Last week I was proud to be in the Commons Chamber to witness Rachel Reeves deliver the first Labour Budget in nearly 15 years. This Budget aims to deliver change by fixing the NHS and rebuilding Britain, while ensuring working people don’t face higher taxes in their payslips. It is a Budget I support, and I would like to outline how I believe the measures announced will benefit our community and the country.
This Budget supports working people, with no increase in National Insurance, the basic, higher, or additional rates of Income Tax, or VAT. The National Living Wage is being increased by 6.7% to £12.21 per hour for full time workers. The government is maintaining the fuel duty freeze and temporary 5p cut for 2025-26.
The Budget will set us on a path to rebuild our public services, which have suffered over the last 14 years. The government is rejecting the return to austerity set out in the previous government’s spending plans by increasing day-to-day spending on essential services in real terms. This includes an extra c£25.6 billion over two years for the NHS in order to cut waiting times with 40,000 extra elective appointments a week, and build capacity for more than 30,000 additional procedures. It will also support the recruitment of 6,500 teachers by increasing the Core Schools Budget by £2.3 billion next year .
The Chancellor is focused on “investment, investment, investment” so we can get the economy moving again, and the Budget is boosting public investment by over £100 billion over the next five years whilst keeping debt on a downward path. It invests in Britain’s future so, alongside business, we can build the homes, the infrastructure, the roads and the railways our country needs. The Budget also includes investing £20.4 billion into Research & Development and adding £500 million to the Affordable Homes Programme.
Delivering on these promises whilst protecting working people from picking up the bill means asking the wealthiest and businesses to pay their fair share, and the Chancellor has had to make some difficult decisions to put the country’s finances on a firm footing and to invest in public services and infrastructure in the longer term.
This includes taking a balanced approach to adjusting the rate of Capital Gains tax, a tax paid by fewer than 1% of adults each year. The rate will change from 10% to 18% on the lower rate and 20% to 24% on the higher. It will make the inheritance tax system fairer by keeping thresholds at existing levels until 6 April 2030 and bringing unused pension funds and death benefits payable from a pension into the scope of inheritance tax, making their treatment consistent with other products, such as ISAs.
The decision has been made to increase the rate of Employer National Insurance Contributions by 1.2 percentage points to 15% and reduce the Secondary Threshold from £9,100 to £5,000 per year. In making this choice, the government is also choosing to protect small businesses by increasing the Employment Allowance to £10,500 and expanding this to all eligible employers. The Office for Budget Responsibility expects 250,000 employers to gain from these changes and an additional 820,000 will see no change.
This is alongside previous tax commitments to abolish the non-dom tax loopholes, reform Stamp Duty Land Tax so those who buy second homes pay 2 percentage points more than before, extend the Energy Profits levy on oil and gas companies, and to end the VAT exemption and business rates relief provided to private schools.
I believe that this Budget delivers the change our country voted for. It is the start of a new chapter towards making Britain better off and improving the living conditions and opportunities for people in Reading Central.
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