THE GOVERNMENT has presented its first full budget today, Wednesday, October 30, as Chancellor of the Exchequer Rachel Reeves has laid out changes to financial policy.
Reeves took to the dispatch box today to announce a number of measures that the government says will “restore economic stability.”
The Chancellor announced that minimum wage for over-21s is to be increased by nearly 7% to £12.21 – an increase of around £1,400 annually for an eligible worker in full-time employment.
Reeves also announced that a uniform rate would be phased in to equalise pay for those under 21.
The NHS has seen an increase of £22.6bn in its regular budget, and another £3bn in its capital budget.
Around £1bn has been earmarked for repairs and upgrades, and another £1.5bn for new beds and testing capacity.
A 10-year plan for the NHS has also been promised, which will be due spring next year.
Housing investment will see an increase in spending of £5bn over 2025-2026, while reductions right-to-buy discounts and the retention by local councils of earnings from council housing will be put in place.
Reeves announced that £3.4bn is to be invested in the warm homes plan, aimed at upgrading buildings and bringing energy bills down, as well as a new energy body called Great British Energy, which will be based in Aberdeen.
Defence will see an increase on spending of just under £3bn next year, while £1.3bn is set to be added to grant funding for local government.
National Insurance contributions will see a rise of 1.2% from employers, bringing them up to 15%, from April next year, though employees will not pay more directly.
A secondary threshold of when contributions are due is set to be reduced from the current level of £9,100 to just £5,000.
This constitutes the biggest individual tax-raising initiative in the budget, and is estimated to raise around £25bn annually by the end of the forecast period of around five years.
Personal income tax thresholds are set to see increases in line with inflation from the 2028/2029.
Capital Gains tax and Inheritance tax are both set to see rates increased, with the lower rate of Capital Gains tax to be increased from 10% to 18%, and the higher rate jumping from 20% to 24%.
There is no increase set to take place on the capital gains rate imposed on second properties, remaining at 24%.
A freeze which is currently in place on the threshold of £325,000 for inheritance tax is to be extended.
Assets will attract inheritance tax of 20% after the £1m threshold, which is expected to raise around £2bn in taxes by the end of parliament.
Vapes are set to see a levy applied, which will increase in line with tobacco taxes.
Tobacco product taxes are also set to rise by 2% above inflation for the rest of this parliamentary period, except hand-rolling tobacco, which will increase by 10%.
Taxes on alcohol are also set to rise in line with inflation, though this only applies to consumers, as draught duty will instead be cut by 1.7%.
Fuel duty has been frozen, maintaining the 5p cut instated by the previous government.
Elsewhere, VAT will be applied to private school fees from January next year, and the
Department of Education is set to receive £6.7bn in total– a real terms increase of nearly one-fifth.
This means more than £1bn is earmarked to rebuild schools in most need, more than £2bn to support teacher hire, another £2bn for school maintenance, and an increase of £1bn for special needs education.
Olivia Bailey, MP for Reading West and Mid Berkshire, has hailed the measures announced as the beginning of “delivery” from the government.
She said: “People in Reading West and Mid Berkshire voted for change to stabilise our economy and fix our broken public services, and today we’ve started to deliver.
“We will have thousands more appointments in our local NHS, the teachers and buildings our schools need and significant new investment in SEND.
“Despite the terrible Tory inheritance this government will honour its promise that working people will not face higher taxes in their payslip.
“And I can’t forget the incredibly exciting news for our local high street businesses, brewers and pubs , with 40% relief on business rates for the retail, hospitality and leisure industry and cheaper draught pints.”
Matt Rodda, MP for Reading Central, said: “This is a really important budget, the new Government has had a dreadful inheritance but it is tackling the £22 billion black hole left by the last Government.
“I’m pleased that the budget will start to tackle the damage of the last 14 years.
“It is the start of what we want to achieve, it will help get the country’s finances on a firm footing and also to increase investment in the NHS, public services and infrastructure, helping to generate growth.
“I’m pleased with the emphasis on education, with investment in breakfast clubs, building new schools helping vulnerable children with more money for special needs and disabilities.
“The budget includes important measures to help tackle climate change, such as more support for the transition to electric vehicles.
“It also includes action to support small business, including pubs and local shops, such as a reduction in duty on draft drinks and the reform of business rates to help small business in areas like town centres.”
