Everything set to be announced in Budget tomorrow - from NHS to house-buying
by James Rodger, https://www.facebook.com/jamesrodgerjournalist · Birmingham LiveEverything we expect to be announced in the Budget tomorrow - from NHS funding to bus fares being hiked - has been revealed. The chancellor, Rachel Reeves, said measures to be announced on Wednesday would “end the neglect” of the health service.
The Labour Party government says it will deliver more surgical hubs and radiotherapy machines in a drive to lay on an extra 40,000 appointments a week. The prime minister said he wanted to “take the difficult decisions here and now upfront” to create the conditions for improving public services, investment and growth.
“We are fixing the foundations in this budget … That’s the approach … you can expect to see pretty well all of that in this budget,” he said, though he added that he could not “ever completely rule out any further changes”. Treasury sources said Starmer and Reeves would emphasise this week that the budget would be “generational” and would contain the most significant decisions of the parliament, barring unexpected crises.
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“We do not want to come back and do another budget of this magnitude,” one said. “This is responding to a once-in-a-generation set of crises and we don’t intend to ask the country to do this again.”
NHS funding
Billions of pounds are expected to be pumped into the health service, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines. An additional £1.8 billion has been allocated for elective appointments since July.
Bus fare cap being hiked
In a speech in Birmingham, Sir Keir said he knows "how much this matters", particularly to people who live in rural communities, but he lashed out at the previous Conservative government, saying they “only funded £2 bus fares until the end of 2024”.
“That is the end of the funding in relation to a £2 capped fare,” he added. Sir Keir said: "That’s why I’m able to say to you this morning that in the Budget we will announce there will be a £3 cap on bus fares to the end of 2025 because I know how important it is.”
Single bus fares in England have been capped at £2 outside London, where they are £1.75 per journey, for most routes, since January 2023. Sir Keir indicated the hike will be announced at Rachel Reeves’ Budget on Wednesday as the government tries to plug a £22bn hole in the public finances.
Borrowing rules
The Chancellor will tweak debt rules she inherited from the Tories in order to invest billions in major infrastructure projects. Speaking in Washington DC last week she said without the change the UK would be forced to continue on the "path of decline".
She said: "I don't want that path for Britain when there are so many opportunities in industries from life sciences to carbon capture, storage and clean energy to AI and technology, as well as the need to repair our crumbling schools and hospitals."
VAT, National Insurance and Income Tax for 'working people'
She is also expected to extend the freeze on income tax thresholds, which sees people pulled into paying higher rates through a process known as “fiscal drag”. The Chancellor is expected to increase employer contributions to national insurance by at least one percentage point.
Labour has said it will stick to its manifesto promise not to raise the major taxes on “working people”: national insurance, income tax and VAT.
Back to Work
Starmer has said the Chancellor will announce £240 million in funding for local services to help get people back to work at this week’s Budget. Rachel Reeves will deliver her first Budget on Wednesday, as the Government tries to bridge what it has called the £22 billion “black hole” in the public finances.
Addressing an audience in Birmingham on Monday, the Prime Minister said the UK is “the only G7 country for whom economic inactivity is still higher than it was before Covid ”. The Prime Minister also set out his approach to a Budget for “working people”.
Ministers have been facing repeated questions over the Government’s definition of “working people”, after Labour’s election manifesto pledged not to increase taxes on working people – explicitly ruling out a rise in VAT, national insurance and income tax.
They have come under pressure to spell out precisely who would and would not fall under this definition, given the extent of expected tax rises due to be announced this week.
VAT private school fee loophole to shut
From January, the Government plans to remove the VAT exemption and business rates relief for private schools to enable funding for 6,500 new teachers in state schools. The French and German ambassadors to the UK have called for international schools to be excluded from the plans.
End to non-dom status
People who currently have nom-dom status would be allowed a two-year transition period, during which they would be encouraged to bring their foreign wealth into the UK system. The former chancellor said getting rid of the non-dom rules would raise £2.7bn a year by 2028-29. Labour said it would go further, removing a 50% discount for non-doms bringing foreign income into the UK in the first year of the new rules. It also said it would include foreign assets held in a trust within the UK inheritance tax framework.
National minimum wage
According to reports, the national living wage could reach between £12.12 and £12.20 per hour from April 2025. The national minimum wage for 2025 (the rate for 18 to 20-year-olds) will rise by a greater degree. In tomorrow’s announcement, Reeves is also expected to raise employer NICs by up to two percentage points.
Some economists believe that doing so would have an indirect impact on workers because employers might drop pay rates, cut back on recruitment because of the associated costs, or offer staff fewer working hours.
Homes
£128 million has been confirmed for three projects: £56 million to build 2,000 homes at Liverpool Central Docks, £25 million to establish a new fund with Muse Places Limited and Pension Insurance Corporation to deliver 3,000 energy efficient homes, and £47 million to local authorities to tackle river pollution that is preventing houses being built.
Right to buy discounts for tenants of local authority-owned homes will be reduced and a £500 million top-up in funding will go to the affordable homes programme. The Government will launch a consultation on a five-year social housing rent settlement, seeking to cap what social housing providers can charge tenants in line with Consumer Prices Index inflation plus 1%.
Capital gains tax
Newspaper reports suggest capital gains tax, paid on the proceeds from selling an asset, could go up. Changes could be applied to shares or other chargeable assets. It comes as Reeves unveils a £240m package to speed up the rollout of local services to help people back into work. The “Get Britain Working” scheme is expected to feature support in work, skills and health for people who are disabled or long-term sick.
Treasury sources said there would be “no rabbits” – big surprise measures – claiming they were instead focused on the serious endeavour of fixing the national finances.
Inheritance tax
Ms Reeves is reportedly considering changes to inheritance tax, which could include extending the number of years someone has to stay alive after passing on wealth as a gift from seven to 10 years. The chancellor is also expected to make changes to capital gains and inheritance tax and to extend the freeze on tax thresholds, meaning more households will be dragged into paying higher rates of tax as wages rise.
Stamp duty
Stamp duty appears to be the biggest concern ahead of the budget, as Rightmove warned that if the current stamp duty thresholds are not made permanent during the budget, the average first-time buyer (FTB) will pay £3,538 in stamp duty compared with nothing now.
The implications of this shift are far-reaching. Currently, 28% of all home-movers benefit from stamp duty exemptions. However, if the thresholds are lowered from £250,000 to £125,000, this percentage will plummet to just 5%.
Fuel duty
The tax, which is included in the price motorists pay for petrol at the pump, could also be raised for the first time for more than a decade. The tax on motor fuels was frozen by the Tories between 2010 and 2022, and then cut by 5p to 52.95p per litre, where it remains.
“The budget the chancellor will deliver on Wednesday will prevent devastating austerity in our public services and prevent a disastrous path for our public finances,” Starmer said. “That is the reality of what would happen if we’d stuck to Tory spending plans.”
Vape tax
The Chancellor is reportedly considering increasing the tax on e-cigarettes, echoing her Conservative predecessor Jeremy Hunt’s plans to discourage non-smokers from taking up vaping. Vaping products are subject to VAT at 20% but, unlike tobacco, they are not also subject to excise duty.
Matthew Taylor, the head of the NHS Confederation, said the announcement was a “step in the right direction” especially ahead of a “difficult” winter. He said: “We know that capital investment is critical to increasing productivity and ensuring patients are provided with the best possible care in a timely way.”