Rachel Reeves to deliver ‘fixing the foundations and change’ budget – but it’ll be a difficult sell
The Labour manifesto never did add up.
On the one hand, Keir Starmer vowed there would be “no return to austerity” under his government, while also insisting he had “no plans” to raise taxes beyond an £8bn raid on private equity, oil and gas companies, private school fees and non-doms to pay for more teachers and NHS appointments.
Follow live: All the latest on budget day
In reality, whoever won the election faced tens of billions of pounds in tough choices over tax and spending. But instead of levelling with us, the two main parties embarked in a “conspiracy of silence” in order to win votes.
Today, the truth will out, in a budget which will define Sir Keir Starmer’s first term in a way his manifesto did not.
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What to expect from the budget
There will be huge tax rises and there will be changes in the fiscal rules to allow the chancellor to borrow more to invest in Britain’s crumbling infrastructure.
And we will finally find out which “working people” are the ones Sir Keir Starmer wants to protect as small and big businesses, property owners, shareholders – and perhaps “Middle England” too – braces itself for tax rises, and the government braces itself for the fall-out.
The prime minister set the hare running on who’s in the firing line for tax rises last week at the Commonwealth Heads of Government summit in Samoa when he told me “working people” were those who “go out and earn their living, usually paid in a sort of monthly cheque” but they did not have the ability to “write a cheque to get out of difficulties”.
He told me explicitly that “working people” who also owned assets, such as property or shares, did not fit his definition.
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Sky News questions Starmer on tax rises
So business owners, property owners and Middle England do have some cause for alarm.
The pledge to “not increase national insurance, the basic, higher, or additional rates of income tax, or VAT” has been tweaked in recent weeks to a promise to “protect the payslips of working people”.
Employers are expecting an increase in national insurance contributions they must pay on wages – many will argue this is a flagrant breach of a manifesto pledge.
In another blow to employers, but a win for those struggling on low wages, Labour have also announced a 6.7% increase in the National Living Wage for over three million workers next year, amounting to a pay boost worth £1,400-a-year for an eligible full-time worker.
Is this the moment the manifesto is revealed as a sham? Labour insiders insist not and point, again, to the “£22bn black hole” in the current financial year they discovered when their took office – and which ratchets up to a £40bn gap in the public finances over the course of the parliament – that they now have to plug.
Politically, they hope to blame the big tax rises and borrowing on the economic inheritance left to them by the Tories and buy some space with voters.
As one senior government figure put it to me: “The scale of the economic inheritance is bigger than thought and it has blown a political and economic hole in our first few months.”
This will be a message Rachel Reeves will want to land at the despatch box on Wednesday.
But a public disillusioned with politicians might not see it like that as they watch a Labour chancellor, flanked by a prime minister who promised the opposite in the election, embark on a massive round of tax rises that but months ago they were told were not coming down the tracks.
Ms Reeves is set to deliver the budget from 12.30pm. Pic: Treasury
Insiders acknowledge this is going to be a tax and spend budget that goes far beyond what we were told to expect when Labour were asking for votes.
But they hope what they can do with this big moment is to take it beyond the winners and losers and frame this first Labour budget in over 14 years as “forging a new settlement” for the people and the country.
To that end, this will be the “fixing the foundations and change” budget: “This is a new economic settlement from a government willing to investment and, in particular, borrow to invest, and that is a change and it will show a path towards long term growth.”
Ed Conway analysis:
Could budget’s ‘jiggery-pokery’ scare investors?
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Because, as we drill into who is a working person, and who is going to be hit with tax raises in this budget, there will also be a big story about billions of investment in our country’s energy and transport infrastructure, into housing and hospitals and schools.
“If we get it right, on the evening of the budget, we want to be able to show that we protected your pay slip, are fixing the NHS and investing to rebuild Britain,” one senior figure explains. “What’s the alternative? Choice is going to feature very heavily in the chancellor’s speech. We have made our choices and we are asking business and the wealthiest to pay a bit more to grow our economy and protecting working people.”
And this new settlement, when it lands, will be massive. Rachel Reeves intends to change her borrowing rules to allow up to £53bn more in borrowing to be spent on public services and infrastructure.
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Trailing the decision at the International Monetary Fund summit in Washington last week, the chancellor said she was making the change in order to take opportunities for the economy “in industries from life sciences to carbon capture, storage and clean energy to AI and technology”, as well as using borrowing to “repair our crumbling schools and hospitals”.
The danger for the chancellor is that what actually comes out the other side is anger over tax rises not flagged in the manifesto, or accusations that the government is being Janus-faced if it claims it’s protecting working people should it also, as speculated, extend the freeze on income tax thresholds beyond the 2028 deadline set by the last government, which would drag millions of workers into higher tax bands (and raise as much as £7bn a year for the government).
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Will there be ‘budget nasties?’
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How might the middle classes and wealthier voters respond to their incomes being squeezed? And how might businesses respond to being asked to pay billions more in taxes from a government that has been banging on about being pro-business for months?
