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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Police have made a direct appeal to those involved in the murder of a teenager to finally bring her family closure, exactly 30 years after she disappeared.
Lindsay Rimer, 13, went out to buy a box of Corn Flakes late in the evening on 7 November 1994 and never returned home. Her body was found in a canal close to her home six months later.
Lindsay’s family have also marked this year’s anniversary with a renewed appeal for information from the public, particularly in the town of Hebden Bridge in West Yorkshire where Lindsay lived and died.
“This person should be in prison, not us because that’s where we feel we’ve been for the last 30 years,” her sister Kate Rimer told Sky News.
Juliet Rimer was just one when her sister was killed but has recently been reading letters and diaries to gain a better understanding of a life cut short.
“It’s just, it’s a bit of a horror film that we have to do this,” she said. “The fact that I had a sister that I never knew who was murdered, I just can’t wrap my head around that. It’s had a massive impact on me.”
Kate, who played the part of her sister in a police reconstruction a year after her disappearance, says the family believes someone has information that could lead to her killer’s arrest.
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“It’s usually been my mum who does this but the emotional toll it’s taken on my parents means that they just can’t do this anymore.
“It’s incredibly emotional, it opens everything up, and it reflects back over 30 years ago and everything that we lived through then. And just the horror of a loved family member, a child being murdered, is a really bizarre situation. You live your normal life around that and then we’re opening up again to bring murder and death back into our family.”
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In the years since Lindsay’s disappearance, police have spoken to more than 5,000 people and examined 1,200 vehicles. Two men were arrested and later released.
A new sighting of Lindsay after she left the convenience shop on the night she disappeared has been confirmed and police believe those in the community have vital information.
Detective Chief Inspector James Entwistle of West Yorkshire Police made a direct appeal to those who were involved in killing and disposing of her body.
“Has this been on your conscience for thirty years?” he said.
“It’s perfectly possible there’s more than one person involved, its perfectly possible there’s a vehicle involved. Maybe you didn’t murder Lindsay but you know exactly who did because you were there and that’s sat on your conscience for 30 years.
“Now is the time to come and talk to us, now is the time to draw a line under this and bring that closure for Lindsay’s family.”
New posters featuring Lindsay’s picture have gone up around Hebden Bridge as part of the appeal for information and an increased police presence will be in the town.
Juliet said: “It has been 30 years but Lindsey didn’t deserve this and we owe it to her as her family to keep doing this.”
Lucy Letby suggested she could give “tips” to a colleague on how to get away with murder, a public inquiry has heard.
The child serial killer exchanged WhatsApp messages in 2017 with union rep Hayley Griffiths about the US legal drama How To Get Away With Murder.
The discussion took place a year after the neonatal nurse was moved to clerical duties at the Countess of Chester Hospital following concerns she may have been deliberately harming babies.
In a message to Letby, Ms Griffiths wrote: “I’m currently watching a programme called how to get away with murder. I’m learning some good tips.”
Letby replied: “I could have given you some tips x”
Ms Griffiths said: “I need someone to practice on to see if I can get away with it.”
Letby wrote: “I can think of two people you could practice on and will help you cover it up x”
Ms Griffiths replied: “Deal. I will get thinking of a plan. Get the cruise booked as our getaway.”
The pair were working in the hospital’s risk and patient safety department a year before Letby was arrested on suspicion of multiple murders by Cheshire Police.
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How the police caught Lucy Letby
Ms Griffiths said she was aware of the concerns of foul play and the connection to Letby by September 2016.
Shahram Sharghy, representing some of the families of Letby’s victims, asked: “Given the severity of the allegations that were made, and would you agree they are possibly the most serious allegations that anybody could make against a healthcare professional, were you making light of those allegations when you were referring to potentially committing a crime?”
Ms Griffiths answered: “No.”
Mr Sharghy asked: “Can you even begin to imagine and put yourself in the position of the families of the babies who were harmed when they see those messages?”
Ms Griffiths said: “I know… I am so remorseful. As soon as I saw them myself I was upset and I can’t begin to imagine… I can only apologise and say I have learned. I can’t go back in time but I have reflected absolutely on it.”
Earlier, Ms Griffiths told counsel to the inquiry Rachel Langdale KC: “It was nothing more than a conversation. However, I truly and deeply regret having started that conservation… this is completely unprofessional, poor judgement on my behalf and completely insensitive. And for that, I can only apologise from the bottom of my heart.”
Letby, 34, from Hereford, is currently serving 15 whole-life orders.
She was convicted at Manchester Crown Court of murdering seven infants and attempting to murder six others between June 2015 and June 2016.
The Thirlwall Inquiry into the events surrounding her crimes is expected to sit until early 2015. The findings are expected by late autumn that year.
Three men have been arrested in connection with a deadly house explosion in Newcastle.
Seven-year-old Archie York and Jason Laws, who was in his 30s, were killed following the blast in Violet Close, in the Benwell and Elswick area of the city in October.
Police said at the time that six others were taken to hospital “with varying injuries” after the blast and subsequent fire.
Three men – two in their 30s and one in his 50s – have been arrested on suspicion of two counts of manslaughter, and the production of a Class B drug, namely cannabis, Northumbria Police said.
They all remain in police custody.
Detective Chief Inspector Katie Smith said: “This has been a truly tragic incident which resulted in the loss of two lives.
“As a result of our ongoing enquiries, three men have today been arrested in connection with the explosion.
“Our investigation will remain ongoing as we seek to provide answers to what has happened.
“We would continue to ask people to avoid speculation surrounding this incident both online and in the community.”
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From October: Deadly blast destroys Newcastle house
The blast tore through a row of six properties divided into two flats each.
Drone footage showed how six flats in the middle of the building appeared to have been completely destroyed by the explosion and fire, while piles of debris could be seen in the street outside.
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Superintendent Darren Adams, from Northumbria Police, said on the day of the fire: “As a result of the incident in the early hours of this morning, a seven-year-old boy has sadly passed away.
“Despite the efforts of the emergency services, he tragically died at the scene.