the same, and only businesses and wealthy sections will be expected to pay more. The Budget will help rebuild Britain by boosting public investment by over 100 billion pounds over the next five years, it stated. PTI AK ZH ZH
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