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Rachel Reeves’ tax-hiking Budget will hit workers however Labour frame it, the former governor of the Bank of England has said.
Lord Mervyn King, who was head of the Bank of England for a decade until 2013, said that the debate around who Labour are classifying as a “working person” is “a terrible illusion”.
Speaking on Sky’s Sunday Morning with Trevor Phillips, Lord King said: “Taxes are paid by people, they’re not paid by companies or institutions, ultimately, they fall on the amount that people can spend, and you only can raise significant amounts of money by raising taxes on most people, however you care to define that, but it’s most people will have to pay higher taxes.”
He added: “Ultimately, the impact of these higher taxes has to be on the consumption of most people, however you care to define that group.”
It comes after education secretary Bridget Phillipson pledged that working people would not see higher taxes on their payslips.
We’ll be bringing you all the latest updates ahead of the big event here, on The Independent’s liveblog.
Key Points
- What is expected in next week’s Budget?
- Rachel Reeves: Budget is ‘not going to be easy'
- Working people will not see higher taxes on their payslip, education secretary promises
- New era of investment in hospitals, schools and transport to be announced in Budget
- Expected rise on bus fares in Budget - reports
What is reportedly in this week’s Budget?
On top of what has been confirmed, here are a number of measures that are reportedly going to be in Labour’s first Budget this week:
National insurance hike for employers
The amount employers will pay in national insurance is reportedly set to rise in the Budget.
Reports have suggested it could be increased to up to two percentage points. It has been reported that the raise would be used in part to fund the NHS.
Ms Reeves will also make a cut to the earnings threshold at which employers start making national insurance contributions, The Times has reported. Both measures are expected to raise £20bn.
Continued freeze on income tax thresholds
A continued freeze on income tax thresholds beyond 2028 has been floated ahead of the Budget. Government sources have insisted it would not be a breach of Labour’s election promise to not tax working people.
A threshold freeze would allow Ms Reeves to raise an estimated £7bn by bringing more people into the tax system.
Capital gains tax on shares
Rachel Reeves will reportedly use her Budget to increase capital gains tax on the sale of shares.
However the rates will not change for selling second homes, The Times reported.
Capital gains on profits from the sale of shares, which is currently levied at a higher rate of 20 per cent, is reportedly going to rise by several percentage points.
Holly Bancroft27 October 2024 23:32 1730067722What is expected in this week’s Budget?
What has been trailed so far from Wednesday’s Budget:
Slash Right to Buy discount
Rachel Reeves is to slash Right to Buy discount given to those purchasing their council house. The move is designed to protect existing stock so thousands more homes remain for rent.
£500m boost for social homes
An extra £500m for the current Affordable Homes Programme will see thousands more houses built. There will also me hundreds of millions of pounds invested in housing projects in Liverpool.
£1.4bn for schools and more childcare
£1.4bn will be set aside in the Budget to rebuild crumbling schools.
£1.8bn will also be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
Ms Reeves has also said she would triple investment in free breakfast clubs to £30m in 2025-26.
Holly Bancroft27 October 2024 22:22 1730064722Kemi Badenoch: ‘I’m pretty tough. I’m not scared'
In case you missed it, Tory leadership front runner Kemi Badenoch sat down for an interview with The Independent’s Political Editor David Maddox:
Defiant Kemi Badenoch has vowed she will not give up her hard-hitting style, saying: “This is what always happens to strong women. If you don’t play ball, then they will come after you.”
The favourite to become Tory leader next month was responding to claims by Tory critics that she had been “too abrasive” and also to Doctor Who actor David Tennant, who said he wished she would “shut up”.
In a candid interview with Independent TV, she said: “People know that I’m pretty tough. I’m not scared. I will always do the right thing, and I won’t be quiet when it is time to speak up.”
You can read more from her interview here:
Kemi Badenoch: ‘If you don’t play ball, they’ll come after you’
Exclusive: The Margaret Thatcher fan and Tory leadership favourite says her braids are her equivalent of the late PM’s handbag as she tells Political Editor David Maddox, in an interview on Independent TV, that she won’t give up her hard-hitting style – having faced criticism for being too right wing and for her stance on the culture wars
Holly Bancroft27 October 2024 21:32 1730061062Government’s welfare adviser admits Britain is a ‘sick nation'
The government’s new welfare adviser Paul Gregg has said that Britain is a “sick nation” and that the increased number of young people on sickness benefits is “very scary”.
Mr Gregg, a professor of economic and social policy, was appointed by work and pensions secretary Liz Kendall to chair a new advisory board.
His role will look at ways to reduce inactivity among working-age people, The Sunday Times reported.
Speaking at a lecture in London recently, Mr Gregg said: “We are a sick nation, we have far higher rates of mental health problems and we have far higher rates of obesity and diabetes than other countries. This has come together...to form this surge in economic inactivity.”
He said that the UK was unique in its failure to recover from the pandemic in these areas. He added: “There’s something going wrong and I can’t tell you exactly what it is, but there’s something about our childhood, perhaps later childhood, teenage years, which has gone wrong.”
Holly Bancroft27 October 2024 20:31 1730057222Historic churches could be forced to close if tax relief scrapped
Historic churches could be forced to close if Rachel Reeves decides to scrap tax relief for repairs in this week’s Budget.
