The budget will increase taxes by £40bn, with the lion’s share coming from a £25bn rise in employers’ national insurance contributions, the chancellor announced at the budget.
Rachel Reeves said the amount businesses will pay on their employees’ national insurance contributions will increase from 13.8% to 15% from April 2025, with the current £9,100 annual threshold lowered to £5,000, in what she called a “difficult choice” to make.
The Office for Budget Responsibility (OBR), which monitors the government’s spending plans and performance, said most of the burden from the increase will be passed on to workers through lower wages, and consumers through higher prices.
It estimated the national insurance hike would reduce the average hours worked by the equivalent of 50,000 hours.
The £40bn rise in taxes is thought to be the largest increase at a budget since John Major’s government in 1993 and is set to more than fill the £22bn “black hole” Labour said the Conservative government left them with.
Ms Reeves also announced the current freeze on income tax thresholds will end in 2028/29 and will be uprated in line with inflation after that.
The previous Conservative government froze the thresholds which meant more people paying higher rates of tax as their salary increases and they move into higher tax bands.
The OBR said the tax burden will reach “a historic high of 38% of GDP by 2029/30” and predicted inflation and interest rates will both be higher as a result of the budget.
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Ms Reeves said a “line-by-line breakdown” of the black hole will be published, which she said shows there were “hundreds of unfunded pressures on the public finances” under the Conservatives.
The chancellor, who said she was “deeply proud” to be the country’s first female chancellor, insisted the Labour government would “invest, invest, invest” and put “more pounds in people’s pockets”.
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‘This budget raises taxes by £40bn’
Some of the other major changes the chancellor also announced include:
• Fuel duty will stay frozen next year and 5p cut to remain
• Capital gains tax lower rate will increase from 10% to 18%, higher rate from 20% to 24%
• Residential property capital gains tax will remain at 18% and 24%
• Two “permanently lower” business tax rates for retail, hospitality and leisure properties
• 40% relief on business rates in 2025-26 up to a £110,000 cap
• Inheritance tax thresholds frozen until 2030
• Higher rate stamp duty for second homes increased to 5% from Thursday
• Alcohol duty rates on non-draught drinks to increase in line with RPI from February
• Draught alcohol duty cut by 1.7% – 1p off a pint
• HS2 will go to Euston in central London
• Every government department must make 2% cuts by next year
• £22.6bn extra for the NHS’ day-to-day health budget, £3.1bn more for the capital budget
• £2.3bn for schools to hire teachers next year, £6.7bn for the schools capital budget
• £2.9bn for Armed Forces next year
• £500m increase in road budgets next year.
The chancellor started her budget speech by saying the country “voted for change” and “responsible leadership” on 4 July at the general election – and went on to attack the “irresponsibility” of the previous Conservative government.
“We must restore economic stability and turn the page on the last 14 years,” she said.
Ms Reeves added: “The party opposite failed our country. Their austerity broke our National Health Service. The British people have inherited their failure.”
“They called an election to avoid making difficult choices,” she continued.
The chancellor outlined her priorities as economic growth and the NHS, and pledged an end to “short-termism”.
Labour promised to keep the triple lock on pensions, where the state pension goes up each year by whichever is higher of 2%, inflation or earnings growth.
She said that means it will be uprated by 4.1% next year so more than 12m pensioners will be up to £470 better off.
She also set aside £11.8bn for compensation for victims of the infected blood scandal, and £1.8bn for victims of the Post Office IT scandal.
Ahead of the first Labour budget since Alistair Darling’s in 2010, Labour committed in its election manifesto to not increase income tax, national insurance or VAT on “working people”, which Ms Reeves said she had kept to.
Various ministers got into a tangle over who exactly qualified as a working person in the weeks before the budget.
A few plans were leaked or announced ahead of the budget, including:
• All private school fees will include VAT from January, business tax relief to be removed from private schools in April
• An increase on employers’ national insurance – but they did not say by how much
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A British tourist being treated after a suspected mass methanol poisoning in Laos has died, according to UK officials.
