Budget 2024: Rachel Reeves confirms £40 billion tax increase following Conservative turmoil
Chancellor Rachel Reeves told MPs that there would be £40billion of tax rises included in this year’s Budget - blaming the Conservatives for failing to tackle the crisis in public services
Rachel Reeves has confirmed £40billion of tax rises - blaming years of Tory failure.
The Chancellor, delivering the first Labour Budget in nearly 15 years, announced the higher-than-expected figure after pledging to "invest, invest, invest" in public services. Ms Reeves said the Conservatives had failed to assess the challenges public finances face - and claimed anyone in her position would have to do the same.
She told the Commons: "I promised stability to our country once again. The scale and seriousness of the situation that we have inherited cannot be underestimated."
Ms Reeves said the Conservatives had failed to budget for compensation for victims of the infected blood and Post Office scandals, stating: "Their failure to assess the scale of the challenges facing our public services means that this budget raises taxes by £40billion. Any Chancellor standing here today would have to face this reality, and any responsible Chancellor would take action."
The Chancellor has promised more "pounds in pockets" as she vows to use her first Budget to "rebuild Britain" after the mess left behind by the Tories. Among a string of measures announced is a 6.7% rise in the national minimum wage from April 2025. It will mean that the national minimum wage for over 21s will increase from £11.44 to £12.21 an hour - a boost of £1,400 a year for a full-time worker.
She also announced £11.8billion to compensate victims of the infected blood scandal and £1.8billion for those affected by the Post Office Horizon scandal.
Her measures include inreasing the rate of National Insurance paid by employers will rise by 1.6 percentage points to 15% from April next year. There was also an increase in captial gains tax, with the rower rate rising to 18% and the higher rate to 24%. The latter move will raise £2.5billion, according to the Office for Budget Responsibility (OBR).
She also confirmed that the controversial non-dom tax status would be scrapped. Labour has previously said it would use this cash to help provide a further 40,000 NHS appointments every week. Ms Reeves also confirmed Labour would bring in VAT charges on private school fees, or order to fund 6,500 teachers in state schools.
Ms Reeves told the Commons: "In 1945, it was the Labour Party that rebuilt our country out of the rubble of the Second World War. In 1964, it was the Labour Party that rebuilt Britain with the white heat of technology. And in 1997, it was the Labour Party that rebuilt our schools and hospitals.
"Today, it falls to this Labour Party, this Labour government, to rebuild Britain once again.”
The Budget is a critical moment for the new Government to set out its plans on tax and spending, with Keir Starmer saying it will be a "landmark" week for Britain. Mr Starmer insisted there will be no "short cuts" in rebuilding Britain after 14 years of Tory rule - but promised the country "better days are ahead". In a major speech this week, the PM said: "We are turning the page on Tory decline, closing the book on their austerity and chaos. Those days are done, they are behind us, change is here."
In her crucial address to the House of Commons, Ms Reeves promised to "fix the foundations" of the economy and repair the public finances. And the Chancellor promised to "invest, invest, invest" in services.
But she said the "black hole" left by the Conservatives required tens of billions of additional taxes. Ms Reeves claimed the scale of the public spending problems she inherited were worse than previously thought.
She said the £22billion "black hole" the Tories left behind in this year’s finances showed they "hid the reality of their public spending plans", with problems recurring in future years.
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