Budget 2024: What’s likely to be in it – and what isn’t?
Briefings and speculation are rife over what will be included in the chancellor’s budget on Wednesday, particularly the scale of tax rises.
The biggest expected revenue raiser, set to generate as much as £20bn for public services, is a hike in employers’ national insurance.
Government sources have given strong indications of the chancellor’s thinking, prompting questions about whether this breaks Labour’s manifesto commitment not to hike the three main taxes – income tax, national insurance and VAT for “working people”.
Hikes in capital gains tax and inheritance tax have been touted as ways the Labour government could find money to balance the books and fix public services.
The budget’s contents will be only be official when Rachel Reeves sets it out on Wednesday, but these are some measures Sky News expects – and doesn’t expect – to be included.
No rises to income tax, national insurance or VAT
Labour ruled out increasing income tax, national insurance and VAT in its manifesto before getting elected, promising to protect “working people” – though who they define as a “working person” has come into question of late.
The chancellor is also expected to prolong the freeze on income tax thresholds by two years to 2030 after the previous Conservative government froze them until 2028.
Employers’ national insurance hike expected
The amount employers pay in national insurance is set to rise by up to two percentage points, and the money will – in part – be used to help inject £10bn into cutting NHS waiting lists.
A government source told Sky News: “There is a universal consensus that the NHS needs more money.
“That means asking businesses to help out.
“The choice is investment versus decline. She [Rachel Reeves] is choosing not to ask working people to pay the price for their [Conservatives’] failures.”
Housing
The government has confirmed that a large boost in affordable housing will be in the upcoming budget.
It says there will be £500m in new funding to help build up to 5,000 social homes and bring total investment in housing supply to £5bn as part of the government’s Affordable Homes Programme.
£1.4bn for crumbling schools
The chancellor has promised her budget will include £1.4bn to rebuild crumbling schools.
She said children “should not suffer” due to the UK’s depleted public purse, while economists said the funding would generally ensure existing plans keep going, rather than pay for many new initiatives. Teachers said much more cash was needed.
The Treasury said the £1.4bn would “ensure the delivery” of the school rebuilding programme, which was announced in 2020 under then prime minister Boris Johnson.
Funding for nurseries, breakfast clubs and childcare
The Treasury has also confirmed £1.8bn would be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
The Treasury said the first stage of the plan would pay for 300 new or expanded nurseries across England.
Ms Reeves also said she would “triple” investment in free breakfast clubs to £30m in 2025-26, after she announced at Labour’s party conference in September a £7m trial across up to 750 schools starting in April.
VAT exemption for private schools to be scrapped
Labour have long made clear their plans to scrap the VAT exemption and business rates relief for private schools in a bid to fund 6,500 new teachers in state schools.
Details of the government’s assessment of the expected impacts of these policy changes will be published when the budget comes out on 30 October.
This is only two months before the policy is due to come into effect on 1 January 2025, and will likely include details of whether schools will be forced to increase their fees.
It is now expected that military families, a number of whom send their children to private boarding schools because they could be posted abroad at short notice, will be exempt from paying increased fees.
Changes to the £2 bus fare cap
Bus fares have been capped at £2 on more than 4,600 routes in England since 1 January 2023.
Hundreds of operators outside of London have been part of the scheme, which has cost around £500m.
Introducing the scheme in 2023, former transport secretary Mark Harper said it was aimed at helping passengers afford bus travel for both their sakes and the sake of the environment.
But the scheme, which is currently meant to run until at least 31 December, is set to be changed as it is reportedly not generating economic benefit. It is unclear if the cap will be raised or removed entirely.
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Billions to be allocated to NHS
The government will be putting aside up to £10bn for the NHS, largely to help it tackle ballooning waiting lists after COVID, currently at a record high of 7.6 million, and to deliver on their promise of another 40,000 hospital appointments per week.
Health Secretary Wes Streeting last week said he has agreed on a plan for NHS funding with the chancellor – but noted the funds won’t actually be available until six months’ time.
“Investment in the budget, that comes in the new fiscal year in April, so that’s spring,” he said.
Labour are facing “difficult and big choices”, Mr Streeting warned, as he said the government “can’t fix 14 years in one budget”.
Carer’s Allowance expansion
Ms Reeves is expected to raise the limit people can earn before being ineligible for the Carers Allowance from £151 a week to £181.
It would mean tens of thousands of carers who aren’t currently eligible would get an extra £81.90 a week under the scheme.
The budget is set to take place at 12.30pm on Wednesday 30 October.
UK drivers are “confused” by the country’s electric car transition, ministers are being warned.
Although most drivers are not hostile towards electric vehicles (EVs), many are confused about what changes are coming and when, according to new research from the AA.
In a survey of more than 14,000 AA members, 7% thought the government was banning the sale of used petrol and diesel cars.
Around a third thought manual EVs exist, despite them all being automatic.
More than one in five said they would never buy an EV.
The government’s plan for increasing the number of electric vehicles being driven in the UK focuses heavily on increasing the supply of the vehicles.
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What you can do to reach net zero
In 2024, at least 22% of new cars and 10% of new vans sold by each manufacturer in the UK had to be zero-emission, which generally means pure electric.
Each year, those percentages will rise, reaching 80% of new cars and 70% of new vans in 2030.
Manufacturers will face fines of £15,000 per vehicle if electric vehicle sales fall short of 28% of total production this year.
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By 2035, all new cars and vans will be required to be fully zero emission, according to the Department for Transport.
Second-hand diesel and petrol cars will still be allowed to be sold after this date, and their fuel will still be available.
There are more EVs – but will people buy them?
In February, 25% of new cars were powered purely by battery and in January, they made up 21% of all new cars registered in the UK.
But despite the growth of electric sales, manufacturers continue to warn that the market will not support the growth required to hit government EV targets, and called for consumer incentives and the extension of tax breaks.
The AA suggested the government’s plan focuses on “supply but does little to encourage demand for EVs”.
It called on ministers to co-ordinate a public awareness campaign alongside the motoring industry which directly targets drivers who doubt the viability of EVs.
“Our message to government is more needs to be done to make EVs accessible for everyone,” said Jakob Pfaudler, AA chief executive.
Which? head of consumer rights Sue Davis said: “When it comes to making sustainable choices such as switching to an electric car, our research shows that people are often held back by high costs, complex choices or uncertainty.
“The government needs to provide the right information on electric vehicles and other sustainable choices so that people have the confidence to switch.”
A Department for Transport spokesperson said: “We’re investing over £2.3bn to help industry and consumers make a supported switch to EVs.
“This includes installing a public charge point every 28 minutes, keeping EV incentives in the company car tax regime to 2030, and extending 100% first-year allowances for zero-emission cars for another year.
“Second-hand EVs are also becoming cheaper than ever, with one in three available under £20,000 and 21 brand new models available for less than £30,000.
“We’re seeing growing consumer confidence as a result.”
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