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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.

Follow live: All the latest on budget day

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.

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.

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. REUTERS/Mina Kim
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Rachel Reeves and her Treasury team before the budget. Pic: Reuters

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.

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. REUTERS/Isabel Infantes
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Pic: Reuters

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

• A change to the fiscal rules – the way in which the government borrows and pays back money – in order to allow for greater investment spending

• An increase to the bus fare cap by 50% to £3

• A boost to the national living wage, with the minimum someone aged 21 and over can be paid increasing by 6.7% to £12.21 an hour

• The national minimum wage, for 16 to 20-year-olds, will also increase – by 16.3% to £10 an hour.

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Eight arrests in connection with two separate terrorism investigations

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Eight arrests in connection with two separate terrorism investigations

Eight men have been arrested by the Metropolitan Police in two unconnected terrorism investigations.

In one operation on Saturday, counter-terror officers arrested five men, four of whom are Iranian nationals. All are in police custody.

The Met said the arrests related to a “suspected plot to target a specific premises”.

In an update shortly after midnight, the force said: “Officers have been in contact with the affected site to make them aware and provide relevant advice and support, but for operational reasons, we are not able to provide further information at this time.”

It added officers were carrying out searches at a number of addresses in the Greater Manchester, London and Swindon areas in connection with the investigation.

It said those detained were:

• A 29-year-old man arrested in the Swindon area
• A 46-year-old man arrested in west London
• A 29-year-old man arrested in the Stockport area
• A 40-year-old man arrested in the Rochdale area
• A man whose age was not confirmed arrested in the Manchester area.

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Commander Dominic Murphy, head of the Met’s Counter Terrorism Command, said: “This is a fast-moving investigation and we are working closely with those at the affected site to keep them updated.

“The investigation is still in its early stages and we are exploring various lines of enquiry to establish any potential motivation as well as to identify whether there may be any further risk to the public linked to this matter.

“We understand the public may be concerned and as always, I would ask them to remain vigilant and if they see or hear anything that concerns them, then to contact us.

“We are working closely with local officers in the areas where we have made arrests today and I’d like to thank police colleagues around the country for their ongoing support.”

Terror arrests in separate investigation

Police also arrested three further Iranian nationals in London on Saturday as part of another, unrelated counter terror investigation.

The suspects were detained under section 27 of the National Security Act 2023, which allows police to arrest those suspected of being “involved in foreign power threat activity”.

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Home secretary Yvette Cooper said in a statement: “I want to thank the police and our security services for the action they have taken to keep our country safe.

“Protecting national security is the first duty of government and our police and security services have our strong support in their vital work.”

She added: “These are serious events that demonstrate the ongoing requirement to adapt our response to national security threats.”

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Pictured: Boy killed in Gateshead industrial estate fire – 14 children arrested on suspicion of manslaughter

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Pictured: Boy killed in Gateshead industrial estate fire - 14 children arrested on suspicion of manslaughter

Tributes have been paid to 14-year-old Layton Carr who died in a fire at an industrial estate.

Eleven boys and three girls, aged between 11 and 14 years, have been arrested on suspicion of manslaughter after the incident in Gateshead on Friday. They remain in police custody.

Drone view showing the aftermath of a fire at Fairfield industrial park at Bill Quay, Gateshead
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Police were alerted to a fire at Fairfield industrial park in the Bill Quay area

Firefighters raced to Fairfield industrial park in the Bill Quay area shortly after 8pm, putting out the blaze a short time later.

Police then issued an appeal for a missing boy, Layton Carr, who was believed to be in the area at the time.

In a statement, the force said that “sadly, following searches, a body believed to be that of 14-year-old Layton Carr was located deceased inside the building”.

Layton’s next of kin have been informed and are being supported by specialist officers, police added.

Pic: North News and Pictures
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Layton has been described as a ‘beautiful soul’

A fundraising page on GoFundMe has been set up to help Layton’s mother pay for funeral costs.

Organiser Stephanie Simpson said: “The last thing Georgia needs to stress trying to pay for a funeral for her Boy Any donations will help thank you.”

One tribute in a Facebook post read: “Can’t believe I’m writing this my nephew RIP Layton 💔 forever 14 you’ll be a massive miss, thinking of my sister and 2 beautiful nieces right now.”

Another added: “My boy ❤️ my baby cousin, my Layton. Nothing will ever come close to the pain I feel right now. Forever 14. I’ll miss you sausage.”

