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Rachel Reeves’ Autumn Budget Statement: Fixing the Foundations?

£40 billion in tax rises, fiscal rules rewritten, and a blueprint for this new Labour government.
@RachelReevesMP on X
@RachelReevesMP on X

Chancellor Rachel Reeves delivered Labour’s first Budget since 2010 in the House of Commons this afternoon.

Following their landslide election victory in July, Labour promised to fix the foundations of Britain’s economy. It meant that their first Autumn Budget, an outline of the government’s tax and spending plans for the following financial year, was eagerly anticipated.

In her opening remarks, Reeves promised to restore stability to the UK economy and unleash a decade of national renewal; familiar phrases from Labour’s election campaign.

Despite the bleak tone of her budget, in which she lamented the record of the outgoing Conservative government, the Chancellor said her “belief in Britain burns brighter than ever”.

On the Tory economic record, she argued that “their austerity broke our NHS, their Brexit deal harmed British businesses, and their mini-budget left families paying the price with higher mortgages”.

She further declared that after a “decade of low growth” under the Tories, she inherited a £22 billion black hole in public finances, forcing her to make tough decisions “in the national interest”.

Positioning Labour as the party of economic stability and fiscal responsibility was a key theme, with Reeves promising to never again allow “a government to play fast and loose with the public finances”.

Key announcements

Overall, this Budget raised taxes by £40 billion. Reeves said that “any chancellor standing here today would have to face this reality”, referencing the aforementioned £22 billion blackhole.

Here is our summary of the Chancellor’s Autumn Budget:

Taxes – Personal

  • Income tax thresholds will be unfrozen in 2028, and will then be uprated in line with inflation
  • Capital Gains Tax, profits from selling shares, increased from 10 to 18%, and higher rate increased to 20% to 24%
  • Inheritance tax thresholds frozen until 2030 – with unspent pensions included from 2027
  • Increase in the interest rate on unpaid tax paid to HMRC – plus new powers to go after tax avoidance
  • Stamp duty surcharge for second homes increased 2p to 5%
  • Reducing debt on Universal Credit Payments from 25 to 15%

Taxes – Business

  • Corporation tax capped at 25% for the duration of the parliament
  • Employers National Insurance increased by 1.2p to 15% from April
  • Threshold level at which employers start paying National Insurance reduced from £9,100 to £5,000
  • Increasing employment allowance for small business from £5,000 to £10,000
  • Windfall tax on North Sea oil and gas producers increased from 35% to 38%

Taxes – Other

  • Private jet passenger duty increased by 50% – equivalent to £450 per passenger
  • Alcohol duty (non-draft drinks) increasing in line with RPI next year
  • Alcohol duty on draft drinks cut by 1.7%
  • Non-dom tax regime abolished from April, with new residence based scheme introduced
  • Fuel duty frozen next year, and the existing 5p cut extended for a further
  • Right to buy housing discounts reduced
  • Bus fare cap increased from £2 to £3 until end of next year

Wages

  • National minimum wage increased to £12.21 an hour – a 6.7% increase
  • Minimum wage for 18-20 year olds increased to £10 an hour – a 16.3% increase
  • Long-term ambition for an equal minimum wage for everyone aged 18 and over
  • Carers weekly earnings limit increased to national living wage for 16 hours a week

Welfare

  • Carrying on Conservative plans to reform the Workplace Capability Assessment to deliver welfare savings and get people back to work
  • Crackdown on fraud in benefits system by expanding DWP’s fraud teams, with new legal powers to directly access bank accounts to capture debt
  • Committed to pension triple lock, with state pension rising 4.1% in April 2025

In a major announcement, Reeves changed the government’s fiscal rules, meaning that debt is now defined as net financial debt, which Reeves said recognises “”that government investment delivers returns for taxpayers”.

This change allows the government to borrow more to invest, totalling around £100 billion over the next 5 years.

Reeves declared that the “only way to drive economic growth is invest, invest, invest”.

Investment – Public Services

  • £22.6 billion increase in day-to-day NHS budget and £3.1 billion in capital investment
  • Core schools budget increased by £2.3 billion next year, and £6.7 billion of capital investment for the Department of Education
  • An extra £300 million provided for Further Education
  • £1 billion uplift specifically for SEND children
  • Ministry of Defence budget increased by £2.9 billion next year – plus 3 billion to support Ukraine each year in its ongoing war with Russia
  • An extra £1.3 billion for local gov next year – including £600 million grant funding for social care and £230 million for tackling homelessness
  • A £500 million increase in the road maintenance budget – aiming to fix 1 million potholes a year
  • £650 million for local transport funding across the country

Investment – Industry

  • £1 billion for the Aerospace industry
  • Over £2 billion for the Automotive sector
  • £520 million for a new Life Sciences Innovative Manufacturing Fund
  • £20 billion in general R&D funding
  • £5 billion of investment to build 1.5 million new homes
  • Funding for 11 new ‘green hydrogen projects’ across Britain

In response, Conservative leader Rishi Sunak declared that Rachel Reeves and Keir Starmer “have not been straight with the British people”.

Sunak accused the Chancellor of fiddling with Britain’s fiscal rules to allow “an enormous borrowing spree”, which he said would saddle “our children and grandchildren with billions upon billions more debt”, and push up interest rates.

He further said his warnings during summer’s election campaign, that Labour would increase taxes, were borne out by this budget.

On Reeves’ claims of a dire economic inheritance, Sunak called them “nonsense”, arguing that inflation and unemployment were low, and that the UK was the fastest growing economy in the G7.

On the contents of Budget, he said Labour were destroying businesses with their tax increases, and that in reality, working people would “pay the price”.

Instead, Sunak argued, the government ought to have followed Tory plans to shrink the Civil Service and cut the benefits bill.

See our X page for all the highlights and reactions from today’s Autumn Budget!

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