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.”
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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.
UK
UK sanctions Russian military officer accused of Salisbury novichok poisoning in crackdown on Kremlin
The UK has sanctioned a Russian military officer accused of helping poison former double agent Sergei Skripal with novichok in Salisbury.
The Foreign Office has imposed 56 new sanctions on people and entities linked to Russia, including those in the Wagner mercenary group that operates unofficially on Vladimir Putin’s behalf, and companies based in China, Turkey and central Asia supplying parts to Russia.
Denis Sergeev, who the Met Police charged over the attempted murder of double agent Mr Skripal, has been sanctioned under the chemical weapons sanctions regime.
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“Sergeev provided support in the preparation and use of the chemical weapon novichok in Salisbury…and provided a coordinating role in London on the weekend of the attack,” the Foreign Office said.
Sergei Skripal and Yulia Skripal were poisoned with novichok. Pic: Shutterstock
Mr Skripal and his daughter Yulia were found unconscious on a bench in Salisbury, Wiltshire, in March 2018.
Police said nerve agent novichok was applied to the front door of his home.
Three Russians, who police said are GRU military intelligence officers, have been charged in absentia over the incident.
Sergeev was the last to be charged after police said he was acting under the alias Sergey Fedotov.
Dawn Sturgess died after picking up a sample perfume bottle with novichok in
A public inquiry into the death of Dawn Sturgess, a woman unwittingly killed after coming across a sample perfume bottle containing novichok, heard Mr Skripal believed Mr Putin had ordered the attack on him.
Moscow has repeatedly rejected British accusations the Kremlin was involved.
The inquiry heard the amount of novichok in the perfume bottle was enough to kill thousands of people.
Also included in the latest sanctions round are companies supplying Russia with military equipment being used in its war against Ukraine.
Ten companies based in China, and a handful from Turkey, Estonia, Kazakhstan and Uzbekistan, are on the list for supplying and producing machine tools, microelectronics and components for drones used by Russia in Ukraine.
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Russian-based mercenary groups operating in sub-Saharan Africa with links to the Kremlin are also on the list.
The Foreign Office said they have threatened peace and security in Libya, Mali and the Central African Republic, and have committed widespread human rights abuses across Africa.
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Foreign Secretary David Lammy said: “Today’s measures will continue to push back on the Kremlin’s corrosive foreign policy, undermining Russia’s attempts to foster instability across Africa and disrupting the supply of vital equipment for Putin’s war machine.
“And smashing the illicit international networks that Russia has worked so hard to forge.
“Putin is nearly 1,000 days into a war he thought would only take a few. He will fail and I will continue to bear down on the Kremlin and support the Ukrainian people in their fight for freedom.”
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.”
Lindsay months before her death
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.
“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.”
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.
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Juliet, left, and Kate Rimer speak to Sky News this month
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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.”
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