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Rachel Reeves will announce Labour’s first Budget in 15 years later this month, leading one of the most highly-anticipated fiscal events in over a decade.
As the chancellor looks to fill the £22bn “black hole” in public spending she announced in late July, speculation has mounted about what measures will be included on 30 October.
Ahead of the event, ministers have reportedly written directly to the prime minister to ask that proposed spending cuts be softened, bypassing Ms Reeves. It is understood that Number 10 has received complaints from several government departments.
During Labour’s first few months in power, ministers have warned that “tough decisions” will be required to balance the books. Sir Keir Starmer has said the event is going to be “painful” but that there is “no other choice given the situation that we’re in.”
This likely means tax rises and spending cuts can be expected, with Reeves reportedly looking to raise £40bn. The government has already come under fire for its decision to cut back winter fuel payments for millions of pensions, sparking a row which has hung over its first 100 days in power.
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Key points
- Ministers plead with PM to soften Reeves’ spending cuts
- Inflation falls below 2% target for first time in three years
- Proposed national insurance hike sparks row
- Preview: What will be in Labour’s Budget?
Pinned: Ministers plead with PM to soften Reeves’ spending cuts
Several ministers have reportedly written to Number 10 urging the prime minister to soften departmental spending cuts laid out in the upcoming Budget.
The requests have gone over the head of Rachel Reeves, who is reportedly looking to find around £40bn in tax rises and spending cuts on 30 October.
It is an embarrassing show of disunity for the prime minister, indicating that ministers and Ms Reeves may not be seeing eye-to-eye on departmental budgets.
It’s understood that the complaints have come from the Ministry of Housing, Department for Transport, Ministry of Justice. Unlike health and education, these departments have ‘unprotected’ budgets, meaning they could see severe cuts.
One Cabinet minister told Sky News: “The briefing doesn’t match the reality. It’s pain this year, and pain next year. We’re simply going to be digging a hole which we end up filling in later in the year.”
Albert Toth17 October 2024 09:22 1729188042Budget rumours: Private equity profits
In another manifesto pledge, Labour said it will announce more details on plans to close the private equity tax loophole in the October Budget.
Due to the ‘carried interest’ law, private equity fund managers pay only 28 per cent tax on their income, which is treated as capital gains. This was the result of a successful lobbying campaign in 1987.
Labour has vowed to change this, making managers pay the 45 per cent higher rate of income tax. It is estimated the change will raise around £600 million a year with just a few thousand people affected.
Albert Toth17 October 2024 19:00 1729177245Budget rumours: Employer National Insurance Contributions
National insurance contributions (NICs) are the UK’s second-largest tax after income tax. They are paid by both employees on their own earnings, and employers on the earnings of their employees.
Labour officials say they will uphold the manifesto pledge to not raise NICs for employees above the recently lowered rate of 8 per cent. However, speculation has mounted that this could leave the door open for an increase in the rate paid by employers, with both the chancellor and prime minister refusing to rule out the measure.
Employer NICs are currently paid at a flat rate of 13.8 per cent. Experts say an increase of just 1p could raise £8.5bn in 2025/26 and more for the following years.
Albert Toth17 October 2024 16:00 1729167627How make-or-break Budget has fractured Keir Starmer’s cabinet
Rachel Reeves’ Budget is a make-or-break moment for Sir Keir Starmer’s government, potentially sparking a decade of national renewal – or sowing the seeds of Labour’s downfall.
The prime minister’s poll ratings are at rock bottom after just over 100 days in charge, and the much-hyped “tough choices” to be unveiled on October 30 will likely do little to help boost his appeal.
How make-or-break Budget has fractured Keir Starmer’s cabinet
With the prime minister’s poll ratings at rock bottom, Sir Keir Starmer is grappling with cabinet unity ahead of Rachel Reeves’ Budget, writes Political Correspondent Archie Mitchell
Albert Toth17 October 2024 13:20 1729160732Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget
Rachel Reeves should increase capital gains tax (CGT) at Labour’s upcoming Budget, a group of millionaire business owners have urged, estimating the measure would raise £14bn a year.
In a report by the IPPR think-tank, analysts have consulted with wealthy entrepreneurs who say higher CGT would not have stopped them from making investments in the UK.
Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget
Government analysis has previously all but ruled out the measures
Albert Toth17 October 2024 11:25 1729156492Angela Rayner leads Cabinet revolt against Reeves’ ‘huge’ Budget cuts
Sir Keir Starmer is facing a backlash from Angela Rayner and his cabinet over “huge” cuts to departmental spending to be unveiled in Rachel Reeves’ Budget.
The prime minister has received letters from senior ministers raising concerns about the spending cuts after a number spoke out against the measures at Tuesday’s cabinet meeting.
Angela Rayner leads Cabinet revolt against Reeves’ ‘huge’ Budget cuts
Senior ministers are pushing back against cuts as Rachel Reeves finalises her first Budget as chancellor
Archie Mitchell17 October 2024 10:14 1729130400Budget rumours: business rates reform
In its election manifesto, Labour said it was committed to reforming the current business rates system “so we can raise the same revenue but in a fairer way”.
What this means has not been spelt out by the party, but it said the new system will be designed to “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.
It’s thought this could take the form of an immediate cut to the rates, while also closing loopholes which allow some firms to avoid tax. This will come as welcome news to smaller business owners, but Labour will be careful to ensure their reform maintains a monetary net zero.
Exchequer secretary James Murray MP confirmed this at a Labour conference fringe event hosted by the British Retail Consortium, saying: “It’s within the current envelope. It’s all about raising the same amount of money overall, that’s the commitment.”
Albert Toth17 October 2024 03:00 1729119660ICYMI: Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Inflation has dropped below 2 per cent for the first time in over three years, raising hopes that the Bank will cut interest rates in November. The decrease exceeded many economist predictions, with the Consumer Price Index (CPI) falling to 1.7 per cent
But some experts have warned that the rate drop is “badly timed” for many people, as it will be a key factor in how much benefits are uprated by the DWP next April.
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Lowered inflation rate will decide how much benefits are increased next year
Albert Toth17 October 2024 00:01 1729108856Budget rumours: fuel Duty increase
Fuel duties, or taxes, apply to purchases of petrol, diesel and a variety of other fuels used both for vehicles and domestic heating.
The level of fuel duty depends on the type of fuel used, with a litre of petrol, diesel, biodiesel and bioethanol attracting a fuel duty of 52.95p. It was cut by 5p by the Conservatives in 2022, after being frozen at 57.95p since 2011.
It represents a significant source of revenue for the government, expected to raise £24.7 billion in 2023-24, according to the Office for Budget Responsibility – equivalent to 2.2 per cent of all receipts.
Scrapping the 5p cut would raise the government an estimated £2bn. However, doing so would not automatically force fuel retailers to bring down their costs, likely meaning higher fees for motorists, at least in the short term.
Albert Toth16 October 2024 21:00 1729105256ICYMI: Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
Rachel Reeves has been boosted by a sharp drop in inflation as she seeks to find £40bn of tax hikes and spending cuts in this month’s Budget.
The chancellor will welcome the dip, which saw inflation fall under the Bank of England’s 2 per cent target for the first time in more than three years, as she prepares for what promises to be a brutal Budget.
Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
The fall in inflation comes as Rachel Reeves looks for £40bn of spending cuts and tax hikes in the October 30 Budget
Albert Toth16 October 2024 20:00 Newer1 / 3OlderDisclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
