Reeves announces £22.6bn increase in day-to-day health spending Reeves ends with an announcement about investment in the NHS. She says day-to-day health spending will rise by £22.6bn, and capital spending by £3.1bn, this year and next year. She goes on: So today, because of the difficult decisions that I have taken on tax, welfare and spending, I can announce that I am providing a £22.6bn pound increase in the day to day health budget. Let me set out what this funding is delivering. Many NHS buildings have been left in a state of disrepair. So we will provide £1bn pounds of health capital investment next year to address the backlog of repairs and upgrades across our NHS to increase capacity for tens of thousands more procedures. Next, we will provide a further £1.5bn pounds for new beds in hospitals across our country, new capacity for over a million additional diagnostic tests and new surgical hubs and diagnostic centres so that people waiting for their treatment can get it as quickly as possible. The health secretary will be setting out further details of his review into the new hospital program in the coming weeks and publishing in the new year. But I can tell the house today that work will continue at pace to deliver those seven hospitals affected by the Raac crisis … And finally, because of this record injection of funding, because of the thousands of additional beds that we have secured, and because of the reforms that we are delivering in our NHS, we can now begin to bring waiting lists down more quickly and move towards our target for waiting times to be no longer than 18 weeks by delivering on our manifesto commitment for 40,000 extra hospital appointments a week. Early evening summary Rachel Reeves has announced £40bn of tax rises on businesses and the rich as Labour’s first budget in 14 years sought to reverse more than a decade of decline in Britain’s public services. As Richard Partington and Jessica Elgot report, after months of speculation since the party’s general election landslide victory, the chancellor revealed a sweeping package of tax increases she said would be vital to balance the books and turn the page on austerity. “The only way to improve living standards, and the only way to drive economic growth is to invest, invest, invest,” Reeves said. “There are no shortcuts, and to deliver that investment, we must restore economic stability and turn the page on the last 14 years.” At its heart was an increase in national insurance contributions (Nics) paid by employers – worth £25bn by the end of this parliament – alongside billions of pounds in increases from changes to capital gains tax, inheritance tax, VAT on private schools and the non-dom tax regime. The chancellor said the budget was a fulfilment of a promise to shield working people from tax rises, adding that they would “not see higher taxes in their payslips as a result of the choices that I am making today”. And here is Larry Elliott’s analysis. And here is a summary of the main measures in the budget. Labour has embarked on a “large, sustained increase in spending, tax and borrowing”, according to the government’s economic forecaster, as it judged that Labour’s first budget for 15 years is unlikely to increase economic growth over the next five years. Rail fares will go up by 4.6% next March, the government disclosed alongside the budget – meaning they will rise above inflation for only the second time in 12 years. HS2 trains will be able to run all the way to Euston after the chancellor, Rachel Reeves, committed to funding tunnelling work to the central London station. Pimco: No reason to question UK"s fiscal credibility Bond trading giant Pimco have given the UK something of a vote of confidence tonight, after the budget. Peder Beck-Friis, economist at Pimco, says the UK’s fiscal credibility is intact, and that he continues to find British debt attractive. Beck-Friis also points out that while UK bond prices fell today, they did slightly better than German government debt, saying: There are no reasons for us to question the fiscal credibility in the UK. The government intends to bring the primary deficit into a large surplus, for the first time since the early 2000s. While debt — by the conventional definition — may not fall in coming years, it is unlikely to rise dramatically either. It was a volatile day for gilt yields, which ended the day a few basis points higher. Technical factors likely exaggerated the volatility. While gilt yields ended the day higher, they outperformed German Bunds. We continue to like gilts. We expect the market to over time shift its attention away from fiscal to the underlying macro drivers, including softening inflation. Tight fiscal policy should weigh on growth and inflation ahead — and over time, we expect the market to price in a lower terminal rate for the Bank of England’s cutting cycle. The Joseph Rowntree Foundation has done some post-budget modelling that suggests average disposable income will fall over the course of this parliament. This is from Alfie Stirling, its chief economist. The Office for Budget Responsibility has a different analysis. It says: Real household disposable income (RHDI) per person grows by an average of just over ½ per cent a year between 2024-25 and 2029-30 in our central forecast. This is below the average of around 1 per cent a year in the decade before the pandemic, but RHDI per person still rises 3½ per cent across the forecast. Back in the City, stocks on Aim - the junior stock market – have surged this afternoon after Rachel Reeves resisted abolishing their inheritance tax perk. The FTSE Aim All Share Index has jumped by 4%, after Reeves halved the tax relief available on Aim shares. As we covered earlier, the chancellor announced that business property relief on Aim shares will be limited to 50% of the portfolio; currently, the full value of an Aim portfolio is exempt from inheritance tax if shares have been held for two years. Assets with 50% relief are subject to an effective IHT rate of 20%. OBR says there is "insufficient certainty" about Labour"s planning reforms to know what impact they"ll have on growth Keir Starmer has said boosting growth is a priority for his government, and that