UK budget 2024 live: Rachel Reeves’ expected tax hike will hit working people, says ex-Bank of England governor
Rachel Reeves’ tax-hiking Budget will hit workers however Labour frame it, the former governor of the Bank of England has said.
Lord Mervyn King, who was head of the Bank of England for a decade until 2013, said that the debate around who Labour are classifying as a “working person” is “a terrible illusion”.
Speaking on Sky’s Sunday Morning with Trevor Phillips, Lord King said: “Taxes are paid by people, they’re not paid by companies or institutions, ultimately, they fall on the amount that people can spend, and you only can raise significant amounts of money by raising taxes on most people, however you care to define that, but it’s most people will have to pay higher taxes.”
He added: “Ultimately, the impact of these higher taxes has to be on the consumption of most people, however you care to define that group.”
It comes after education secretary Bridget Phillipson pledged that working people would not see higher taxes on their payslips.
We’ll be bringing you all the latest updates ahead of the big event here, on The Independent’s liveblog.
Key Points
What to watch out for in the Budget? Inheritance Tax and Fuel Duty
One of the consistently most unpopular taxes, despite being paid by just 4 per cent of the population. Ministers are thought to be planning to raise money from inheritance tax, possibly by making changes to a series of exemptions.
What to watch out for in the Budget? Borrowing
The chancellor Rachel Reeves has changed her rules around debt, to allow her to invest in major projects. This is expected to give her up to an extra £50bn of borrowing to invest in infrastructure building such as roads, railways and hospitals.
Former Bank of England governor Mervyn King says extra borrowing could have an impact on interest rates. Asked on Sky News’s Sunday Morning With Trevor Phillips programme, he said: “Certainly if you borrow more, it doesn’t matter how you dress it up in terms of a different fiscal rule, people know that higher borrowing means higher borrowing, and financial markets and people who lend to the government will demand a slightly higher interest rate to compensate for the higher amount of debt that they’re being asked to finance.
“It doesn’t have to be dramatic, but it certainly will put some upward pressure on long-term interest rates. I don’t think it necessarily affects what the Bank of England does today or even next year, but it certainly will have some upward pressure.
Four people arrested during pro-Tommy Robinson and anti-racism marches
Two arrests took place at the far-right protest organised by Mr Robinson, 41, real name Stephen Yaxley-Lennon, where demonstrators displayed anti-immigration placards.
Around midday, thousands of Mr Robinson’s supporters gathered in central London, marching from Victoria Station to Parliament Square.
Among the messages were signs reading “Two tier Keir fuelled the riots”, alongside calls to “Bring back Rwanda” and “Stop the Boats”. Some demonstrators were seen holding cans and glasses of alcohol.
The Metropolitan Police reported that two individuals from Mr Robinson’s protest were detained on suspicion of breaching Public Order Act conditions and another on a racially aggravated public order charge. Meanwhile, a counter-protest organised by Stand Up to Racism, encouraged by calls for a “massive anti-fascist demonstration”, saw thousands rallying in the capital.
Labour donor says rich Brits opposing higher taxes should ‘f*** off’
Dale Vince, the green energy tycoon who has previously donated £5 million to Labour, has dismissed arguments that higher taxes will harm UK entrepreneurship, describing this view as “profoundly stupid.” Instead, Mr Vince suggests Britain would be better off without those who are prepared to leave if, as expected, Shadow Chancellor Rachel Reeves raises taxes in the upcoming Budget.
“If people only live here because they pay less tax, they should f— off,” said Mr Vince, The Telegraph reported. “This is a brilliant country. There’s no way people won’t live here because of a fairer tax system.”
Recap: Reform MP says party’s migrant plan would lead to ‘friendly stand-off’ between UK and France
Speaking to Sky News’s Sunday Morning With Trevor Phillips programme, he said: “It’s very simple. The government’s policy of smashing the gangs is clearly not working, and sadly people are literally dying… The only way to stop the boats is a variant of what Australia did.
“We’ve talked about it before. I will repeat it again: You’ve got to safely pick up and take back to France, which we are legally entitled to do under the 1982 UN Convention of the Law of Sea.