A third said: “Rest in peace big lad such a beautiful soul taken far to soon my thoughts are with you Gee stay strong girl hear for u always.”

Read more from Sky News:
Eight arrests in connection with two terrorism operations
Compensation scheme scrapped for child sexual abuse victims

Detective Chief Inspector Louise Jenkins, of Northumbria Police, also said: “This is an extremely tragic incident where a boy has sadly lost his life.”

She added that the force’s “thoughts are with Layton’s family as they begin to attempt to process the loss of their loved one”.

They are working to establish “the full circumstances surrounding the incident” and officers will be in the area to “offer reassurance to the public”, she added.

A cordon remains in place at the site while police carry out enquiries.

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Child sexual abuse victims ‘denied justice’ after compensation scheme scrapped over cost

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Child sexual abuse victims 'denied justice' after compensation scheme scrapped over cost

Sky News can reveal that the government has rowed back on a national compensation scheme for victims of child sexual abuse, despite it being promised under the previous Conservative administration.

Warning – this story contains references to sexual and physical abuse

A National Redress Scheme was one of 20 key recommendations made by the Independent Inquiry into Child Sexual Abuse (IICSA), but a Home Office report reveals the government has scrapped it because of the cost.

Marie, who is 71, suffered alleged sexual, physical, and emotional abuse at Greenfield House Convent in St Helens, Merseyside, between 1959 and 1962, and is still fighting for compensation.

Greenfield House Convent, where Marie says she was abused
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Greenfield House Convent, where Marie says she was abused

As soon as she arrived as a six-year-old, Marie says her hair was cut off, her name changed, and she experienced regular beatings from the nuns and students.

She claims a nun instigated the violence, including when Marie was held down so that her legs were “spread-eagled” as she was sexually abused with a coat hanger.

Merseyside Police investigated claims of abuse at the convent, but in 2016, a suspect died before charges could be brought.

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Marie has received an apology from the Catholic body that ran the home; she tried to sue them, but her claim was rejected because it was filed too long after the alleged abuse.

Marie is still fighting for compensation for the abuse she suffered
Image:
Marie, 71, is still fighting for compensation for the abuse she says she suffered as a child

In February, ministers said the law would change for victims of sexual abuse trying to sue institutions for damages, which was a recommendation from the IICSA.

Previously, people had to make a civil claim before they were 21, unless the victim could prove a fair trial could proceed despite the time lapse.

Campaigners argued for the time limit to be removed as, on average, victims wait 26 years to come forward. Changes to the 1980 Limitation Act could lead to more people making claims.

Peter Garsden, President of The Association of Child Abuse Lawyers
Image:
Peter Garsden, President of The Association of Child Abuse Lawyers

Civil cases ‘can take three to five years’

But Peter Garsden, president of the Association of Child Abuse Lawyers, worries that when it comes to historical abuse where the defendant is dead, institutions will still argue that it is impossible to have a fair trial and will fight to have the case thrown out of court.

Mr Garsden said it takes “between three and five years” for a civil case to get to trial.

He warned that claimants “can end up losing if you go through that process. Whereas the Redress Scheme would be quicker, much more straightforward, and much more likely to give justice to the victims”.

Victim awarded £10 compensation

Jimbo, who was a victim of abuse at St Aidan’s children’s home in Cheshire, took his case to the High Court twice and the Court of Appeal three times, but, after 13 years, all he ended up with was £10 for his bus fare to court.

Despite the Lord Justice of Appeal saying he believed that the abuse had occurred, Jimbo lost his claim because of the time limit for child sexual abuse claims to be made.

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Neither Marie nor Jimbo is likely to benefit from the removal of the time limit for personal injury claims, which is why Mr Garsden is calling on the government to implement a National Redress Scheme for victims of sexual abuse, as recommended by the IICSA.

Hundreds of millions paid to victims

The governments in Scotland and Northern Ireland have set up compensation schemes and paid hundreds of millions of pounds to victims.

In 2023, the then Conservative government said a similar scheme would be organised for England and Wales.

But the Home Office admitted in its Tackling Child Sexual Abuse: Progress Update that it “is not currently taking forward any further steps on the IICSA proposal for a separate, national financial redress scheme for all survivors of child sexual abuse”.

“In the current fiscal environment, this recommendation is very difficult to take forward,” it added.

For victims, the scheme was the last chance of compensation for a lifetime blighted by abuse.

“The money is about justice and about all the other people who have had to suffer this abuse,” Marie said.

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