reforming planning laws will be a big part of this. But the Office for Budget Responsibility says in its report it has not been able to adjust its growth forecasts to take account of these policies because there is “insufficient certainty” at the moment as to what exactly they will involve. It says: The government has proposed significant changes to the National Planning Policy Framework as part of wider reforms to the planning system. These changes are yet to be finalised, as responses to a recent public consultation are being processed by the government. As such, there is insufficient certainty to adjust our current forecast for these measures and we will continue to monitor developments, especially around their implementation given past reform attempts, to judge if and when to incorporate them. These reforms may enable greater delivery of new housing and infrastructure projects, which would boost the associated investment flows, as well as increasing productivity over the longer term. Rachel Reeves has told Sky News that she can’t rule out further tax rises in the parliament. In an interview this afternoon, she said: “I’m not going to make a commitment to never change taxes again. “That would be irresponsible. “But this is a once-in-a-parliament budget to wipe the slate clean after the mess that the Conservatives have left us.” Rachel Reeves’s plans for increased spending and borrowing will put upward pressure on inflation, and thus interest rates. David Miles of the OBR explained today that the watchdog’s new inflation forecasts and borrowing projections mean interest rates are likely to be 0.25 percentage points higher than they otherwise would have been in the coming years. That implies one fewer quarter-point cut to rates than would otherwise be the case. The odds of a rate cut at the Bank of England’s meeting next week have now dipped to around 83%, down from around 95% earlier this week….. Commentators are desperate to come up with a verdict on the budget. We have reported plenty of them here, on this blog, and there are more views here. But, according to Ed Balls, a former Labour shadow chancellor, it may take up to two years or more before we know whether the budget was any good. This is what he said about it on his Political Currency podcast. On the one hand, [Rachel Reeves] has gone for big spending, borrowing for investment, investing in public services, but with an economy which is fragile. If that economy gets better and people feel it, it will be seen as a winning budget. But if the economy falters and people feel squeezed, and the tax revenues don’t come in, she’s not going to be coming back a second time in this parliament, with ‘Rachel Reeves massive tax rise 2’ and at that moment … it starts to feel like she is being pushed into a much tighter position on public spending. So we won’t know about this budget for one or two years. I think what you’ll definitely say was ‘it was big and bold and historic,’ and she’ll end the day feeling that she’s given it her best shot. What other opposition parties are saying about budget Rishi Sunak responded to the budget statement in the Commons for the Conservatives, and there is a summary of what he said at 3.43pm. This is what other opposition parties are saying. From Ed Davey, the Liberal Democrat leader I worry that the government is still ignoring the elephant in the NHS waiting room: the crisis in social care. I urge the government to end the dither and delay and begin cross-party talks on social care now. I’m glad that the chancellor has listened to Liberal Democrat calls for more investment in the NHS to start repairing all the damage done to local health services by the Conservatives. We will now hold the government to account on delivering its promises so people can see a GP or dentist when they need to. From Richard Tice, the Reform UK deputy leader This budget is an assault on working people, an assault on growth and an assault on hard work. Thanks to this budget, we are all getting poorer: Per person, per family, per small business, per community. Labour have failed working people with this budget, they came into office promising change, growth and no tax rises on working people. What we have instead is the same old Labour: higher taxes, more borrowing and lower growth. This budget hurts hard working British people. From Carla Denyer, co-leader of the Green party After the Conservatives left our public services in crisis, we needed a Budget which would start building a fairer society and a greener economy. There is a way to help fund this – by raising taxes on the very wealthiest in our society. But the chancellor has ducked it. Instead, we have a set of half measures, some of them positive, but a Budget which lacks a vision for our future and that does not deliver the change that people voted for in July. This is a Budget that gives with one hand and takes away with the other. While there is modest investment in the NHS, the withdrawal of winter fuel payments for millions of pensioners will leave them colder and sicker. The chancellor is spending to create jobs but is also making it more costly to employ people by raising employers’ NICs [national insurance contributions], and more expensive for people to travel to work by raising bus fares. There’s funding to fix crumbling schools, but they will be filled with students going hungry because she won’t lift the two-child benefit cap. Public services that have been starved of funding for fourteen years need more than a few crumbs. The money to fund our public services is available if the chancellor had the courage to tax the very wealthiest. Labour promised us no more austerity, but it won’t feel like that. From Stephen Flynn, the SNP leader at Westminster It’s clear the SNP is winning the argument on the need for more investment in our NHS and public services. I welcome those areas where the chancellor has listened, including the decision to change the Labour government’s conservative fiscal rules to allow for more investment. However, while additional funding for public services is welcome, the Labour government’s budget also imposes more than £40bbn of cuts and tax hikes that will hit millions of Scots in the pocket - and it fails