Simone White, 28, from Orpington, Kent, fell ill after reportedly drinking “free shots” from a local bar in Vang Vieng – a resort popular with backpackers.
Four people had already died following the suspected poisonings – an Australian named Bianca Jones, 19, from Melbourne, as well as two Danish women in their 20s and a 56-year-old US citizen.
They are believed to have consumed drinks tainted with methanol, which is sometimes added to mixed drinks as a cheaper alternative to alcohol, but can cause severe poisoning or death.
“We are supporting the family of a British woman who has died in Laos, and we are in contact with the local authorities,” the UK’s Foreign, Commonwealth and Development Office (FCDO) said in a statement.
The FCDO said it was also providing consular assistance to other British nationals hospitalised in the incident, as well as their families.
Ms White was an associate lawyer specialising in intellectual property and technology and worked at the London office of the American law firm Squire Patton Boggs.
Her work involved general commercial matters, and contentious and non-contentious intellectual property law issues, according to the firm’s website.
Bethany Clarke, a friend of Ms White and a healthcare worker, also from Orpington, said a group of six people had been taken to hospital after drinking from the same bar.
She posted on a Laos Backpacking Facebook group to warn other travellers after the group fell ill.
“Urgent – please avoid all local spirits. Our group stayed in Vang Vieng and we drank free shots offered by one of the bars,” she wrote.
“Just avoid them as so not worth it. Six of us who drank from the same place are in hospital currently with methanol poisoning.”
‘Every parent’s very worst fear’
Australian Prime Minister Anthony Albanese confirmed to his country’s parliament that 19-year-old Bianca Jones had died after being evacuated to a Thai hospital from Vang Vieng.
Thai authorities confirmed that Jones had died of “brain swelling due to high levels of methanol found in her system”.
Her friend Holly Bowles, also 19, remains in hospital in neighbouring Thailand, Mr Albanese said.
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Laos methanol poisonings – what we know
Australian officials said “several foreign nationals” had also been victims of methanol poisoning
“This is every parent’s very worst fear and a nightmare that no one should have to endure,” Mr Albanese said.
“We also take this moment to say that we’re thinking of Bianca’s friend Holly Bowles who is fighting for her life.”
‘Her incredible spirit touched so many lives’
In a statement to the Melbourne Herald Sun newspaper, Ms Jones’ family paid tribute to her.
“She was surrounded by love, and we are comforted by the knowledge that her incredible spirit touched so many lives during her time with us,” the family wrote.
“We want to express our deepest gratitude for the overwhelming support, love, and prayers we’ve received from across Australia.”
The US State Department confirmed that an American had also died in Vang Vieng, and Denmark’s Foreign Ministry said two of its citizens had also died in “the incident in Laos”.
Neither would comment directly on a link to methanol poisoning.
The second named storm of the season will bring snow, rain and strong winds to parts of the UK this weekend, according to the Met Office.
Hundreds of schools are closed as the storm, named Bert, sweeps in, bringing freezing temperatures and snow over the weekend.
Wind gusts of up to 70mph are expected in some areas as well as the potential of flooding and travel disruption.
Heavy snowfall could bring further disruption to parts of the country while heavy rain is also likely over the weekend, the Met Office added.
Parts of southwest England including Plymouth and Exeter are under a yellow warning for snow until 3pm today, with 5-10cm predicted in higher parts of Dartmoor.
Wintry showers will continue in different parts of the UK throughout Thursday and Friday, amid warnings of snow and ice for much of Scotland, northern England and parts of western and eastern England and Wales between midday today and 10am tomorrow.
Met Office chief meteorologist Matthew Lehnert said: “A northerly airflow will continue to feed snow showers into Scotland over the next few days, with this reaching lower levels at times and bringing the potential for some travel disruption.