It is going to be a difficult sell, no doubt. But this government is calculating that short-term pain now will translate into gains in the medium to long term if Reeves can pull it off and kick-start economic growth.
The hope is that come the next Labour manifesto, the pledges on the NHS, economy, better housing and jobs have been met and the public can forgive the tax rises foisted on them to get there.
Starmer talked endlessly about it being a change election and it will be this budget, not his manifesto, that proves the point.
Former British heavyweight world champion Anthony Joshua delivered a dose of reality to YouTuber-turned-boxer Jake Paul as he won their much-anticipated showdown.
Joshua scored three knockdowns before landing a huge right hit on Paul halfway through the sixth round.
The British fighter lifted Paul’s hand in a show of respect after the fight broadcast on the streaming platform Netflix.
Joshua landing the right hit that knocked out Paul. Pic: AP
“Jake Paul has done really well tonight. I want to give him his props, he got up, time and time again,” he said about his opponent.
Joshua said it “wasn’t the best performance”, adding: “It took a bit longer than expected. But the right hand finally found the destination.”
Joshua celebrating his win after the fight. Pic: Reuters
Meanwhile, Paul said: “I’m feeling good, that was fun. I love this sport. I gave it my all, It’s f****** crazy. I had a blast.
“I got my ass beat, but that’s what this sport is about. I’mma (going to) come back and keep on winning.”
He added: “I just got tired to be honest. He did amazing and hits really hard.”
Jake Paul was knocked down three times before the final knockout in the sixth round. Pic: Reuters
The fight marked the end of a 14-month hiatus for Joshua, 36, while for 28-year-old Paul it was the biggest fight since his boxing career began in 2020.
At the weigh-in on Friday, Joshua boasted an almost two-stone advantage over Paul, who has regularly fought at cruiserweight since he entered the world of boxing.
Britain’s two-time world heavyweight champion tipped the scales at 243.4lbs (17st 5lbs) for his fight against Paul in Miami, while Paul weighed in at 216lbs (15st 6lbs) – a hefty 1.9st difference.
Joshua, who could not weigh more than 245lbs, is the lightest he has been since his first fight against Oleksandr Usyk in September 2021 when he was 240lbs. For his last fight against Daniel Dubois he weighed 252.5Ibs.
Jake Paul and Anthony Joshua at the weigh-in. Pic: Reuters
It is also only the second time that Paul weighed in over cruiserweight limit – the other time was when he fought 58-year-old Mike Tyson. Paul defeated Tyson by unanimous decision with 80-72, 79-73, and 79-73.
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Family of nine-year-old Aria Thorpe pay tribute to ‘beautiful soul’ as teen appears in court charged with murder
The family of a nine-year-old girl stabbed to death have said she was a “beautiful soul” who was brave, kind-hearted and “always put a smile on people’s faces”.
Police were called to Lime Close in Weston-super-Mare, Somerset, just before 6.10pm on Monday, where Aria Thorpe had suffered a single stab wound.
The child was pronounced dead at the scene.
In a tribute released by Avon and Somerset Police on Friday, the girl’s family on her mother’s side said: “For those who didn’t have the privilege of knowing Aria, she was the most beautiful little soul – happy-go-lucky, full of light, and joy.
“She loved to sing and dance, and she took such pride in dressing up, always wanting to look just like her mummy.”
Tom Thorpe, the girl’s father, said: “It’s hard to put into words how devastating it is, our little Aria, that you’re up there with the angels looking over us.”
It comes as a 15-year-old boy charged with Aria’s murder appeared in court.
Pic: Avon and Somerset Police
Aria was a ‘precious girl’
In their statement, Aria’s family on her mother’s side said her death “has devastated us beyond words”.
“Our hearts are broken in a way we never imagined possible,” they added.
“As a family, we are holding one another close and doing everything we can to support each other through this unimaginable time.”
They said they were “truly touched by the lovely messages we have received”, before asking “that our privacy is respected, as we try to come to terms with the terrible loss of our precious girl”.
Flowers laid in memory of the young girl
‘Wacky ways and outright madness’
Mr Thorpe said: “How sad it’s going to be not hearing ‘Dad, how long left?’ on our long journeys back and forth at weekends.
He then said that Aria was “such a brave, kind-hearted and a beautiful innocent soul”, and “always put a smile on people’s faces with your wacky ways and just outright madness”.
Mr Thorpe added: “Your other little family down here in Portsmouth will forever miss you.
“We’ll miss you begging to go outside, even in the pouring rain just to have as much fun as possible in the little time we had at weekends.
“You will be greatly missed, you special little angel. A life gone far too early but I hope a life lived well. We all love you dearly. Goodnight darling.”
Teenager in court
Meanwhile, a 15-year-old boy charged with Aria’s murder appeared at Bristol Crown Court on Friday, where he was remanded.
The teenager, who cannot be named because of his age, was arrested in the Somerset village of Worle at 6.19pm on Monday.
He is next due in court on 16 March 2026. Appearing via video link from youth detention accommodation, he spoke only to confirm his name.
Judge Peter Blair KC set a provisional trial date for 15 June during the hearing.
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