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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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President Bush determined to ‘rid world of evil-doer Saddam Hussein’, new records reveal

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President Bush determined to 'rid world of evil-doer Saddam Hussein', new records reveal

It would have been “politically impossible” to stop President Bush from invading Iraq, as he believed he was on a “crusade against evil”, new records show.

Newly declassified UK government files show Sir Tony Blair was warned by his US ambassador that George W Bush was determined to overthrow dictator Saddam Hussein, in the months before the invasion of Iraq.

Sir Tony, who was prime minister at the time, was trying to encourage the US president to use diplomatic means to change the situation in the Middle Eastern country, and flew to Camp David in January 2003 to make the case, just two months before the joint US-UK invasion.

The UK government was also hoping the United Nations Security Council would agree a new resolution specifically authorising the use of military force against Iraq.

But the files, made public for the first time, show that Sir Tony’s ambassador, Sir Christopher Meyer, warned him it would be “politically impossible” to sway Mr Bush away from an invasion unless Hussein surrendered.

 File photo dated 21/11/2003 of US President George Bush stood alongside Prime Minister Tony Blair
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Prime Minister Tony Blair with US President George W Bush in 2003

The documents, released by the National Archives at Kew in west London, show Sir Christopher also wrote that Mr Bush believed himself to be on “a crusade against evil to be undertaken by God’s chosen people”.

Sir Tony’s foreign policy adviser, Sir David Manning, told the PM that when he met Mr Bush, he should make the point that a new diplomatic resolution was “politically essential for the UK, and almost certainly legally essential as well”.

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But the White House was becoming increasingly impatient at the unwillingness of France and Russia – both of whom held a veto – to agree a resolution so long as UN inspectors were unable to find any evidence of Iraqi weapons of mass destruction, the supposed justification for war.

Sir Christopher warned Sir Tony shortly before his visit to see Mr Bush in January 2003 that options for a peaceful solution in Iraq had effectively run out.

(from L-R) Tony Blair, Spanish Prime Minister Jose Maria Aznar, George Bush and Portuguese Prime Minister Manuel Durao Barroso - 16/03/03
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Tony Blair speaking at a press conference following talks over Iraq in March 2003, watched on by George Bush and the leaders of Spain and Portugal

He wrote: “It is politically impossible for Bush to back down from going to war in Iraq this spring, absent Saddam’s surrender or disappearance from the scene.

“If Bush had any room for manoeuvre beforehand this was closed off by his State of the Union speech.

“In the high-flown prose to which Bush is drawn on these set-piece occasions, he said in effect that destroying Saddam is a crusade against evil to be undertaken by God’s chosen people.”

File photo of Iraqi President Saddam Hussein, December 31, 2001. REUTERS/Faleh Kheiber SJS/CMC
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Saddam Hussein in 2001 – he was captured by US soldiers in December 2013

In a cable sent the previous month, Sir Christopher said that much of the impulse for deposing Hussein was coming from the president, a born-again Christian, who was scornful of what he saw as the “self-serving” reservations of the Europeans.

“His view of the world is Manichean. He sees his mission as ridding it of evil-doers. He believes American values should be universal values,” Sir Christopher stated.

“He is strongly allergic to Europeans collectively. Anyone who has sat round a dinner table with low-church Southerners will find these sentiments instantly recognisable.”

In the end, Sir Tony and Mr Bush abandoned efforts to get a new Security Council resolution, blaming French President Jacques Chirac for refusing, and launched the invasion of Iraq anyway.

Lobbying from Mandelson and anger at the French

Among the new files, there are also a number of other revelations. These include:

  • Current UK ambassador to the US, Sir Peter Mandelson, was so desperate to get back into government following his second resignation from Sir Tony’s government that he asked Lord Birt, a policy adviser to Downing Street, to write to the prime minister in 2003, asking for him to receive a role – four months before Sir Peter was appointed as the UK’s next European commissioner
  • Sir Tony was furious at French president Jacques Chirac’s efforts to undermine pressure being put on Zimbabwean dictator Robert Mugabe by the UK in 2003, over growing violence caused by a policy of driving the remaining white farmers from their lands in the African nation
  • The prime minister also insisted on changing the rules around which parties can lay wreaths at the Cenotaph on Remembrance Sunday in a bid to protect the Northern Irish peace process in 2004, despite warning this could create an “adverse reaction” from the SNP and Plaid Cymru

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People smugglers to have assets frozen and be banned from UK

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People smugglers to have assets frozen and be banned from UK

People smugglers face having their assets frozen and being banned from entering the UK, the foreign secretary has announced.

David Lammy said new powers under the Sanctions Act will allow the UK to freeze the assets of anyone complicit in smuggling illegal migrants into the country.

They can also be banned from travelling to the UK.

The first wave of sanctions on smuggling gangs and their enablers will be imposed on Wednesday.

Mr Lammy said it is the “world’s first sanctions regime” targeted at smuggling gangs.

Gang leaders, small boat suppliers, people making and selling fake passports and middlemen facilitating payments by migrants through hawala networks (informal systems for transferring money) will all be targeted this week.

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They will be publicly named on a sanctions list, making it illegal for the UK financial system to engage with them.

By using the Sanctions Act, the government said it can target the smuggling gangs wherever they are in the world, including where law enforcement and criminal justice approaches cannot reach.

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How people smugglers dodge French police

Labour’s manifesto promised to “smash the gangs”, but the first half of 2025 has seen a record number of small boat crossings, with about 20,000 from January to June – the highest ever in that period, and 48% more than the first half of 2024.

Earlier this month, the UK and France announced a pilot scheme under which migrants arriving in the UK illegally from France will be returned and a legitimate asylum seeker will be able to come to the UK. They did not say how many would be returned each week, but the suggestion was 50.

People thought to be migrants wade through the sea to board a small boat leaving the beach at Gravelines, France, in an attempt to reach the
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Migrants wading through the sea in France to board a small boat destined for the UK. Pic: PA

On the latest sanctions, Foreign Secretary David Lammy said: “For too long, criminal gangs have been lining their corrupt pockets and preying on the hopes of vulnerable people with impunity as they drive irregular migration to the UK. We will not accept this status quo.

“It is our moral duty and a key part of our Plan for Change to do all we can to smash these gangs and secure Britain’s borders.

“That’s why the UK has created the world’s first sanctions regime targeted at gangs involved in people smuggling and driving irregular migration, as well as their enablers.

“From tomorrow, those involved will face having their assets frozen, being shut off from the UK financial system and banned from travelling to the UK.”

Home Secretary Yvette Cooper said the sanctions send a “clear message that there is no hiding place for those who exploit vulnerable people and put lives at risk for profit”.

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Crypto ATMs seized in the UK amid growing scrutiny of kiosk-based exchanges

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Crypto ATMs seized in the UK amid growing scrutiny of kiosk-based exchanges

Crypto ATMs seized in the UK amid growing scrutiny of kiosk-based exchanges

Crypto ATM arrests in London come as US states like Wisconsin move to limit daily transactions and mandate fraud warnings.

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