Chancellor Rachel Reeves is delivering Labour’s first Budget in 14 years.
The UK’s first female chancellor rose to her feet at 12.34pm to announce the first Labour budget since Alistair Darling in 2010.
She has promised to put “more pounds in people’s pockets”.
But commitments not to increase income tax or national insurance on employees are likely to see companies hit with a greater share of the burden to help repair the nation’s finances and fund stretched public services.
It comes after she received a mixed response after confirming that the minimum wage in the UK will rise by 6.7% to £12.21 an hour next year.
While welcomed generally, some of those in Northern Ireland warned against dramatic changes which would particularly impact smaller businesses here.
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Follow the announcement on our live blog here:
Key updates
No increase on fuel costs
Budget to raise taxes by £40 billion
Prime Minister promises to ‘give all support’ to Stormont Assembly
“Looks like those business owners who rushed to sell their companies in advance of today’s Budget made the right move. The Chancellor has hiked capital gains tax, as forecast, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%. These are measures which will hit business owners and serial entrepreneurs, but there’s no arguing they’ll also raise significant revenue. Measures like this were inevitable if the Chancellor was to stick to the Labour Party’s pledge not to increase employee national insurance, Vat, corporation tax or income tax.”Margaret Canning, Belfast Telegraph Business Editor
Capital gains tax will increase
The headline rates of capital gains tax will increase, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%, the Chancellor has announced.
“The most painful element of today’s Budget, A 1.2 percentage point increase in rate of employer national insurance contributions to 5%, and the threshold lowered from £9,100 to £5,000. Chancellor says the measure will raise £25bn. “I do not take this decision lightly.” It won’t sit lightly on the minds of many small business owners tonight!”Margaret Canning, Belfast Telegraph Business Editor
National Insurance contributions to rise
The Chancellor has announced that National Insurance contributions by employers will rise from 13.8% to 15%. The threshold at which businesses start paying National Insurance on a workers’ earnings will be lowered from £9,100 to £5,000.
No increase on fuel costs
Chancellor Rachel Reeves has announced she will continue the freeze on fuel duty next year and maintain the existing 5p cut as she said that increasing it “would be the wrong choice”.
“Freezing fuel duty and retaining 5% discount is expensive… but Ms Reeves says lifting the freeze is not the right thing to do. “There will be no higher taxes at the petrol pumps next year”.”Margaret Canning, Belfast Telegraph Business Editor
Weekly earnings limit for carers allowance will rise
The weekly earnings limit for carers allowance will rise to the equivalent of 16 hours a week at the national living wage, the largest increase since the allowance was introduced, the Chancellor has announced.
“National living wage going up by 6.7% to £12.21 an hour. It’s really welcome news for workers, but it can’t be denied small business owners are going to find it difficult. That’s particularly true in narrow-margin sectors like hospitality. The Low Pay Commission has been urged to monitor the impact of higher minimum wage rates on employment, including whether firms start to switch to self-employed labour so that they can avoid the rising cost of employment. ”Margaret Canning, Belfast Telegraph Business Editor
Labour working to ‘develop’ city growth deals
The Chancellor has said Labour will ensure that “all parts of the UK” can realise their potential.
“We are working with the devolved governments and partnering with our mayors to develop local growth plans,” said Ms Reeves.
The deals relate to a package of extra funding worth over £1bn and decision-making powers negotiated between central Government and local councils.
“We are working with the devolved governments and partnering with our mayors to develop local growth plans,” said Ms Reeves.
The deals relate to a package of extra funding worth over £1bn and decision-making powers negotiated between central Government and local councils.
There are currently four in Northern Ireland. These are the Belfast Region City Deal, the Derry City & Strabane District Council City Deal, the Causeway Coast & Glens Growth Deal and the Mid South West Growth Deal.
“Chancellor has announced 2% efficiency targets for all government departments to meet, and a new unit to crack down on companies who profited unfairly from emergency funding during Covid-19. And there’s a new crackdown on benefit fraudsters, along with a drive to reduce economic inactivity and Neets. Economic inactivity has of course been a long-term drag on the economy here in NI. ”Margaret Canning, Belfast Telegraph Business Editor
Government borrowing expected to reach £127 billion
Government borrowing for this year is expected to reach £127 billion, the Chancellor has said.
Budget to raise taxes by £40 billion
The Budget “raises taxes” by £40 billion, Chancellor Rachel Reeves has said.