According to The Telegraph, 36 Tory MPs, church leaders and charities have written to the Chancellor calling on her to maintain a scheme which exempts places of worship from paying VAT at 20 per cent on restoration work.
They fear the measure could be scrapped as Ms Reeves looks for ways to fill the £22bn “black hole” that she says she inherited from the Conservatives.
The current commitment to fund the scheme ends in March next year, which means the Treasury has to decide whether to end it.
Holly Bancroft27 October 2024 19:27 1730054042Scotland secretary: Labour Budget will ‘herald an era of growth for Scotland'
The first Labour Budget for over a decade will “herald an era of growth for Scotland”, Ian Murray has insisted – with the Scottish Secretary saying SNP ministers at Holyrood must ensure any additional cash they receive goes towards frontline services.
He was speaking as Rachel Reeves prepares to deliver what will be the first Budget from a Labour Chancellor since 2009 on Wednesday.
While Ms Reeves has made clear the economic situation left by the Conservatives will mean difficult choices, she has said her Budget will “begin to fix the NHS and start to rebuild our economy”.
Her cabinet colleague Mr Murray has warned: “No-one should be in any doubt about the scale of the challenge the Labour Government inherited when it comes to the public finances.
“The Tories left us a £22 billion black hole, emptying the reserves meant for disasters and emergencies three times over.”
£1.4 billion to fix ‘crumbling’ schools as Reeves pledges to prioritise education and free childcare in Budget
Rachel Reeves has announced she will earmark £1.4 billion to rebuild crumbling schools as she pledges to prioritise education and childcare in the Budget.
Investment in free breakfast clubs for pupils will also be tripled, while there will be another £1.8 billion to expand government-funded nursery care.
The Chancellor said children “should not suffer for” because of a £22 billion ‘black hole’ Labour says it was left by the last Tory government.
However, experts cautioned that most of the funding would simply be enough to maintain existing programmes.
More than 400 schools which are part of a flagship government rebuilding scheme, set up under the Tories, still don’t have any builders.
Kate Devlin 27 October 2024 18:02 1730048642Analysis: Rachel Reeves might just get away with breaking her promise – here’s how
Chief political commentator John Rentoul has spelled out how Rachel Reeves could get away with raising taxes on working people in his latest column:
“When George HW Bush said, “Read my lips: no new taxes” as he accepted the Republican nomination for president in 1988, he thought he was on safe ground. And he would have gotten away with it if it hadn’t been for those meddling kids in Congress, where a Democratic majority forced him to put up taxes in a 1990 budget.
Bush insisted that he hadn’t imposed any “new taxes” – he had only increased existing ones. And, surprisingly, American voters seemed to accept this sophistry. He seemed so popular that the Democrats struggled to find a candidate to put up against him in the 1992 election.
But then the economy went into recession and a little-known governor of a small southern state ran against Bush as a New Democrat. Bill Clinton made Bush pay a heavy price for his tax pledge in the end; Bush’s broken promise was played like a broken record in the election campaign.
The other case study for Rachel Reeves as she prepared Wednesday’s Budget was Nick Clegg’s promise in the 2010 election to oppose a rise in university tuition fees. It was followed not just by a breach of the promise, but by the appointment of fellow Liberal Democrat Vince Cable as the cabinet minister who would sponsor the legislation to triple fees.”
Read the rest here:
Rachel Reeves might just get away with breaking her promise
George Bush Sr and Nick Clegg paid the price for making U-turns, but other politicians have escaped the voters’ wrath – could the chancellor, too?
Holly Bancroft27 October 2024 17:04 1730046662Recap: Education Secretary open to ban on smacking children
The Education Secretary has said she is “open-minded” to a ban on smacking children, but she added there are no imminent plans to change the law.
Bridget Phillipson said she would like to hear more from experts on how such legislation could work - a change in tone from the previous Tory government which said it was up to parents to discipline their children.
It comes after Children’s Commissioner Rachel de Souza said a ban is a necessary safeguarding step and suggested similar measures already in place in Scotland and Wales should be adopted in England.
Asked whether she supports that proposal, Ms Phillipson told the BBC’s Sunday With Laura Kuenssberg show: “We are considering it, but this is not an area where we intend to bring forward legislation any time soon.
“I’d be keen to hear from the Children’s Commissioner and from others about how this would work. I’m open-minded on it. It’s not something we intend to legislate on, but I think we do need to look at how we keep children safe.”
She said measures set out in the Children’s Wellbeing Bill, which will be brought forward “by the end of the year”, will address many of issues relating to children’s social care and safeguarding.
Analysis: 8 things to watch out for in autumn budget 2024
Rachel Reeves is set to unveil Labour’s first Budget in a generation on Wednesday – and the first ever written by a female chancellor.
She has warned that it will involve “difficult decisions” – as she blamed the last Tory government for leaving a £22bn black hole in the public finances.
Paul Johnson, the director of the high-respected Institute for Fiscal Studies (IFS) think tank has already said it could be the “biggest tax-raising budget” ever and yet it still could leave “a lot of public services still feeling squeezed”.
Here we take a look at some of the key measures expected:
8 things to watch out for in autumn budget 2024
Speculation is rife on what will come in Rachel Reeves’ Budget - here we take a look at some of the measures expected
Kate Devlin 27 October 2024 16:05 Newer1 / 9OlderDisclaimer: 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.
