Budget UK latest: When is it and which tax cuts might Rachel Reeves announce?
Housing secretary Angela Rayner is planning to double the number of council homes after receiving a boost in the budget, according to reports.
The deputy prime minister is set to announce nearly £1billion to begin a “council housing revolution” and build tens of thousands of extra homes, The Times reported.
Ms Rayner believes council housing is crucial for the government’s target of 1.5 million new homes in the next five years.
As part of the plan, the deputy PM is also set to crack down on the Right to Buy scheme, which allows council house residents to buy their homes below market value, according to The Times.
A senior government source told The Times: “Angela’s ambitions on social and council housing have the full backing of the prime minister and chancellor, and that will become even clearer in the weeks ahead.
“They are joined at the hip when it comes to getting Britain building.”
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Key Points
Calls for budget to fund Iron Dome-style missile defence system in UK
The UK needs its own version of Israel’s Iron Dome missile defence system to protect it from Russian aggression, former ministers have said.
Former defence secretary Penny Mordaunt told The I: “This is a significant UK capability gap we must plug at the earliest opportunity. The forthcoming Budget must enable early work to be done on the alliance’s key needs and let the US and other partners know we mean business.”
Fact check: Would raising employer national insurance be a ‘tax on working people’?
Speculation has mounted in the subsequent months, with an increase in employer NICs now looking likely. The measure has caused strong political debate, focused on whether it would break Labour’s manifesto pledge to not raise taxes on “working people.”
Ministers and Treasury officials have indicated the government’s position is that the measure would not break their manifesto pledge. Labour has not confirmed that an employer NIC hike will be included in the Budget, but has refused to rule the measure out.
Meanwhile, Institute for Fiscal Studies director Paul Johnson has argued it would be a “straightforward breach.”
The tax expert adds that in the extreme case that an increase of one pence per pound in employer NICs was passed on to employees in the form of lower wages, the measure would only net £4.5 billion a year. He adds that the end figure would probably be a little higher than this, but much less than a previous HMRC estimate of £8.5 billion.
Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget
Rachel Reeves should increase capital gains tax (CGT) at Labour’s upcoming Budget, a group of millionaire business owners have urged, estimating the measure would raise £14bn a year.
In a report by the IPPR think-tank, analysts have consulted with wealthy entrepreneurs who say higher CGT would not have stopped them from making investments in the UK.
The group has called for CGT to be aligned with income tax, arguing that fears such a move would lead wealthy individuals to leave the country in response are unfounded. Recent HMRC analysis found that a 10 per cent increase to the measure would actually cost the exchequer £2bn after behavioural impacts.
What other steps could be taken to tackle the UK’s economic challenges?
There have been rumours Labour could tweak the fiscal rules the Government uses to constrain its own spending and tax decisions.
Chief among those under consideration for change is the period over which the Government aims to see national debt falling as a percentage of the UK’s overall economic output.
Relaxing this rule to a longer period than the current five-year target, or removing spending by certain public organisations from the total, could allow the Chancellor to borrow more cash to invest in major infrastructure projects such as railways, roads, hospitals and new prisons.
What are the problems Labour faces as it sets out its spending plans?
Public services including the NHS and local councils are struggling across the UK, as they grapple with an ageing population, backlogs caused by the pandemic, and the aftermath of the coalition-era austerity programme.
Labour has brokered a pay deal for a swathe of public servants after several years of industrial action, a spending commitment worth £9 billion by some estimates.
Ms Reeves has also claimed the previous Conservative government did not account for the costs of some of its promises, which now need to be met or scaled back.
These commitments, alongside keeping the Government’s ongoing costs “standing still”, made up the so-called £22 billion “black hole” in the public finances which Labour said it needs to fill.
However, Ms Reeves is said to have since identified a far larger £40 billion funding gap which she will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.
Wider economic gains being ignored in two-child limit debate, says think tank
The wider benefits of scrapping the two-child limit such as the future earnings potential of young people who avoid poverty as a result are being ignored, a think tank has said.
Prime minister Sir Keir Starmer has faced pressure, including from some of his own Labour MPs, since being elected in July to scrap the controversial Conservative policy but has insisted he cannot do so in the current economic climate.
The New Economics Foundation (NEF) said its UK-wide analysis suggests that retaining both the two-child limit and the benefit cap – which a number of campaigners have said should also be axed – could see almost half (49.4%) of families with three or more children living in relative poverty after housing costs by the end of this Parliament five years from now.
Scrapping both from April 2025 could cost the Government £2.5 billion a year, rising to £3.5 billion by 2029/30, the organisation said.
Much of these costs are taken up by the two-child limit at £1.9 billion and £2.6 billion respectively, the NEF said, but it argued this would be “significantly offset by short, medium and longer-term economic gains”.