“And by the way France has a legal obligation to do the same, which they are in breach of. So we are legally entitled to do this.
“If the French coastguards say ‘you’re not coming in’ they’re in breach of international law.”
When pressed on what would happen if French authorities refused, Mr Tice said: “Well then we’ve got a stand-off… I’m not saying go to war but you can have a friendly stand-off with friends. It’s the only way you’re going to stop the deaths. Ours is the kind and compassionate policy.”
What is reportedly in this week’s Budget?
On top of what has been confirmed, here are a number of measures that are reportedly going to be in Labour’s first Budget this week:
National insurance hike for employers
The amount employers will pay in national insurance is reportedly set to rise in the Budget.
Reports have suggested it could be increased to up to two percentage points. It has been reported that the raise would be used in part to fund the NHS.
Ms Reeves will also make a cut to the earnings threshold at which employers start making national insurance contributions, The Times has reported. Both measures are expected to raise £20bn.
Continued freeze on income tax thresholds
A continued freeze on income tax thresholds beyond 2028 has been floated ahead of the Budget. Government sources have insisted it would not be a breach of Labour’s election promise to not tax working people.
A threshold freeze would allow Ms Reeves to raise an estimated £7bn by bringing more people into the tax system.
Capital gains tax on shares
Rachel Reeves will reportedly use her Budget to increase capital gains tax on the sale of shares.
However the rates will not change for selling second homes, The Times reported.
Capital gains on profits from the sale of shares, which is currently levied at a higher rate of 20 per cent, is reportedly going to rise by several percentage points.
What is expected in this week’s Budget?
Rachel Reeves is to slash Right to Buy discount given to those purchasing their council house. The move is designed to protect existing stock so thousands more homes remain for rent.
£500m boost for social homes
An extra £500m for the current Affordable Homes Programme will see thousands more houses built. There will also me hundreds of millions of pounds invested in housing projects in Liverpool.
£1.4bn for schools and more childcare
£1.4bn will be set aside in the Budget to rebuild crumbling schools.
£1.8bn will also be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
Ms Reeves has also said she would triple investment in free breakfast clubs to £30m in 2025-26.
Kemi Badenoch: ‘I’m pretty tough. I’m not scared’
In case you missed it, Tory leadership front runner Kemi Badenoch sat down for an interview with The Independent’s Political Editor David Maddox:
Defiant Kemi Badenoch has vowed she will not give up her hard-hitting style, saying: “This is what always happens to strong women. If you don’t play ball, then they will come after you.”
The favourite to become Tory leader next month was responding to claims by Tory critics that she had been “too abrasive” and also to Doctor Who actor David Tennant, who said he wished she would “shut up”.
In a candid interview with Independent TV, she said: “People know that I’m pretty tough. I’m not scared. I will always do the right thing, and I won’t be quiet when it is time to speak up.”
Kemi Badenoch: ‘If you don’t play ball, they’ll come after you’
Exclusive: The Margaret Thatcher fan and Tory leadership favourite says her braids are her equivalent of the late PM’s handbag as she tells Political Editor David Maddox, in an interview on Independent TV, that she won’t give up her hard-hitting style – having faced criticism for being too right wing and for her stance on the culture wars
Government’s welfare adviser admits Britain is a ‘sick nation’
The government’s new welfare adviser Paul Gregg has said that Britain is a “sick nation” and that the increased number of young people on sickness benefits is “very scary”.
Mr Gregg, a professor of economic and social policy, was appointed by work and pensions secretary Liz Kendall to chair a new advisory board.
His role will look at ways to reduce inactivity among working-age people, The Sunday Times reported.
Speaking at a lecture in London recently, Mr Gregg said: “We are a sick nation, we have far higher rates of mental health problems and we have far higher rates of obesity and diabetes than other countries. This has come together…to form this surge in economic inactivity.”
He said that the UK was unique in its failure to recover from the pandemic in these areas. He added: “There’s something going wrong and I can’t tell you exactly what it is, but there’s something about our childhood, perhaps later childhood, teenage years, which has gone wrong.”
