Rachel Reeves, the first female chancellor of the Labour party, is expected to unveil the party’s first Budget in a generation. She has emphasized that tough decisions will be made due to the financial mess left by the previous Tory government, with a £22 billion gap in public finances. The Institute for Fiscal Studies (IFS) has predicted that this could be the largest tax-raising budget ever, potentially leaving public services feeling the squeeze.
One of the key measures expected in the budget is an increase in employer national insurance payments. Although Labour had promised not to raise NI before the election, they clarified that it only applied to employees, not employers. Critics have accused the government of imposing a ‘tax on jobs’ by breaking their promises.
Additionally, there may be an extension on the freeze for the point at which income tax is paid, leading to more people moving into higher tax brackets due to inflation. The chancellor has also adjusted borrowing rules to allow for investment in major projects, potentially unlocking up to £50 billion for infrastructure building like roads, railways, and hospitals.
In terms of taxes, inheritance tax and fuel duty are areas of focus. Inheritance tax, paid by only 4% of the population, could see changes to exemptions. Fuel duty, which has not been increased for over a decade, is facing calls to remain unchanged.
Winter fuel payments for pensioners may also be affected by means-testing, sparking concerns about the impact on vulnerable elderly individuals. Moreover, the exemption of private schools from paying VAT is set to be removed, with exceptions for military families who frequently relocate.
Education and healthcare are also key areas of investment in the upcoming Budget. £1.4 billion is earmarked for rebuilding schools, while an additional £1.8 billion will go towards expanding government-funded nursery care. Health Secretary Wes Streeting is expected to receive a significant funding boost of around 4% for the NHS, although there are worries about whether this will be enough to drive necessary reforms.
In conclusion, the Autumn Budget 2024 is set to address critical financial challenges and make tough decisions to stabilize public finances. With a focus on tax changes, borrowing rules, and investments in key sectors like education and healthcare, the budget aims to set a new course for economic recovery and growth.
