Chancellor Rachel Reeves unveiled Labour’s long-awaited budget for 2024, outlining a mix of tax rises, spending increases, and targeted support for key areas. Here’s a breakdown of the key announcements:
Tax Changes:
- Tax rises: The budget raises £40bn through a combination of measures. Employers’ National Insurance contributions will increase, and capital gains tax will rise for both lower and higher earners. Inheritance tax thresholds will remain frozen for another two years.
- Tax relief: Starting in 2028, the freeze on income tax thresholds will be lifted, which is a small win for taxpayers. Additionally, the Employment Allowance will be increased, meaning many businesses will pay less National Insurance.
Spending Boosts:
- Health and Social Care: The NHS receives a significant funding boost of £22bn, which will result in more appointments, procedures, and hospital beds. Local authorities receive at least £600m for social care.
- Education: A £1.4bn investment will rebuild 500 ageing state schools, with additional funding for maintenance, free school breakfast clubs, and schools with special needs students. Private schools will face a new VAT charge and lose their business rates relief.
- Minimum Wage: The minimum wage for workers aged 21 and over will rise by 6.7%, while younger workers will see an even steeper increase of 16.3%.
- Support for Vulnerable Groups: Health and employment services for people with disabilities and long-term illnesses will receive increased support. Carers Allowance eligibility will expand, and the household support fund will receive a £1bn boost to help those struggling with essentials.
Infrastructure and Environment:
- HS2: The controversial HS2 rail project gets the green light for further development, with confirmed extension plans.
- Greener Transport: Air passenger duty on private jets increases sharply, while fuel duty remains frozen for another year.
Other Measures:
- Defence: The annual defence budget will grow slightly, and a £3bn yearly commitment will support Ukraine.
- Public Finances: The budget aims for a public sector surplus by 2027-2028, with projected economic growth in the coming years.
- Efficiency: Government departments are tasked with achieving 2% annual productivity and efficiency gains.
The budget reflects a Labour government that prioritises public services, social welfare, and infrastructure investment. However, this comes at a cost, with tax rises impacting businesses and individuals.