“Any Chancellor would have to face this reality,” she said. “And any responsible Chancellor would take action.”
“Any Chancellor would have to face this reality,” she said. “And any responsible Chancellor would take action.”
“Chancellor emphasising that her Budget is about breaking with the past and the “short-termism” of former budget announcements. No more borrowing to fund day to day spending, which is a big break with how things have been done before. ”Margaret Canning, Belfast Telegraph Business Editor
Infected blood and Post Office scandals victims to be compensated
The Government will set aside £11.8 billion to compensate those affected by the infected blood scandal and £1.8 billion to compensate victims of the Post Office Horizon scandal, the Chancellor has announced.
“Two years ago, then-Chancellor Kwasi Kwarteng and then-PM Liz Truss unleashed chaos on the markets with their mini-budget. In the process, they rubbished the Bank of England and the Office for Budget Responsibility. But Chancellor Rachel Reeeves is breaking firmly with that past, with her thanks to both institutions. And there’s a tongue-in-cheek reference from RR to a recent KK interview in which he said the mini-budget wasn’t perfect. ”Margaret Canning, Belfast Telegraph Business Editor
Reeves ‘deeply proud’ to be first female Chancellor
“While this the first Budget in more than 14 years to be delivered by a Labour Chancellor, it is the first Budget in our country’s history to be delivered by a woman,” said Rachel Reeves.
“I am deeply proud to be Britain’s first ever female Chancellor of the Exchequer. For girls and young women everywhere I say, let there be no ceiling on your ambition, your hopes and your dreams.
“And along with the pride that I feel standing here today, there is also a responsibility to pass on a fairer society and a stronger generation for the next generation of women.”
“I am deeply proud to be Britain’s first ever female Chancellor of the Exchequer. For girls and young women everywhere I say, let there be no ceiling on your ambition, your hopes and your dreams.
“And along with the pride that I feel standing here today, there is also a responsibility to pass on a fairer society and a stronger generation for the next generation of women.”
“There are tweaks expected in inheritance tax, such as an end to relief on the sale of shares in AIM companies, and capital gains tax. The prospect of changes to the latter has prompted a rush of company disposals in the last few weeks, keeping corporate lawyers and advisors busy! ”Margaret Canning, Belfast Telegraph Business Editor
“The Chancellor has vowed to turn the page on the last 14 years, with a mantra to “invest, invest, invest,” and “rebuild Britain”. Yet there’s no escaping the fact that today’s Budget has been feared by businesses of all sizes. In particular, the tipped increase in minimum wage is adding to the burden of costs for small businesses in particular. ”Margaret Canning, Belfast Telegraph Business Editor
‘Invest, invest, invest’ Rachel Reeves tells the Commons
“Change must be felt,” the Chancellor has told the House of Commons.
“More pounds in people’s pockets, an NHS when you need it, an economy that is growing – creating wealth and opportunity for all – because that is the only way to improve living standards.
“And the only way to drive economic growth is to invest, invest, invest.”
“More pounds in people’s pockets, an NHS when you need it, an economy that is growing – creating wealth and opportunity for all – because that is the only way to improve living standards.
“And the only way to drive economic growth is to invest, invest, invest.”
Budget announcement gets underway
Chancellor Rachel Reeves said: “On July 4, the country voted for change. This government was given a mandate to restore stability to our economy and to begin a decade of national renewal.
“To fix the foundations and deliver change through responsible leadership in the national interest. That is our task and I know that we can achieve it.”
“To fix the foundations and deliver change through responsible leadership in the national interest. That is our task and I know that we can achieve it.”
Prime Minister promises to ‘give all support’ to Stormont Assembly
Rishi Sunak said he was “so pleased” to see the Stormont Assembly restored earlier this year.
The former Prime Minister said he was grateful for Sir Keir Starmer’s support during that time and asked him to assure the House of Commons that he will “continue to work to keep Stormont open, delivering for the Northern Irish people and strengthening Northern Ireland’s place in our Union”.
Sir Keir replied: “I absolutely agree that the institutions at Stormont need to be up and running. I want to give all support I can to the further development in Northern Ireland.”
The former Prime Minister said he was grateful for Sir Keir Starmer’s support during that time and asked him to assure the House of Commons that he will “continue to work to keep Stormont open, delivering for the Northern Irish people and strengthening Northern Ireland’s place in our Union”.
Sir Keir replied: “I absolutely agree that the institutions at Stormont need to be up and running. I want to give all support I can to the further development in Northern Ireland.”