Key Points
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Rachel Reeves has posed with the famous red box at Downing Street ahead of Labour’s first budget - It is the first budget to be delivered by a Labour chancellor since Alistair Darling in 2010
- Prime Minister Keir Starmer said it was a ‘huge day for Britain’
- Changes are expected to include extra funding for the NHS and a hike to the minimum wage
Rachel Reeves will pledge to put “more pounds in people’s pockets”, fix the NHS and grow the economy on Wednesday as she deliver’s first Budget in 14 years.
The chancellor, who is the first woman to hold the role, is expected to warn there are “no short cuts” to driving the economic growth Labour has promised to deliver other than to invest.
Reeves is expected to lay out new funding to cut hospital waiting lists, pave the way for more affordable homes and rebuild crumbling schools.
However she has warned that the tax hikes and borrowing increases she is considering may not be enough to undo “14 years of damage” to the NHS, despite plans to pump billions of pounds into the health service.
A hike in the minimum wage to £12.21 an hour is among the measures included, and Labour has also promised not to increase the headline taxes on the pay cheques of “working people”: national insurance, VAT and income tax.
Alongside its Budget analysis, fiscal watchdog the Office for Budget Responsibility (OBR) will publish a report on the Conservatives’ legacy in government, which is expected to account for the so-called £22bn “black hole” in the public finances.
Despite warnings from ministers that the Budget will include tough decisions on tax rises and spending cuts, Reeves is expected to say: “My belief in Britain burns brighter than ever. And the prize on offer to today is immense.”
She will add: “More pounds in people’s pockets. An NHS that is there when you need it. An economy that is growing, creating wealth and opportunity for all. Because that is the only way to improve living standards.
“And the only way to drive economic growth is to invest, invest, invest. There are no short cuts. To deliver that investment we must restore economic stability.”
Harking back to the Labour governments of Attlee, Wilson and Blair, Reeves will say it is “not the first time that it has fallen to the Labour Party to rebuild Britain”.
“Today, it falls to this Labour Party, this Labour Government, to rebuild Britain once again,” she will add.
On Tuesday, the Chancellor confirmed a 6.7% increase in the minimum wage, meaning it will rise to £12.21 an hour next year.
The increase, recommended by the Low Pay Commission, will mean an extra £1,400 a year for a full-time worker earning the main minimum wage rate, known as the national living wage, from April.
The Conservatives have continued to protest against the decision to limit the winter fuel allowance to all but the poorest pensioners.
Shadow work and pensions secretary Mel Stride said a petition calling on the Government to think again has “over a quarter of a million signatures”, adding “many” pensioners are going to “really, really struggle”.
Reeves made the cut as part of a series of measures aimed at filling the reported £22bn spending gap in the public finances.
Shadow chancellor Jeremy Hunt is contesting a report into the so-called black hole which is set to be released alongside the Budget.
He has written to the country’s top civil servant, Simon Case, claiming the OBR risks “straying into political territory and failing to follow due process” as it plans to publish the report on the impact of Tory spending.
The report follows Reeves’ claims that she unearthed £22bn of unfunded spending when Labour came to power.
On Tuesday morning while visiting a south London hospital, the chancellor said the Budget would help to end “neglect” of the health service, amid plans to spend £1.5bn on new surgical hubs and scanners and £70m for radiotherapy machines.
But she warned that turning around public services would take time, saying: “I don’t think in one Budget you can undo 14 years of damage.”
As Labour grapples with the public finances, other measures reported to be under consideration include raising fuel duty and inheritance tax.
In the Commons, Reeves also hinted at at a reform to business rates, “as well as a business tax road map”.
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