The October 2024 United Kingdom budget was delivered to the House of Commons by Rachel Reeves, the Chancellor of the Exchequer, on 30 October 2024. She is the first woman to present a UK Budget, marking the Labour Party's first Budget in over 14 years. It covered Labour's fiscal plans, with a focus on investment, healthcare, education, childcare, sustainable energy, transport, and workers' rights enrichment.
The National Minimum Wage is set to increase by 6.7% (reaching £12.21 per hour) and a £22.6billion increase in the day-to-day health budget was announced, with a £3.1billion increase in the capital budget. That includes £1billion for hospital repairs and rebuilding projects. The government plans to allocate £5billion for housing investment in the fiscal year 2025–26, with a focus on enhancing the availability of affordable housing. Education will receive £6.7billion of capital investment, a 19% real-terms increase. This includes £1.4billion to rebuild more than 500 schools.
Labour won a landslide victory in the election, with Keir Starmer becoming Prime Minister and Rachel Reeves becoming Chancellor of the Exchequer. On 8 July, Reeves gave her first statement as Chancellor,[5][6] and on 29 July she confirmed 30 October as the date for the budget.[7][8] It is the first budget presented by Reeves during her tenure as Chancellor. It also is the first Labour budget since March 2010,[9] and the first budget to be announced by a female chancellor.[10]
Inherited government debt
The chancellor alleged that the previous government had left a 'black hole' of £22billion. This was disputed by the official spending watchdog, the Office for Budget Responsibility (OBR), who said that the hidden costs from her predecessor Jeremy Hunt were £9.5billion.[11]
Social care changes
It was decided in September 2021 by the previous government that no-one arranging support such as going in to a care home, or paying for residential care, would have to pay more than £86,000 over their lifetime in care costs. Any individuals with personal assets of less than £20,000 would not have to pay out of from those assets, with those who had assets under £100,000 (the previous level being £23,250) being eligible for a varying degree of state support, depending on how wealthy they were. These changes came in to force in October 2023.[8][12][13]
The budget involved £40billion of tax rises from 2025 and £70billion over the next 3 years to allow more spending and investment over the next 3 years.[14][15]
It was announced 2 days before that the minimum wage is to rise by 6.7% to £12.21 an hour. This was confirmed in the budget.[16][17][18]
The chancellor promised to respect the OBR's forecasts and invest in the UK's economy.
Employers' NICs will rise by 1.2% to 15% and the threshold fall from £9,100 to £5,000.[15][22]
From 2028, personal thresholds for income tax and national insurance (currently frozen) will rise in line with inflation.[15]
Employment allowance rises from £5,000 to £10,500.
Capital gains tax rates increase immediately to 18% from 10% at the lower rate, and to 24% from 20% for higher earners, bringing them into line with the rates on property sales.[23]
From April 2027, pensions will be counted as part of the assets subject to inheritance tax.[24]
From April 2026, agricultural property will no longer be fully exempt from inheritance tax; the first £1million will remain exempt, and tax will be charged on the excess at half the standard rate.[25]
£3.4billion will be put in to the UK's Warm Homes Fund.
£22.6billion will be given to healthcare.
40,000 new medical appointments would be funded to help cut waiting lists to 18 weeks.
£1.3billion more funding for the South Yorkshire Combined Authority Leader to spend on improving and renovating Sheffield's part of the South Yorkshire Supertram.
Reeves announced tax rises worth £40billion, the biggest tax rise at a budget since 1993.[28] Amongst the measures she announced were an increase in employers' National Insurance to 15% on salaries above £5,000 from April 2025, income tax thresholds to rise in-line with inflation after 2028, changes to farm inheritance tax so that rural estates above the value of £1,000,000 from April 2026 would face 20 per cent inheritance tax, and a rise in the single bus fare cap to £3 from January 2025.[14] The OBR forecast that the budget would mean the tax burden would be set to its highest ever level in recorded history.[29] The director of the Institute for Fiscal Studies, Paul Johnson, accused Reeves of further undermining trust in politicians.[30] Reeves later said that it was not a budget she would want to repeat,[31] and accepted that the tax rises would likely hit wage growth for workers.[32]
Reactions
Rishi Sunak, the leader of the Conservative Party, accused the government of deceit and breaking earlier fiscal pledges. He disputed Reeves's description of a "black hole" in the budget, stating that Labour had always planned to raise taxes, and condemned the previous Labour government's record. The response prompted Victoria Atkins, in a moment of quiet to exclaim "He's wiped the floor with Rachel".[33][34][35]
Sir Ed Davey, the leader of the Liberal Democrats, described the government’s plans on social care as “a good start” but inadequate. He also said that he thought that the budget may not offer British people "a sense of hope, urgency and the promise of a fair deal" and that more could have been done to help the more vulnerable people in society.[36][37]
The OBR supported it and predicted 1.1% of economic growth for the next fiscal year, starting in April 2025.[38]
Businessman James Dyson, the founder of the Dyson company, and one of the UK's richest industrialists, said of the budget that by targeting family-owned businesses, Reeves had inflicted "an egregious act of self harm" on the economy. He said that the effect on family businesses of the changes to inheritance tax and the National Insurance increases will be to "kill entrepreneurship, snuff out wealth creation and stunt growth".[39]
Subsequent events
On 31 October, the Independent Schools Council, which represents around 1,400 private schools in the UK, voted to take legal action challenging the government's decision to end their tax exemption status from January 2025.[40]
In a letter to Reeves, published on 19 November, a group of the UK's high street retailers, including Tesco and Greggs, warned the "cumulative burden" of tax rises announced in the budget, along with other policies already in the pipeline, would add billions in costs to the retail sector and put jobs at risk.[42]
Also on 19 November, several thousand people attended a protest in London over inheritance tax increases for farmers.[43] It was reported that a 78-year-old farmer had taken his own life the day before the budget, fearing tax increases.[44]
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