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“Overnight temperatures will drop below zero fairly widely over the next few days, which has resulted in some ice warnings, with further warnings likely through this week.”
More than 114 schools are shut in the Highland Council area today due to snow, including Inverness Royal Academy where pupils were told their prelim exams planned for the day would be rescheduled.
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Almost 40 schools in Aberdeenshire are also shut while many others had delayed openings, and in Moray around 12 were closed and others opened late.
It comes after more than 100 schools or nurseries were closed in Scotland yesterday because of the weather.
South of the border, 89 schools were shut in Devon today, 18 in Dorset and 60 in Cornwall, while in Wales around 10 were closed in Conwy, 18 in Denbighshire and two in Wrexham.
As Storm Bert hits the UK, areas where warnings are in place in the south and west are likely to be impacted by heavy rain on Saturday and Sunday.
Between 50-75 mm of rainfall is expected there on the weekend, while Wales and southwest England could see more than 100mm.
There is already a yellow warning for heavy snow on Saturday followed by a “rapid thaw” and rain on Saturday night in northeast and northwest England, the West Midlands, Yorkshire, and much of Scotland.
Met Office Deputy Chief Meteorologist, Dan Holley, said: “Storm Bert marks a shift to much milder air and wintry hazards will gradually diminish through the weekend, but heavy snowfall is expected across parts of northern England and Scotland for a time on Saturday, especially over higher ground, and warnings are in place.”
A man has been found guilty of murdering his “best friend” on Christmas Eve.
A jury of 10 men and two women heard Dylan Thomas, 24, killed William Bush, 23, in a “frenzied attack”in the Llandaff area of Cardiff last year.
Thomas had previously pleaded guilty to manslaughter by diminished responsibility but denied Mr Bush’s murder.
A trial at Cardiff Crown Court heard Thomas attacked Mr Bush “from behind” in his bedroom after he entered through the kitchen at the property they shared, owned by the defendant’s grandparents.
During the “sustained attack” Mr Bush “fled for his life” down two flights of stairs and onto the patio, the trial heard.
Mr Bush sustained 37 stab wounds in total, including 21 to the neck.
His cause of death was given as “multiple stab wounds to the neck and trunk”.
The defendant, who was wearing a blue t-shirt, attended the hearing via video link from a secure hospital.
The jury returned a unanimous verdict on Thursday afternoon after just over three hours of deliberation.
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Thomas, who was suffering from schizophrenia, had initially claimed he was acting in self-defence.
‘Clear thinking’
The court heard how Mr Bush was Thomas’s “only known real friend”.
During the trial, it was also heard how Thomas had been arrested “for trying to climb into Buckingham Palace” some weeks previously.
He also wrote to Elon Musk telling him he believed he had the ability to harness gravity.
The defendant was staying with his grandmother in Rhoose, the Vale of Glamorgan, on the night before the attack.
In the early hours of Christmas Eve, the jury heard Thomas had carried out an online search for the “anatomy of the neck”.
Thomas, who could not drive, enquired about getting an Uber to Tŷ Matthew in Llandaff at 3.31am.
Later that morning, his grandmother agreed to take him to the house after he told her he “wanted to walk the dog” and they left her home in Rhoose at 10.41am.
He had sent several messages to Mr Bush in the hours before the attack in which he said he needed to see him before Mr Bush went home to Brecon to spend Christmas with his family.
The prosecution argued there was “clear thinking on the part of Dylan Thomas”.
“This was a frenzied attack where Mr Thomas could only have had one intention and that was to kill Mr Bush,” said Gregory Bull KC, prosecuting.
But the defence argued Mr Bush’s schizophrenia lay “at the centre” of the case.
“He didn’t understand, because he was deluded. He believed, for whatever reason, that his best friend was threatening his life,” said defence barrister Orlando Pownall KC.
Thomas will be sentenced on Monday 16 December.
This breaking news story is being updated and more details will be published shortly.