to deliver the transformative change people in Scotland were promised. From Liz Saville Roberts, the Plaid Cymru leader at Westminster Tax changes will hit businesses with lower-paid workers hardest, impacting families across Wales. And new rules on farm property could threaten the family-run farms that are the heart of Welsh agriculture. It was good to see Westminster finally addressing the damage left by the coal industry - an issue Plaid Cymru has raised for years. But without real investment to create local jobs, these communities will keep paying the price for an industry that once fueled UK wealth. Haldane predicts ‘bond markets won"t fall out of bed’ after budget Andy Haldane, the always-quotable former chief economist of the Bank of England, has billed today’s statement as a Keynesian budget. Speaking on LBC’s Tonight with Andrew Marr, Haldane pointed out that Reeves has anounced extra borrowing, extra spending, and extra taxation – but warns that the payoff in growth terms “remains a bit uncertain right now”. Haldane also voiced hopes that the bond market won’t panic about the plans, saying: ‘My guess would be there’s enough assurance around Rachel’s new fiscal rules… the current one, the one that balances the books on current spending three years ahead, would be seen as a tighter rule than the earlier one. So, my guess would be that bond markets won’t fall out of bed. And of course, what really matters to bond markets is a good story about growth. With the help of Blick Rothenberg, we’ve just launched our budget calculator which lets you calculate if you’re better, or worse, off after the budget: Scotland’s finance secretary, Shona Robison, has welcomed the extra funding form the budget but insisted the Scottish government still faces “enormous cost pressures”. The chancellor said the devolved government would receive an additional £3.4bn from the Treasury this year and next year, bringing its total funding to £47.7bn next year. Scottish ministers had been braced for another tough settlement. Robison said: We called for increased investment in public services, infrastructure and tackling poverty. This budget is a step in the right direction, but still leaves us facing enormous cost pressures going forwards. The additional funding for this financial year has already been factored into our spending plans. By changing her fiscal rules and increasing investment in infrastructure, the chancellor has met a core ask of the Scottish government. But after 14 years of austerity, it’s going to take more than one year to rebuild and recover – we will need to see continued investment over the coming years to reset and reform public services. City wealth management firm Investec are comparing the budget to a chess gambit – and warning that it might backfire… In a research note titled The Reeves Gambit, they say: The Chancellor is a keen chess player and the government’s fiscal strategy does resemble a gambit in chess, where a player sacrifices a piece in order to gain a longer-term strategic advantage. Spending more money on investment should enhance the capital stock and in principle will provide the economy with the required tailwind over the medium-to-long term. These prospects would be reinforced if the new government is successful in attracting greater business investment as well. Indeed the OBR gave a qualified thumbs up to medium-to-long prospects in this respect. But today’s Budget is a calculated risk which could backfire, leaving the UK’s fiscal position in a worse mess than when it started. There was some confusion this morning when the Treasury released a statement from Rachel Reeves saying the budget would mean “more pounds in people’s pockets”. It is going to raise taxes by £40bn a year by the end of the decade. Tax-raising budgets can have considerable benefits, but ‘more pounds in pockets’ is a concept normally associated with tax cuts. On its website, the Treasury has published an article identifying three ways in which the budget will put “more money into your pocket”. It says the national minimum wage is going up, universal credit claimants who have to pay back benefit debt will get the money deducted at a slower rate, and the Help to Save scheme, incentivising people to save, will be extended. John Burn-Murdoch of the Financial Times points out that the UK is far from the only country facing a record high tax burden (as covered earlier): Devolved governments welcome "huge" budget deal from chancellor Government ministers in Scotland, Wales and Northern Ireland have welcomed a “huge” budget deal after the chancellor said the devolved nations will get record levels of funding. Rachel Reeves, the chancellor, said the three governments will benefit from the largest real terms funding since the advent of devolution, receiving a total of £6.6bn from the budget after years of spending squeezes under the Conservatives. She unveiled a series of significant investment pledges for all three nations, including new green hydrogen projects at Cromarty in the Highlands and Milford Haven in south west Wales, a £25m city growth deal for Argyll and Bute in Scotland, £25m to maintain disused coal tips in Wales, as well as £125m to launch the new GB Energy headquarters in Scotland. Ian Murray, the Scottish secretary, said the total settlement for Scotland of £3.4bn would have a “huge impact” on the devolved government’s spending, with Treasury funding rising to a record £47.7bn next year. Darren Jones, the chief secretary to the Treasury, told reporters that meant public spending in Scotland would soon be 20% higher per person than the UK average. The chancellor said Wales would receive an additional £1.7bn and Northern Ireland £1.5bn for both day-to-day funding and investment in infrastructure. The Treasury confirmed after her statement those figures involved extra funding across this year and next, so were the equivalent of two years additional spending, rather than a jump in funding from this year to next. Its data tables showed the actual rate of increase in real terms over those two years was 2.3% for Scotland; 1.3% for Wales and 1.3% for Northern Ireland. The capital funding for Northern Ireland actually fell by 0.3% between 2023/24 and 2025/26.